With strategic bases in Pakistan and Sri Lanka, China securing the deep-sea port project in the littoral the waters of Myanmar will rattle India – as the string begins to corner New Delhi in its own backyard
@Kunal_Chonkar
New Delhi: China’s long hope of carving out a backdoor into the Indian Ocean Region (IOR) is set to be realized, with Myanmar approving Beijing’s plan to develop a deep-sea port in the western Rakhine state. The strategic development making waves in the Bay of Bengal are set to rattle New Delhi, which is already vexed over two other Chinese-built ports cornering it in its own backyard. Under its massive Belt and Road Initiative (BRI), Beijing is building the Gwadar port in Pakistan and has a 99-year lease of the Hambantota port in Sri Lanka. Reports also indicate that China is fuelling money to construct one more port at Chittagong in Bangladesh.
In addition to the above, Nay Pyi Taw’s investment agency, last week, approved the registration of a joint venture between a Chinese company and a government-backed committee to develop China’s strategic deep-sea port project in Kyaukphyu region. The approval moves the long-delayed backbone project of the China-Myanmar Economic Corridor (CMEC) one step closer to actually getting off the ground. The CMEC forms part of China’s expansionist policy via the BRI.
The Kyaukphyu Special Economic Zone (SEZ) and deep-sea port project is designed to provide China with direct access to the IOR, allowing its oil imports to bypass the Strait of Malacca and boost development in Beijing’s landlocked Yunnan province. The entire project spans over 4,300 acres (about 1,750 hectares), with secondary plans to construct an industrial zone with facilities for textile and garment manufacturing, construction materials processing, food processing, pharmaceuticals, electronics, marine supplies and services, and research..
Beijing’s Budget Trap
As per the company registration documents from the Directorate of Investment and Company Administration (DICA), available with TheNews21, the agency on August 6, approved the registration of Kyaukphyu SEZ Deep Seaport Company Limited – a joint venture between a consortium of six companies led by the China International Trust and Investment Corporation (CITIC) and the Myanmar government-backed Kyauk Phyu SEZ Management Committee.
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The other Chinese companies in the port and zone consortium include China Harbour Engineering, China Merchants Holdings, TEDA Investment Holding, and Yunnan Construction Engineering Group (YNJG). The consortium also features a Thai conglomerate called the Charoen Pokphand Group. Documents indicate that the consortium is to operate the port for 50 years.
Official records indicate that while the Chinese company holds a 70-percent stake in the venture, the Myanmar committee has a 30 percent share, as agreed by the two sides in November of 2018. The China-backed infrastructure project ran into delays soon before Myanmar’s 2015 general election after concerns were sounded that the deal could land Myanmar in Beijing’s debt trap. The initial agreement called for a project worth $9-10 billion and gave the Chinese developer an 85-percent stake. However, the current National League for Democracy (NDL) government successfully renegotiated the share ratio with Beijing, along with an agreement that the project would be based on demand.
Later, Beijing agreed that Nay Pyi Taw would hold a 30-percent stake. After the deal was finalized, the Kyaukphyu SEZ Management Committee and CITIC inked a framework agreement for the development of the Kyaukphyu SEZ in 2018. The port development will be divided into four phases, with the first stage taken up with the construction of two berths with a total investment of $1.3 billion.
According to records, Myanmar’s Deputy Minister of Planning, Finance, and Industry Dr. U Set Aung, who is also chair of the Kyaukphyu SEZ Management Committee, and Director-General of the Department of Trade under the Ministry of Commerce U Minn Minn will serve as directors in the joint venture company. Meanwhile from Beijing, CITIC Group (Myanmar) Managing Director Yuan Shaobin and Deputy Managing Directors Liu Qing, Shan Liming, Ma Chuanfu, and Sun Tiejun will serve as Directors.
Chinese Whispers on Environmental Impact
Last year in July, the Chinese company hired a Canadian consulting engineering firm called Hatch, to supervise the Environmental and Social Impact Assessment (ESIA) and Preliminary Geological Survey (PGS) of the project. In September 2019, the company submitted a Project Proposal report (PPR) to the Ministry of Natural Resources and Environmental Protection (MONREC).
In its 2017 report, Kofi Annan’s Rakhine Advisory Commission recommended the Myanmar government conduct a Strategic Environmental Assessment (SEA) and labor assessment for the SEZ before beginning the ESIA process, in order to determine the likely consequences on local communities, as well as the project’s risks and benefits for other industries in the area.
However, in January, the Chinese firm stated that MONREC had determined the deep-sea port project required an ESIA under Myanmar law. The Chinese firm said it would choose an independent consultant to conduct the EIA through a bidding process. However, the Beijing-based company has yet to provide an update on the ESIA.
