By Damir Sagolj and Aung Hla Tun
YANGON (Reuters) - Holy water is sprinkled over a new Honda sub-compact festooned with flowers and red ribbons.
For more than a century, owners of ox-drawn carts, World War Two-era trucks and decrepit buses have descended on the Shwe Nyaung Pin Nat Shrine under a banyan tree in Myanmar's biggest city to bless one of the world's oldest vehicle fleets, dominated by Japanese rust-buckets from the 1980s or older.
Today, as the country emerges from 49 years of isolation, the shrine has new visitors: freshly minted cars. The Honda's owner, Nyein Chang Aung, hopes the blessing will protect him from accidents in a country with some of the world's most treacherous roads.
"My elders were coming to this tree and I'm doing the same," he said. "They never had any accidents."
As Myanmar opens up, its antiquated transportation system is undergoing dramatic change. New cars are plying roads dominated by rattletrap buses -- known as "bikepoo", or "big belly", in the Myanmar language -- and wheezing taxis.
The decades-old buses as well as trains are being retired. Airlines are updating fleets of mostly ageing Fokker planes from the 1970s.
Yet, despite the changes, travelling in Myanmar remains a colorful, surreal and daunting experience -- a legacy of rules drawn up by paranoid generals who governed since a 1962 coup until last year, ruling by fear and superstition.
Most vehicles, for instance, are right-hand drive, a throwback to British colonialism. Yet the roads are right-hand traffic, similar to the American system, reducing visibility and keeping drivers on perpetual alert. As more vehicles are imported, such quirks worsen the strains of already-congested roads.
And few people know why such rules exist anyway.
Late dictator Ne Win switched from left-hand drive after he seized power in 1962. Some locals put the change down to superstition, while others say it was an anti-colonial, political gesture.
"Most people believe his trusted astrologer told Ne Win that changing from left to right hand side would bring him good luck in fighting against the leftist underground Burma Communist Party and its sympathisers," said Kyaw Nyunt, a 75-year-old former drug store manager.
"BIG BELLY" BUSES
Car showrooms have mushroomed across the country, offering everything from Chinese-made micro cars to Japanese SUVs and expensive BMWs, all of which have begun jockeying for space on roads shared with tractors and occasional ox-carts.
Conspicuously absent in Yangon are motorbikes and bicycles, possibly a casualty of the former junta's paranoia. They were banned in Yangon about 20 years ago. Explanations vary. Some say a motorbike driver once pointed his pistol-like finger at a car carrying a powerful general in the former military junta. Others say it was to prevent students cycling from campus to campus during protests.
In August, Japan Car Co Ltd, a member of ICE Group of Japan, and Myanmar's state-owned Ministry of Rail Transport, signed a $451 million deal to improve bus services in Yangon.
Such deals mark the end for World War Two-era "bikepoo" buses.
"This is the last month I'm driving a bikepoo", said Aung Win, its 48-year-old driver, as he surveyed passengers -- students, Buddhist monks and farmers -- sitting on wooden benches bolted into the vehicle's wooden floor.
"I've been driving it for 20 years and I'm sorry my bikepoo is going to the scrap," he said of the 1940s modified Chevrolet C15, among the world's oldest buses in operation.
"The bikepoo era is over," he added.
His manager will use its licence to import a new bus. That also marks a change. From 1997 until last year when a semi-civilian government took office, military-owned companies monopolized the distribution of vehicle import licenses. Only the rich and the powerful could afford them.
But a new policy went into effect in September last year. Since then, import permits have been issued for more than 58,000 cars, Ministry of Commerce data shows. For travelers in Yangon's stifling tropical heat, that offers some relief: a few taxis now have air conditioning.
Car prices have plunged but remain high compared to other countries, inflated by taxes. A typical 2001-model Toyota sedan now costs about 20 million kyat ($23,000), compared to more than 120 million kyat ($140,000) in August last year.
A 1987 Nissan sedan now sells for about 7 million kyat ($8,200), compared to 20 million kyat ($23,000) previously.
Trains are also getting refurbished, mainly with new cars imported from India and China. With Japanese assistance, a 600-km (370-mile) rail link between Yangon and Mandalay in the north will be upgraded, shortening the journey to eight hours from 14, Deputy Minister of Rail Transport Thaung Lwin told Reuters.
A train line that loops around Yangon on ageing narrow-gauge rails is also being upgraded, he added, potentially transforming a colorful three-hour journey around the city of five million people. As rickety carriages jolt and sway between stations, passengers hang off the side. Banana-sellers and lottery-vendors hawk their goods inside.
At a station in the suburb of Danyingone, women sell food on the tracks and naked children jump between platforms, their cheeks painted in swirls of yellow paste made from thanaka bark, a type of sun protection dating back centuries.
Airlines are changing, too. State-owned Myanma Airways and five local private airlines recently bought second-hand aircraft while one more private airline will emerge in two or three months, according to government officials.
General Electric Co reached a deal in September to lease two Embraer SA-made jets to Myanmar Airlines, the latest in a series of deals since the United States reopened commercial dealings with the long-isolated Asian nation. Myanma Airways still use Fokker F28s, a short-range jet that began flying in the 1960s.
Many airlines operate on what is known locally as an "air bus system". Usually there are not enough passengers for direct flights to all destinations in Myanmar, a vast country as big as France and England combined. To be profitable, airlines often fly to one city, pick up passengers, and then fly to several more cities before a final stop, a bit like a bus route.
At the holy tree in Yangon, business has rarely been better.
"Business these days is good, very good," says Sein Pain, 67, after blessing the Honda. Sein's family owns the tree and manages the business. Car owners pay anything from $3 to hundreds of dollars for different levels of blessings.
"Since the government allowed new cars last year, numbers doubled. Now we have up to 60 cars on a busy day."
(Writing and additional reporting by Jason Szep; Editing by Jeremy Laurence)