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Too close for comfort: China to build port in Myanmar, 3rd in India’s vicinity

Hindustan Times logo Hindustan Times 09-11-2018

India will be closely following the developments following an agreement between China and Myanmar on Thursday to develop a multi-billion dollar deep sea port in Kyaukpyu on the coast of Bay of Bengal, third in India’s neighbourhood.

China has already helped build port in Gwadar in Pakistan and Hambantota in Sri Lanka. It is also funding the development of the Chittagong port in Bangladesh.

Located on the western coast of Myanmar in Rakhine state, the scaled-down port, part of a special economic zone (SEZ), when developed will not be far away from a submarine base India is developing on its east coast, close to Vishakhapatnam.

Though the total China-Myanmar investment into the Kyaukpyu project has been scaled down to $1.3 billion (initial phase) from the earlier $7 billion figure, the port will be of great strategic significance to China as it navigates its way into the Bay of Bengal – and the Indian Ocean -- considered within New Delhi’s range of influence.

China’s investment in the project was reduced following Myanmar’s concerns of falling into a debt-trap.

Nonetheless, the port will boost the China-Myanmar economic corridor and will be another road-sea link under President Xi Jinping’s Belt and Road Initiative (BRI).

Oil and natural gas pipelines are already functioning between the fishing town of Kyaukpyu and Kunming in China’s Yunnan province, bordering Myanmar.

For Myanmar, the project promises employment to thousands and billions in tax revenue in the future, according to Chinese media. The deal took years to finalise because of differences on “…financing and other issues,” the tabloid Global Times said in report.

“At a ceremony in the Myanmar capital of Nay Pyi Taw, the Chinese consortium led by State-owned conglomerate Citic Group signed the framework agreement with the Kyaukpyu Special Economic Zone Management Committee on the development of the deep-sea port,” the report said.

China will invest 70 per cent of the $1.3 billion while Myanmar will finance the rest in the initial phase, which will include two berths.

The signing of the framework agreement marks a significant step for the port project, which has been stalled since 2015, and for the continued implementation of BRI, under increased scrutiny because of cases such as the Kyaukpyu port project.

“Prolonged negotiations fueled criticism of the BRI, which some foreign critics said could add to local debts and even threaten other countries’ sovereignty,” the GT report said.

China has maintained that the BRI is an open platform to facilitate regional and global economic integration and help countries along the routes with economic growth and job creation.

“The Kyaukpyu project is estimated to bring 100,000 jobs to the local community and will contribute as much as $15 billion in tax revenue to Myanmar. Once completed, the port will have an annual gross output of $3.2 billion,” the report added.

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The CITIC Consortium comprises China Harbor Engineering Company Ltd. (CHEC), China Merchants Holdings (International) Co. LTD (CMHI), TEDA Investment Holding (TEDA) and Yunnan Construction Engineering Group(YNJG) as well as Thailand’s Charoen Pokphand Group Company Limited (CP Group).

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