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Policy Note Series

Managing the Challenges of Rapid Urbanisation

Ideas for Solid Waste Management Reform in Mandalay

The SituationRising quantities of garbage are an unglamorous part of every city’s development and Mandalay is no exception. Between 2005 and 2018, waste generation in Mandalay rose from approximately 259 tons1 to around 1,000 tons2 per day. As the city’s population continues to grow and wealth increases, the amount of waste generated is likely to rise. Moreover, the task of managing waste is changing; as the city develops and lifestyles change, so too does the composition of domestic waste. There is a rise in inorganic waste, especially single-use plastics and packaging materials, and an increased presence of hazardous materials such as e-waste, industrial and medical waste.

The MCDC cleansing department has worked hard to keep pace and has made some impressive progress.

• Mandalay’s Waste Management Strategy and Action Plan for Mandalay City (WMSAP) (Figure 1) sets out a comprehensive strategy for meeting the city’s solid waste challenge. The WMSAP identifies the need to upgrade aging infrastructure, invest in sanitary landfill practices, including methane and leachate capture, and improve enforcement. It notes that the city’s

1 Waste Management Strategy and Action Plan for Mandalay City (2017) MCDC, ECD and MONREC.

2 World Bank estimate, 2018. The scale of the increase was partly due to an expansion in the city’s boundaries.

current landfill sites are set to reach the end of their lifecycle in 2019-2021.

Figure (1)

• Fee reform, introduced in October 2018, aims to increase the resources available for solid waste management (SWM). The new system, which is based on the type of house, replaced the waste component of property tax. The weighted average of the new fee is estimated at MMK 12,000 per household per year. In comparison, the previous ‘garbage tax’ component of the property tax component raised less than MMK 2,000 per household per year.

This note is based on the World Bank Myanmar Subnational Public Expenditure Review 2019: Fostering Decentralization in Myanmar.

December 2019

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• The MCDC’s Kyar Ni Kan dumpsite leads the way in terms of the steps taken to improve safety with limited resources (Box 1).

Box 1: Kyar Ni Kan dumpsite

MCDC has demonstrated that managing a landfill well is about more than just resources.

At MCDC’s Kyar Ni Kan dumpsite, garbage is covered with soil daily to control emissions, garbage dumping is carefully organised and compacted to save space, and leachate is collected through simple run offs which limits the risk of groundwater contamination.

This attention to detail allows MCDC to limit the damage caused by unsanitary landfill and shows how good use of existing resources can make a difference.

However, a number of key challenges remain.

• A substantial share of solid waste goes uncollected each day. An estimated 248 tons of waste currently go uncollected in the city each day. A combination of inadequate and aging infrastructure for waste collection and low public awareness leads to illegal dumping of domestic and industrial waste on streets and general littering. This waste ultimately finds its way into drains, streams and other watercourses, causing considerable environmental and health problems.

• Waste fees still remain low overall. At around 0.2 percent of average household income, the new fees are still well below international benchmarks of affordability (1-1.5 percent). Revenues from commercial / industrial / institutional sectors are also low, at MMK 3,432 per ton collected. Internationally, it is common for higher charges on the commercial

sector to be used to help fund some improvements in collection for ordinary households.

• The MCDC Cleansing Department is unable to cover its operational expenditures. Fee revenue still remains below the department’s basic operating cost of MMK 15,296/ton. In 2017-18, SWM ran at an estimated operating deficit of MMK 4,444 million3. MCDC must fund this operating deficit from other own-source revenues. This operating deficit also makes it more difficult for MCDC to fund the ambitious capital investments proposed in the city’s waste action plan.

• Open dumping is practiced throughout Myanmar, including in Mandalay. While steps have been taken to improve sanitary conditions at Kyar Ni Kan, waste disposal and treatment at other sites tend not to be well managed, causing further difficulties for health and environmental problems. Landfills are mostly open dumping sites, where hazardous waste is typically collected and dumped together with household waste.4 There are few environmental protections, resulting in ground and surface water contamination, air pollution from landfill gas emissions and large dangerous fires like the one at the Htein Bin landfill in Yangon in early 2018 that blanketed the city in toxic fumes for three weeks. Pests such as flies, cockroaches, rats, and dogs pose considerable health risks for people who pick through the waste looking for items that are still useful, as well as for communities living around the landfills, and for public health in general.

Fortunately, MCDC has built a strong platform from which to further improve SWM. MCDC has devolved responsibility for solid waste management and citizens have indicated that they are willing to support their city; in the recent Asia Foundation City Life Survey, 81 percent of Mandalay respondents agreed that they would walk further to dump their garbage if it meant that garbage

3 Based on the adjusted OPEX, where the costs of the vehicles used for waste collection accounted for under the transport department were allo-cated to the operational costs of SWM.

4 Though in both YCDC and MCDC infectious medical waste is incinerated or burned in cemeteries while sharp wastes are buried underground in land-fills (Gamaralalage et al., 2017; MCDC and ECD, 2017).

A B

Photos A & B: Garbage management and leachate capture at Kyar Ni Kan landfill.

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trucks could cover more houses and keep the city cleaner.5

This policy note focuses on a number of ways that MCDC can build on this platform to make SWM more effective, sustainable and safe, and generate the additional revenue needed to fund implementation of the city’s ambitious waste management action plan.

Suggestions1. Preserve the real value of the new garbage fee by adjusting it in line with inflation. The introduction of a new garbage fee in 2018 has the potential to substantially increase the Cleansing Department’s revenue, however the value of the revenue generated by that reform could quickly be eroded by increases in prices. To put this into context, with annual inflation running around 6 percent, the real value of fees collected over only three years will fall by approximately 16 percent.6

2. Strengthen the city’s property tax. Ultimately, a key determinant of the fiscal space available for SWM is the own-source revenues collected by MCDC. Property taxes are one of the most important revenue sources available – being an efficient and fair way to raise revenue from urban residents to fund municipal services. In Mandalay, however, as in other cities across Myanmar, property taxes are currently underperforming. For example, in 2019-20 property tax revenue in Mandalay city is forecast to be almost one-third of that collected from wheel tax, despite properties being a significantly larger store of value. A separate note in this series (as well as previously published work by the Renaissance Institute) suggests practical options for property tax reform. In addition to raising additional revenue through the property tax, MCDC should also consider clarifying the current garbage bill, which has led to some confusion over the difference between garbage fees and property taxes (see Box 2).

5 Asia Foundation’s 2018 City Life Survey6 Inflation figure from the World Bank Economic Monitor, June 2019. Inter-

nationally, cities garbage fees are often adjusted for cost inflation even more precisely, for example fees may need to rise to adjust for government salary increases or new taxes on fuel. Adjusting for the national inflation rate however would be a simple first step.

Box 2: Property tax or a garbage fee?

At present, in order to save time, the Cleansing Department in Mandalay uses the same bill as the tax department. While this is administratively simple, it risks creating confusion with little distinction from the old system where the garbage fee was part of the property tax. Although adjusting the design of the tax bill will not raise significant revenue, it is a reform which could make the system clearer for Mandalay’s citizens.

The garbage fee is a charge for a specific service, while the property tax is a contribution to the municipal budget not associated with a specific service. Making this distinction clear to residents is an important communications task for MCDC and will make future changes to the system easier.

A Mandalay garbage bill, July 2019

Property Tax

Street Ligh�ng Tax

Tax dept

Household Garbage Fee

Business Garbage Fee

Cleansing Dept

12,000 kyat

12,000 kyat

Amount Amount

Tax Dept, Tax Bill

MCDC

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3. Focus on finding complementary resources for SWM. Options include:

• Using fees from the commercial/industrial/institutional sector to balance low household fees. Waste fees should be based on individual waste management contracts with companies/institutions, taking into account the actual quantity of waste that needs to be collected (e.g. size/weight of container).

• A waste gate fee to raise funds for landfilling in an environmentally controlled manner. Currently, waste disposal fees are only charged for third party waste disposal but not for cleansing department trucks, which limits the landfill operator’s ability to raise the funds needed to improve waste disposal and build sanitary landfills. A gate fee is one way to ensure sufficient resources are allocated to landfill investments.

• Further options for increasing waste-related revenues include:

o A municipal tourist fee per person per night in hotels and guesthouses with allocated funds for environmental protection and SWM.

o Penalties for non-compliance with local and national legislation on solid waste management.

o Creating a specific definition of “Municipal Solid Waste” in the legislation to distinguish among the types of wastes to be collected by municipalities as part of regular waste collection services and categories of waste that require a separate payment.

o Developing commercial waste collection and treatment services for: hospital waste, non-hazardous industrial waste, construction and demolition waste, and bulky waste. These services could operate under an “on demand” service with separate fees linked to the amount of waste to be collected.

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4. Encourage residents and businesses to play their part. Education and public awareness on reduction of waste and littering are essential for raising awareness and shaping community expectations. These require ongoing funding. Fines and other penalties should also be more consistently used by MCDC. For example, publicly penalizing companies that illegally dump waste when other options are available would incentivize companies to comply. Importantly, negative incentives need to be well targeted, as it may be counterproductive to penalize those who don’t have collection options available or who are unable to pay.

5. Consider restructuring the Cleansing Department and making use of the latest technology. Options include:

- Reorganising the Cleansing Department into business units. Dividing the Cleansing Department into different waste activities: (i) collection/transport, (ii) street cleaning, (iii) landfilling; and (iv) other activities could improve efficiency by making it easier to track costs and identify opportunities for making smarter use of resources. The importance of monitoring and measuring performance across all involved MCDC departments has already been highlighted in the WMSAP.

- Using technology to track and improve waste collection. A digital record of households in Mandalay recording housing/business type could help MCDC assess the quantities of waste that need collecting. Similarly, GPS technology can allow more efficient route planning for garbage trucks. Several cities in Myanmar are also using GPS technologies to track garbage trucks in real time.

Further Information During 2018 and 2019, the World Bank and the Renaissance Institute jointly reviewed the governance, revenues, and expenditure arrangements in Yangon and Mandalay regions and cities, and Shan state. They also examined the status of digital infrastructure, the delivery of solid waste management and transport services. The findings and their discussion are detailed in the “Subnational Public Expenditure Review 2019: Fostering Decentralization in Myanmar”. The above advice is based on these findings.

For more information, including Myanmar versions of these notes, please visit www.rimyanmar.org or contact renaissance@rimyanmar.org.

This work was supported by the Australian Department of Foreign Affairs and Trade, the UK Department of International Development, and the Kingdom of Denmark through the Myanmar Multi Donor Trust Fund.