The future of a major Chinese-backed economic zone in troubled Rakhine State remains in the balance amid repeated delays.
In 2015, Myanmar signed a deal with the Chinese consortium led by the state-run Citic to develop the US$10-billion port and industrial zone.
China said the development would create 100,000 jobs but it has been delayed, it part by the forced departure of more than 700,000 Muslim Rohingya from areas to the north into neighbouring Bangladesh since August 25.
Rakhine is rich in natural resources, with South Korea’s Daewoo discovering 4.5 trillion cubic feet of gas reserves off the coast in 2004. This attracted China’s attention, as it looked to diversify its fuel sources and extend its influence.
China appears to be looking for a deep-sea port to service its impoverished southwestern provinces, including Yunnan, Guangxi and Guizhou, and a strategic foothold in the Indian Ocean.
In 2008, the state-run China National Petroleum Cooperation was permitted by the Burmese junta to buy gas from the Shwe reserve in Rakhine’s offshore basin. In 2013 China began transporting gas from Kyaukphyu to Yunnan using its new gas pipeline. Construction of the pipeline began in 2010 and it reportedly delivers up to 12 billion cubic metres of gas per year.
In 2008, the junta gave the all clear for China to work on a parallel crude-oil pipeline, which opened this April (pictured) after a two-year delay, sending oil from Rakhine’s island of Made.
Kyaukpyu is one of three large special economic zones (SEZ) launched by under the quasi-civilian government of former president Thein Sein. Of them only one is operating: Thilawa, near Yangon, is run in collaboration with Japan. The third, being established with Thailand in southerly Tanintharyi Region’s Dawei is making slow progress.
It is feared that if the authorities fail to fund Kyaukpyu, Myanmar may be forced to take out Chinese loans. Last month China agreed to take a 70-per-cent stake in the Kyaukpyu project.
Oo Maung, vice chairman of Myanmar’s committee overseeing the SEZ, said the government had pushed for a bigger slice of the port in negotiations with the consortium led by Citic.
“Locals from Rakhine and communities across Myanmar think that the previous 85/15-per-cent agreement is unfair to Myanmar. People disagree with the plan and the government is now trying to make a better deal,” Oo Maung said last month.
Under China’s ambitious Belt and Road Initiative, Laos has reportedly borrowed a US$2.1-billion loan from the Chinese Export-Import Bank to help finance its 30-per-cent stake in the Sino-Laos railway.
Vientiane allegedly borrowed US$630 million from China, amounting to 5 per cent of landlocked Laos’ annual GDP in 2015.
The opening of the crude-oil pipeline from Rakhine State to China in April. Picture credit: YouTube