Myanmar is a good destination for building confidence and trust, between Japan and China. Both nations have been offering technologies to Myanmar to revamp its railway system and built a new transportation corridor. There is no rivalry but a smooth competition between the two nations. Railway and transportation are two important projects needed to transform Myanmar.
Beijing inked a long-awaited deal to build a deep-water port in the town of Kyaukpyu on the Indian Ocean. There was a basic agreement signed with the Chinese conglomerate CITIC Group and the work began on the port on November 8, 2018, after two years of negotiations. Chairman of CITIC Group Chang Zhenming said this meant, “The beginning of further steps. Signing this agreement is the starting step for our businesses.”
There are various activities ahead, he remarked. U Set Aung, as Chair of Kyaukphyu SEZ Management Committee (KSMC), said the project will not amount to debt burden for Myanmar. “Many negotiations were made to make the project sustainable and to avoid burdening Myanmar, in the present and in the future,” he explained, pledging transparency in the process.
The project is designed for greater regional connectivity. The Kyaukphyu SEZ is part of the China-Myanmar Economic Corridor, and the project will benefit the people of Myanmar and promote the China-Myanmar friendship. CITIC Group initially won the tender to construct the Kyaukphyu (SEZ) with an estimate investment of US$ 7 billion in December 2015.
The development comes after months of difficult negotiations between China’s state investment vehicle CITIC Group and the NLD-Government to reduce the Chinese consortium’s stake in the port from 85 percent to 70 percent. The Chinese have since agreed to accept a 70 percent stake at the deep sea port in Kyaukphyu. The remaining 30 percent will be taken up by the Myanmar Government and local public firms. Under the previous Government, CITIC had won the original tender to build the port based on an 85:15 ratio.
Meanwhile, development of the deep sea port will take place in four stages as originally planned, but the first phase has been scaled down and is now expected to cost US$ 1.3 billion, according to U Khin Maung Cho, Minister of Industry. This will involve the construction of a terminal with the capacity for 2-3 vessels. Chinese oil companies from Kunming, capital of Yunnan province in China, will be involved in oil and gas transportation.
The port will be a crucial piece of the China-Myanmar economic corridor, which will connect Kyaukpyu and the Chinese border via rail and highways. Once completed, the corridor will give inland China direct access to the Indian Ocean, and be a symbol of President Xi Jinping’s signature Belt and Road Initiative.
Already, pipelines are running from Kyaukpyu to inland China, transporting oil and gas. This route bypasses the Straits of Malacca — any future troublesome point to offset the business. This is in China’s interest to avoid the Malacca point and get connected with Myanmar for oil and gas and all crucial maritime exports in the region. The project has the potential to transform the economy of Myanmar.
Yet Japan is ready to upgrade the railways from Yangon to Mandalay, which is going to be 620 km long which is the longest route. Two state-owned companies, China Railway Eryuan Engineering Group and Myanmar Railways, signed an agreement on 22 October 2017. Beijing’s vast trade and infrastructure push the Belt and Road Initiative. This will increase people’s traffic and goods transportation to a large extent.
The project is designed for greater regional connectivity. The Kyaukphyu SEZ is part of the China-Myanmar Economic Corridor, and the project will benefit the people of Myanmar and promote the China-Myanmar friendship. CITIC Group initially won the tender to construct the Kyaukphyu (SEZ) with an estimate investment of US$ 7 billion in December 2015
Mandalay is an important point before going into Muse. The north of the country between Muse and Mandalay is seen as crucial to improving the connectivity of the South East Asian nation.
It is also part of the China-Myanmar Economic Corridor — linking Yunnan with key in Myanmar — under the economic corridor spans 1,700km — from Kunming to Mandalay, then east to Yangon and west to the Kyaukpyu Special Economic Zone in Rakhine State, where China wants to build a deep water port and where it already has a cross-border oil pipeline.
Since 2015, Myanmar has been heading toward a market approach. There is also huge potential for the country to upgrade its structure with China, and also within the rest of the country. Things have been moving in the right direction. China and Japan have been assisting Myanmar’s Government despite the Rohingya crisis.
The heads of State of Japan, Cambodia, Laos, Myanmar, Thailand, and Vietnam met in Tokyo for the Japan-Mekong Summit on 9 October 2017, and reached an agreement on the “Tokyo Strategy 2018.” The strategy includes cooperation for the nation-state development, such as human resources, infrastructure, and others. Myanmar prioritizes cooperation with Japan, while the West has been isolating Myanmar on human rights violation of Rohingya, China and Japan provide a great cushion to the country.
The writer is a Consultant at the Institute of Strategic Studies Islamabad. He writes on East Asian affairs and China
Published in Daily Times, November 14th 2018.