Gov’t Spells Out Conditions for Signing BRI Deals with China

By Nan Lwin 30 May 2019

YANGON—A senior Myanmar official revealed that the government has drawn up a set of conditions for signing memorandums of understanding (MOUs) related to Beijing’s grand infrastructure projects in the country in order to avoid falling into a “debt trap” with China and to ensure the projects benefit both countries. The conditions include acquiring international financing and opening the tender process to non-Chinese companies.

It is the first time a government official has spoken about this issue since September, when Myanmar signed an MOU with China agreeing to establish the China-Myanmar Economic Corridor (CMEC) as part of Beijing’s Belt and Road Initiative (BRI).

Amid warnings from experts that the project could burden Myanmar with unsustainable debt, the permanent secretary of the Ministry of Planning and Finance, U Tun Tun Naing, said the government has discussed three key points with China regarding the CMEC MOU: that Myanmar must be allowed to seek financing from international financial institutions to implement the projects; that the government be allowed to invite international tenders, so as to ensure international investment in the projects; and that the proposed projects must be chosen by Myanmar while creating mutual benefits for both sides.

“After China agreed to all of our demands, the minister signed the MOU,” said U Tun Tun Naing at a press conference in Naypyitaw.

“[Planning and Finance] Minister U Soe Win has scrutinized every sentence and word [of the MOU],” he stressed.

In September, the CMEC MOU was signed by U Soe Win and He Lifeng, chairman of the National Development and Reform Commission (NDRC), China’s top economic planning agency.

The estimated 1,700-km-long corridor will connect Kunming, the capital of China’s Yunnan Province, to Myanmar’s major economic checkpoints—first to Mandalay in central Myanmar, and then east to Yangon and west to the Kyaukphyu Special Economic Zone (SEZ).

Chinese President Xi Jinping’s signature foreign policy unveiled in 2013, the BRI is a grand vision to revive the historic Silk Road trade route and create a “21st-Century Maritime Silk Road.” Ultimately planning to encompass nearly 70 countries and two-thirds of the world’s population, it would create a network of trade routes from China to Europe passing through Central Asia, the Middle East and Russia.

Lying at the junction of South and Southeast Asia, and between the Indian Ocean and southwestern China’s landlocked Yunnan province, Myanmar occupies a unique geographical position within the ambitious international development plan.

Myanmar State Counselor Daw Aung San Suu Kyi attended the 2nd Belt and Road forum in April in Beijing. During her visit, Myanmar and China signed three agreements focused on strengthening cooperation on trade and technology. Myanmar and China also signed a document outlining a list of early harvest projects for the CMEC to facilitate the implementation of infrastructure projects including building economic zones and upgrading roads across the country.

U Tun Tun Naing said China has proposed a total of 38 projects under the CMEC. However, Myanmar only approved nine early harvest projects at the 2nd BRI forum.

When asked for a full list of the early-harvest projects, the permanent secretary said, “I don’t remember the details but the projects are under review by the related ministries.” Of the nine projects he only mentioned three economic cooperation zones in Kachin and Shan states and the Muse-Mandalay railway project, all of which are already known to the public. Experts have pointed out that the government still has not released information on how the CMEC projects will be implemented on the ground, and the general public has scarce knowledge of the projects.

U Tun Tun Naing said, “Each of the projects’ details will be publicized when it comes time to make decisions on implementation.”

The Ministry of Planning and Finance, the government’s National Economic Coordination Committee (NECC) and other related ministries have vetted each project, he added.

At the first meeting of a BRI steering committee in February, the State Counselor said thorough scrutiny of BRI projects is needed to assess their likely short- and long-term impacts on the country and the public.

She emphasized the need “to make sure that the selected projects are in conformity with national plans, policies and domestic procedures.”

Myanmar inked a separate framework agreement in November for China’s ambitious Kyaukphyu Special Economic Zone (SEZ), a key strategic project under the BRI that is expected to boost development in China’s landlocked Yunnan province and provide China with direct access to the Indian Ocean, allowing its oil imports to bypass the Strait of Malacca.

Even as BRI projects face pushback among Southeast Asian countries, the vice chairman of China’s top economic planning agency pressed the State Counselor to work out an implementation plan for the CMEC during his visit to Naypyitaw in November.

In October, two state-owned companies, China Railway Eryuan Engineering Group (China Railway Group Ltd) and Myanmar Railways signed an MOU on a feasibility study for the proposed railway line from Muse to Mandalay. The two cities are envisioned as key hubs in a plan to improve connectivity in Southeast Asia. Myanmar officials are currently reviewing the study and the final decision for construction is to be made at the end of this year.

“China proposed 38 projects, and our ministries also proposed many projects. But, we will only implement the projects that can guarantee mutual benefits for both sides,” the permanent secretary said.

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