China to hold 70% stake in Myanmar’s planned strategic seaport

Myanmar will hold a 30 percent stake in its strategic deep-water seaport project led by cash-rich China, giving Beijing a 70 percent interest, under their final agreement reached during recent talks between the two countries, according to a visiting senior Myanmar official.

That is an improvement for the emerging Southeast Asian economy from the initially proposed ratio of 15 percent for Myanmar versus 85 percent for China, as reported by some news media.

In an interview with NNA on Wednesday, Myanmar’s Union Minister Thaung Tun also said his country plans to gradually scale up the size of the port in line with transport demand.

He said the Kyaukpyu special economic zone project, including the port, in a coastal town along the Bay of Bengal in the western state of Rakhine will “soon go forward.”

Thaung Tun, who is also chairman of the Myanmar Investment Commission and national security advisor, stressed that the SEZ project must be “a win-win situation” for both Myanmar and China and beneficial to residents in Kyaukpyu.

The two countries have also agreed to develop the port under the principle of a “demand-based” and “step-by-step” approach in its initial phase, instead of launching it as a mega project.

“We would like to make sure that it is manageable,” he said in Tokyo on the sidelines of the 10th Mekong-Japan summit this week, which brought together the leaders of Cambodia, Laos, Myanmar, Thailand and Vietnam.

As for the KyauKpyu SEZ, a consortium led by the CITIC group, China’s largest state-backed conglomerate, has won the right to develop an industrial park as well as the deep-water port.

Myanmar depends on China for over 40 percent of its foreign debt, according to the International Monetary Fund.

The country has managed to reduce the cost of development and China’s stake in the port project from initial plans in a bid to cap its debt owed to Asia’s powerhouse, which is expanding its stakes in strategic infrastructure systems and natural resources in developing economies around the world in what many see as checkbook diplomacy.

For its part, Myanmar, with an overwhelming Buddhist population, has been criticized by the international community for its atrocities against the Rohingya Muslim minority, facing slowdowns in foreign direct investment for the second straight fiscal year to March 2018.

The World Bank has revised downward its economic growth forecast for Myanmar to 6.2 percent for 2018 from its previous projection of 6.7 percent, and to 6.5 percent for 2019 from 6.9 percent previously.

The European Union said last week that it was considering suspending preferential duties on imports from Myanmar due to the Rohingya issue.

Thaung Tun said his country’s “democracy is in a transition phase” and that it has stressed the rule of law and promoted human rights protection.

“If the EU decides to withdraw GSP (Generalized System of Preferences), it will hurt ordinary people (in Myanmar),” he said, adding it would be “not fair” for the EU to “take away employment” in the garment and other industries as a result of the measure.

The Myanmar government “is working to ensure that there are other alternatives” to providing investment opportunities “so that there will be a creation of jobs” in special economic zones, including Thilawa on the outskirts of commercial capital Yangon which was jointly developed by the private and public sectors of Japan and Myanmar.

“We are also trying to ensure that friends and neighboring countries — Japan, (South) Korea, Taiwan, Thailand and Singapore — all invest in Myanmar” to support the country’s high economic growth, said the minister.

Myanmar announced on Sept. 25 that it has confirmed commercial viability in the development of reserves in a gas field called the A-6 block in the southern Rakhine Basin offshore area.

The stake in the block is owned 40 percent each by Woodside Petroleum Ltd., Australia’s largest independent oil and gas firm, and France’s Total S.A., and the remaining 20 percent by Myanmar’s MPRL E&P.

Thaung Tun said that exploration will “start soon” and the country expects “a significant investment inflow” in the oil and gas sector, subsequently spurring investment in surrounding infrastructure facilities.

SOURCE: THE MAINICHI

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