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State Counsellor Stresses Belt and Road Needs to Align National Priorities

At the BRI summit in May, the State Counsellor stressed that BRI-led projects should complement national priorities and take into account the welfare of local communities, and highlighted the need to ensure responsible business practice.

Local analysts and commentators in Myanmar have spelt out some of the benefits and risks of Myanmar’s participation in Beijing’s Belt and Road Initiative (BRI).

Launched by Chinese President Xi Jinping in 2013 as “One Belt, One Road”, the initiative involves China underwriting billion-dollar investments, mainly in physical infrastructure, in countries along the land-based Silk Road Economic Belt and the 21st-century Maritime Silk Road, creating an extensive trade network by linking the continents of Asia, Europe and Africa. The financial commitment illustrates the ambition: China is spending roughly US$150 billion a year in the 68 countries which have signed on to the project.

While President Xi announced his grand plan when he visited Kazakhstan and Indonesia in 2013, the BRI did not attract the attention of the government, private sector and media in Myanmar until State Counsellor Daw Aung San Suu Kyi paid a visit to the Belt and Road Forum for International Cooperation in the Chinese capital in May.

During a roundtable session of the forum on May 15, the State Counsellor said that connectivity covers not only physical or infrastructure connectivity, but also institutional connectivity and people-to-people connectivity. Because of its multi-facetted nature, connectivity cooperation would need to complement existing national and regional platforms.

Daw Suu also stressed that BRI-led projects would be the most effective if they are designed to re-enforce or complement existing or planned projects of participating countries and regional organisations. This is because the priority must be to take into account the expectations and concerns of individual governments and the peoples.

She added that each partner country has its own considerations and the best multi-national initiatives are those which align well with national plans. Myanmar has laid out its own Road Network Master Plan and it is also taking part in a number of ongoing regional projects.

The State Counsellor emphasised the need to ensure that business activities are carried out in a socially and environmentally responsible manner. Conservation of the natural environment and welfare of local communities are essential for the success of development projects. The creation of employment opportunities for the local people is also an important factor.

The State Counsellor’s concerns echo those of the business community.

The McKinsey senior partner told The Myanmar Times in June that success of the BRI in Myanmar would depend on the country creating an investor-friendly environment and developing sufficient human capital. Additionally, human capital poses a bigger challenge than the financial issue and would determine how the country fares compared to the rest of ASEAN.

“Myanmar, given its size, population and proximity, would be very well-positioned to benefit from those investment flows. Whether in fact it does, depends on the investor-friendly environment and the availability of human capital for support.

“I don’t think financial capital is the big issue here – there’s more than enough money around – but how to put to good use in getting good projects, earn a return, and can be sustainably managed by a local workforce determines how much of that capital actually comes to Myanmar,” he said.

Benefits and risks

Myanmar’s role in the BRI is very clear and obvious. Local economists are estimating the benefits and risks associated with the country hopping on the BRI train.

Opportunities are policy coordination, which contributes to a better Sino-Myanmar strategic cooperation and which offers bilateral policy coordination in multilateral frameworks.

The benefits also include a boost for infrastructure and connectivity, fewer barriers for trade via bilateral economic and trade cooperation and financial integration, resulting in more foreign direct investment (FDI), and a better standard of living.

At the same time, BRI presents many challenges. It is essentially a great-power game at a multilateral level, according to numerous analysts The Myanmar Times interviewed. Additionally, there are cognitive differences between China and Myanmar on the definition of a win-win cooperation. Myanmar’s internal dilemmas and issues regarding religion, ethnic minorities, devolution and the peace process are all uncertainties which might negatively affect Sino-Myanmar relations.

U Aye Lwin, member of NLD Central Executive Economic Committee, said that high-level cooperation such as G-to-G coordination is required but it is imperative to strengthen civil and non-governmental interactions between the two countries.

He suggested that it is necessary to leverage traditional media as well as other new channels to promote Myanmar and facilitate bilateral relations with short-term and long-term considerations taken into account.
FDI and foreign loan

China is the top investor in the country, accounting for more than a quarter (26 percent) of the total foreign investment as of July 31, according to the data released from Directorate of Investment and Company Administration (DICA).

The picture is similar in terms of foreign debt: Myanmar has accumulated foreign loan totalling US$9.16 billion and 44pc of that sum was borrowed from China.

Economist U Khin Maung Nyo, vice president of Myanmar Economics Association noted that China has been offering loans to some of the countries in Asia. But countries such as Myanmar should be concerned with the debt trap.

U Aye Lwin added that the country is situated between two giant markets but it has so far failed to translate that geographical advantage into economic strength in the past years.

“It is not possible to deviate from the direction set by your neighbouring countries.

“This time, I think it is a good opportunity to get ahead with the economic development scheme of the region.

“The important priority is to improve infrastructure to the areas covered by the BRI.

Earlier, The Myanmar Times interviewed Jonathan Woetzel, McKinsey senior partner, Bernard Chan, president of Asia Financial Holdings and grandson of Chin Sophonpanich, as well as domestic and international businesses from various countries and industries on the scheme’s implications, opportunities and challenges for Myanmar.

Mr Chan noted that physical infrastructure is the first phase of the BRI.

“The first wave of these so-called initiatives will be about infrastructure, followed by trade and then other development such as tourism. Infrastructure is the most imminent,” he said.

 

Source: The Myanmar Times

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