Business

China-Backed Venture Proposes $800M Development Near Kyaukphyu Seaport

By Moe Myint 3 July 2019

YANGON—A Chinese petrochemical giant and a Myanmar firm have jointly proposed to the Rakhine State government the development of nearly US$800 million (1.21 trillion kyats) worth of projects near the Kyaukphyu Special Economic Zone (SEZ)’s deep seaport and Ramree Island.

The centerpiece of the proposal is a new logistics terminal on Maday Island situated 10 kilometers east of Kyaukphyu to support the deep seaport project. It also includes a project in Za Yet Pyin Village on Ramree Island called the Sea View Beach, 40 kilometers south of Kyaukphyu District, as well as a US$5 million fishery in the Than Zit River.

Myanmar Bright Prospect International Logistics (MBPIL) director U Ding Ying, an ethnic Kachin businessman, held a meeting with Rakhine State Chief Minister U Nyi Pu, which was also attended by several state cabinet members, in Sittwe on June 28, according to Rakhine State Municipal Affairs Minister U Win Myint. During the meeting, U Ding Ying laid out MBPIL’s plans, including an estimated budget for each project, to the cabinet members, the minister said.

The ruling National League for Democracy’s ministers in the state government promised to help the developer clear the necessary legal hurdles in order to implement the project “as soon as possible,” as they believe it will create job opportunities for local residents and boost regional infrastructure development.

Chief Minister Nyi Pu urged the developer to transparently communicate the advantages of the projects to local residents and the Union government’s Myanmar Investment Commission (MIC), which would have to approve the project. According to U Win Myint, the developer told the ministers that it has already purchased land from local residents and wants to start the projects as soon as possible.

“To my understanding, the proposed jetty would serve the Kyaukphyu SEZ,” U Win Myint said.

He could not provide specific information on the projects, as the detailed proposals were in the hands of other state ministers.

Hengyi-backed JV

MBPIL is joint venture (JV) company established by Chinese firm Yunnan Baoshan Hengyi Industry Group and Myanmar firm Delco. MBPIL officially registered as a foreign company with the Directorate of Investment and Company Administration (DICA) in April 2019.

The Irrawaddy has learned Hengyi already operates in northern Myanmar’s Kachin State under the name Yunnan Tengchong Heng Young Investment Company (YTHYIC). Since 2018, YTHYIC has been jointly developing the US$400-million Myitkyina Economic Zone on 4,700 acres of land along the historic Ledo Road with the Kachin State government. The project has drawn criticism for lacking transparency.

YTHYIC is owned by Hengyi Group.

The economic zone is located 25 kilometers from the Myitkyina urban area and is expected to comprise nearly 500 factories and 5,000 buildings. Some experts speculate that the project is part of China’s strategic plan to create a link with India as part of Beijing’s Belt and Road Initiative (BRI). The previous Chinese ambassador to Myanmar, Hong Liang, said the zone will be “a crucial part of China’s ambitious BRI” under the China-Myanmar Economic Corridor agreement.

Chinese President Xi Jinping’s signature project, the BRI aims to create a comprehensive transport and trade route linking China and Europe through Central Asia, the Middle East and Russia. Myanmar’s Kyaukphyu deep seaport is a vital part of the plan, housing the terminus of Chinese oil and gas pipelines. Its 12 massive crude oil tanks have been pumping 22 million tons of crude oil from Kyaukphyu to China’s Yunnan province annually since May 2017.

To confirm the relationship between Hengyi and its Myanmar partner, this reporter visited MBPIL’s Yangon office on New University Avenue in Bahan Township on July 1 in an effort to meet with director U Ding Ying. A member of the office staff said her boss was traveling abroad that day. But a male staff member who joined the Sittwe trip along with U Ding Ying confirmed the discussions.

He said the company has budgeted between US$300-625 million for the new terminal project and US$158 million for Ramree Sea View Resort as well as US$5 million for the fishery. He clarified that the new jetty would be used to facilitate delivery of construction equipment and materials for the Kyaukphyu deep seaport.

Locations of JV-proposed projects in northern Rakhine’s Kyaukphyu District.

The land for the projects has already been bought from local residents, he said, adding that the beach project on Ramree Island is to be implemented along a 4-kilometer stretch of seashore in Za Yet Pyin Village. When asked whether the terminal project on Maday Island has any official affiliation with CITIC, the winning bidder on the deep seaport project, the employee said MBPIL is a separate JV that is still trying to get approval for the project at the Union level.

In general, state and regional governments are only authorized to approve development projects worth less than US$5 million. Larger investments are handled directly at the Union Level.

Calls for transparency  

Despite the state government’s green light for the Hengyi-backed developer, Maday Island residents and Arakanese lawmakers said they had received no information about the new jetty project and fishery business of Yangon-based Delco. Among those calling for more details were Daw Htoot May, an Arakanese lawmaker in the Upper House of the Union Parliament, and a representative of the Kyaukphyu Rural Development Association (KRDA), a longtime monitor of rights violations related to oil and gas pipeline projects, as well as land-grabbing issues.

Kyaukphyu-based KRDA coordinator Ko Tun Kyi said, “We still have no idea about the latest development projects on Maday Island.”

Daw Htoot May urged the state government to publicly elaborate the benefits and potential harms of the projects, in line with its responsibilities as a democratically elected administration. She said she personally welcomes foreign investment projects that embrace a “do-no-harm” approach, but urged authorities to put safeguards in place for local residents before implementation begins.

“I don’t think it’s too late to publicly reveal their plans,” Daw Htoot May said.

Referring to Delco’s fishery project, she said that if foreign investors were to take small businesses into Rakhine along with large-scale projects in order to address the food supply-and-demand gap, locals’ livelihoods would be harmed sooner or later. She pointed out that locals suffered rights violations and other negative impacts during the implementation of the pipeline project by the Chinese state-owned China National Petroleum Corp. in 2010.

In particular, locals faced land confiscations, and inconsistent or unpaid compensation, by the foreign developer for their land used in the pipeline project under the CNPC project.

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