The Wartime Supply Road That Became Myanmar’s Thriving Trade Route

YANGON — As trucks barrel down the well-paved road between Mandalay and the southwest of China, few of the men working on the construction sites lining the road probably realize that it was once a vital wartime supply route.

As Myanmar’s overland tradewith China expands, the roadis now being revived as a bustling trade artery between the two countries.

In Mandalay, the country’s second city and ancient capital, an unprecedented construction boom is underway.

Work is in full-swing at Mingalar Mandalay, a huge commercial district scheduled for completion next year. Phase One of the development includes a 4-story super center, shophouses, condominium and hotel, as well as Myanmar’s first ever pedestrian area. Phase One is complete and is open for business. Phase Two will feature a 12-story grade-A office tower, high-end condominium, private villas, and a 5-star Pullman hotel operated by France’s AccorHotels group.

Elsewhere in the city, the country’s largest international conference hall and an 18-story tower condominium are being built as part of a project led by local real estate developer New Star Light Construction group.

A native of Shan State with Chinese roots, company founder Kyaw Kyaw Win, is a scion of the Yunnan merchants that drove centuries of cross-border tradein the area.

Kyaw Kyaw Win believes the new impetus could see tradewith China could double by 2018. Betting on Mandalay increasing in importance as a transport hub, he intends to expand property development operations.

But competition is picking up in Mandalay’s booming real estate market. Kerry Properties, a major Hong Kong developer, has acquired development rights to some 30 hectares of idle land owned by the national railway operator, and announced plans to build a distribution center for imports from China.

Located about 60km southwest of the city along Ayeyawaddy River, the Mandalay Myotha Industrial Park is a mammoth joint development project involving the local government and local company Royal Hi-Tech Group (RHGC). Occupying some 4,000 hectares of land, the MMIP is twice the size of the Thilawa Special Economic zone in Yangon.

Plot sales started last year and four companies, including a major Hong Kong lumber company and a Chinese confectionery maker, already run plants in the park.

The MMIP will eventually create 250,000 jobs, predicts Aung Win Khaing, the RHGC chief who serves as chairman of the park’s development company. That means talented people will no longer need to leave Mandalay in search of work, he said.

Aung Win Khaing, another businessman of Chinese heritage, founded RHGC in the 1990s and has expanded it into a conglomerate composed mainly of manufacturers which are scarce in Myanmar’s northern areas, such as cement and lumber businesses.

His group has already poured $80 million into the MMIP project, and he is now immersed in raising funds to promote its development from general investors in Mandalay and the International Finance Corp.

Mandalay sits at the crossroads between China, India and ASEAN, with 3 billion consumers in surrounding markets, said Aung Win Khaing. By capitalizing on its location, he argued, the city can become the core of Myanmar’s economy.

The road north toward China is part of what was known as the “Ensho Route” to the Japanese during World War II. The name is derived from the word “enjo,” or support, and Sho Kaiseki, or Chiang Kai-shek, the leader of the Chinese Nationalist forces.

The stretch between Mandalay and Muse was built in just one year, with some 200,000 workers mobilized, to ensure supplies could reach China from the Indian Ocean.

The end of the war saw the road lose much of its significance, and it was left to decay amid strained relations between Myanmar under Gen. Ne Win and Communist China.

But when Myanmar’s junta began to strengthen ties with Beijing in response to tightening Western sanctions in the late 1990s, trade between Myanmar and China grew in volume and importance.

At that point, Asia World, led by Steven Law, set about repairing and expanding the route. By 1998, the conglomerate had shortened the journey time to around 10 hours, down from several days.

After Myanmar began the process of democratization in 2011, the military government led by Thein Sein tried to reduce the country’s dependence on China. But inflows of goods have kept growing nevertheless.

As traffic volumes soared, Asia World started building a bypass last year. A six-hour drive on the road leads to the highland city of Lashio in northern Shan State.

Lashio shows even more signs of China’s influence. Its main street is lined with stalls selling Chinese cakes produced at a local factory.

Young girls fluent in both Burmese and Chinese hawk the snacks to the throngs of Chinese tourists who account for 60% of the guests at a new hotel — a joint venture between a Chinese investor and a Myanmar company — that opened this year.

It does not take long to notice that living standards in Lashio are considerably higher than elsewhere in the country. A sales clerk at a household appliance store said they sell around 20 washing machines every month, even though only 10% of the country’s households have one. The store displays the kind of high-end appliances that are rarely seen even in Yangon. Speakers priced over 120,000 kyat ($94.52) are hot-sellers, according to the clerk.

An uptown residential district is home to more than 10 motorbike shops, where Chinese brands Kenbo and Jianbo go for about 600,000 kyat per unit.

Kan Kyi Maung, the owner of one of the dealers, says he can shift six or seven units on a busy day. Lashio offers many business opportunities because retailers can easily get hold of products from China and capitalize on local residents’ high income, Kan Kyi Maung explains.

Four hours further north lies the border town of Muse. Scores of 10-ton trucks, mostly Chinese-made, trundle along the mountain road every hour.

Eventually, the cityscape of Ruili on the Chinese side of the river emerges from the bamboo forests. Bristling with high-rises under construction, Muse appears to be undergoing an even bigger construction boom than Lashio. The city is all but completely integrated with China.

China Mobile SIM cards are on sale just in front of the three border gates, catering to locals working in Ruili.

For these workers, hopping over the border to earn some cash is quick and easy. A certificate for a seven-day stay costs a mere 1,000 kyat, while immigration procedures take a matter of minutes. Many people in Muse work in Ruili during the week and spend weekends at home.

Shein Thu Shauk runs a store selling various goods in front of the immigration office, which is often packed with workers returning from the Chinese side laden with electrical appliances and clothes.

Her husband owns a car wash on the Chinese side and she crosses the border herself twice a month to pick up stock.

The couple has five children aged 7 to 26; the three eldest live in China. She says her children have no interest in staying in Myanmar, adding she hopes they will carve out their own futures in China.

In August, Aung San Suu Kyi made Beijing her first diplomatic port of call outside ASEAN, hinting at her government’s eagerness to increase trade with China.

The country’s economic development has traditionally been driven by Yangon. But the rapid development of the area between Mandalay and Muse points to the huge growth potential of northern Myanmar. The road that once carried essential supplies to China is now emerging as an artery taking vital wealth in the other direction.


Source: Nikkei Asian Review

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