Myanmar's second international airport will be built by a Singapore-based engineering and construction group Yongnam, a subsidiary of Singapore's Changi Airport, and Japan's JGC Corp for $1.4bn.
The country's civil aviation department said that the Hanthawaddy International Airport will be built on the outskirts of Yangon by December 2019.
Once built, the airport will be able to handle close to 12 million passengers annually, increasing the capacity of the current Yangon International Airport, which saw around 3.7 million passengers in 2013. Yangon only has a capacity to handle approximately 2.7 million passengers a year.
AFP quoted Myanmar civil aviation department director general Win Swe Tun as saying: "We intend it to become the primary gateway for transit routes and also for cargo.
"We plan to extend the airport until it can handle 30 million passengers in the future."
He further added that the new airport was at the centre of Myanmar's ambitions for a huge increase in passenger capacity as the country expects tourist numbers to rise.
According to the new agreement, this winning bid will meet 49% of the costs of the airport's construction through a loan from Japan's international development arm. It was selected after the failure of an earlier agreement with South Korea's Incheon Airport owing to financial concerns.