Chinese-led group to build Indian Ocean port, industrial park

Myanmar has chosen a consortium of mostly Chinese companies to develop a special economic zone sitting near plentiful offshore natural gas reserves.

The Kyaukphyu zone, in the western state of Rakhine, already has an oil and gas pipeline connecting it to China, whose influence over southern neighbor Myanmar could grow as a result of the new investments.

Situated on the Indian Ocean coast, roughly 1,700-hectare site was one of three special economic zones designated in 2014. Companies investing there can qualify for tax incentives.

To speed up the zone’s development, Myanmar’s government in 2014 decided to hold tenders for an industrial park and a deep-water port to be built and operated as public-private partnerships.

The Chinese-led consortium beat 10 or so other bidders to win the development rights late last year. The six companies in the group include state-owned conglomerate Citic, China Harbour Engineering and the Charoen Pokphand group, a Thai conglomerate.

By 2025, the consortium plans to build a roughly 1,000-hectare industrial park and Myanmar’s highest-capacity port, with facilities able to handle 7 million 20-foot-equivalent-units of cargo a year. Total project costs are seen running to a few billion dollars. The projects are expected to lead to the creation of some 100,000 jobs.

Kyaukphyu holds strategic importance for Chinese energy security. China National Petroleum Corp. completed a pipeline linking the coast there with the Chinese inland city of Chongqing in January 2015. Middle Eastern crude and gas drilled offshore flow through it to China, slashing transport time compared with the heavily plied Strait of Malacca shipping route. The Citic-led consortium’s bid thus accords with China’s desire to solidify its foothold in Kyaukphyu.

China sidled up to Myanmar during the Southeast Asian nation’s long years of international isolation under military rule, providing investment in pipelines, hydropower plants and other infrastructure. But Chinese influence over Myanmar has waned in relative terms since the latter embraced civilian government in 2011 and renewed relations with the international community.

This shift could accelerate with the opposition National League for Democracy’s landslide in this past November’s parliamentary elections. The NLD will form a new government this spring, and its leader, Western-leaning democracy activist Aung San Suu Kyi, is expected to seek to move the country out of China’s orbit. For China, Kyaukphyu represents a way to stay connected after the change in government.

Work is underway on Myanmar’s two other special economic zones. The Thilawa zone sits near Yangon, the country’s most populous city, while Dawei is in the southeast, near the Thai border. Japan’s public and private sectors are cooperating in industrial park development and other aspects of these projects.

Source: NIKKEI

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