Myanmar main beneficiary of Kyaukphyu: CITIC

SU PHYO WINTHOMPSON CHAU 23 NOV 2017

Kyaukphyu, as pictured in 2012. The area has been earmarked for development of an SEZ, approvals for which are still pending. Photo: EPA

YUAN Shaobin, executive president of CITIC Myanmar, which is the developer of a proposed Special Economic Zone (SEZ) in Rakhine, disagrees with critics who have accused China of taking an unfairly large stake in the project.

He insisted that Kyaukphyu SEZ will spur much-needed developments in the region and that comparing Kyaukphyu’s ownership structure to that of the Japan-backed Thilawa SEZ in Yangon is “unfair” and “not correct.”

Mr Yuan referred specifically to comments by Simon Tay, chair of the Singapore Institute of International Affairs, who told The Myanmar Times in June that the difference in foreign ownership between Thilawa and Kyaukphyu is very “stark” and “noticeable”.

“The Japanese really made an effort to work with Myanmar by giving Myanmar 51 percent. It is an important [gesture] as a sign of friendship and equality,” Mr Tay stated, adding that if he were to advise the Chinese consortium he “would never ask for 85 percent”.

Under the shareholder structure permitted by the government under U Thein Sein, it was agreed that China would have an 85pc stake in the port, with Myanmar holding the remaining 15pc.

Since the current government took charge, the Myanmar consortium has made new demands to raise its stake to 30pc as well as receive dividends, but does not what to shoulder any financing responsibility. That has led to delays in approving the project, which is currently still pending.

SEZ will benefit Rakhine

Kyaukphyu in Rakhine State is the location for a proposed SEZ which will include an industrial park and a deep-sea port. In 2015, a CITIC-led consortium involving China Harbor Engineering, China Merchants, TEDA Investment, Yunnan Construction Engineering Group and Thailand’s Charoen Pokphand Group won the bid to develop both the port and the industrial park.

But the project drew flak from critics, who say the port holds more benefits for the Chinese than locals, as it serves as a gateway for China to the Middle East, reducing the country’s reliance on the Strait of Malacca.

However, Mr Yuan told The Myanmar Times that the mega-project will mainly benefit Myanmar’s economy and support the growth of Yangon, Mandalay and Nay Pyi Taw. Despite the project being a core part of China's Belt and Road Initiative, he argued that the benefits for China “won’t be much”.

For one, employment opportunities will be made available for the local population, with around 2-3 thousand jobs created during the construction period of the port.

“It [Kyaukphyu SEZ] will be beneficial to Myanmar and, of course, Rakhine. And when the deep-sea port becomes operational, we will be connected to Yangon, Nay Pyi Taw and Mandalay. It will help these three big cities do business and develop logistics networks,” he said.

“It is hard to say when this project could benefit China -- it could take years. However, the benefits won’t be much. Myanmar will take 70pc and China, 30pc of the benefits.”

Mr Yuan added that the distance between coastal China and the Kyaukphyu port is too great to render the logistics cost competitive compared to the Strait of Malacca.

Foreign investments

Warren Hua, legal advisor to CITIC Construction, argued that by investing in the development of the port and industrial park, the Chinese state-owned bank is in fact lending Rakhine a hand in improving its existing infrastructure.

“What is going to be done by CITIC in Myanmar is exactly what happened in China years ago, before the Chinese economy boomed. In the mid-90’s, China lacked the money and technology to develop its infrastructure facilities. We introduced a lot of foreign investors to come into China to help us build ports and highways – that’s why the economy developed,” he said.

For example, CITIC has plans to build a highway connecting Kyaukphyu port to Nay Pyi Taw. Through the capital city, the port would also be connected to Yangon and Mandalay, enabling it to connect with and serve nearly 60pc of Myanmar.

“Without these facilities, who would be willing to come and invest here?”

Now, the ball is in Nay Pyi Taw’s court. CITIC said that they have asked Nay Pyi Taw to approve an Environmental Impact Assessment (EIA) application since the beginning of this year but there has been no response from the government.

“We will do an EIA. We note that any kind of investment or development will influence the environment – both negative and positive,” Mr Yuan said in relation to the environmental concerns.

Mr Chua said it will take about 1.5 years to complete the EIA process. For now, “we are still waiting for the Myanmar government to issue the EIA,” he continued.

Ref:https://www.mmtimes.com/news/myanmar-main-beneficiary-kyaukphyu-citic.html