China Backs Myanmar Probe of Controversial Border ‘New City’ Backed by Chinese Investors

By Nan Lwin 26 August 2020

YANGON—China on Tuesday expressed support for Myanmar’s move to investigate irregularities surrounding a controversial city development project near the Thai border in Karen State run by

Chinese investors accused of illegal casino activities in Cambodia and the Philippines.

Known locally as “China Town”, the planned new city project is a collaboration between the Karen State Border Guard Force—a Myanmar military-backed armed group led by Colonel Chit Thu and formerly known as the Democratic Karen Buddhist Army (DKBA)—and a Hong Kong-registered company, Yatai International Holding Group (IHG).

In 2017 a partnership agreement was signed for the project, which was initiated by the China Federation of Overseas Chinese Entrepreneurs and officially named the Myanmar Yatai Shwe Kokko Special Economic Zone. A promotional video by IHG advertises the project as the “only area in Shwekoko that is authorized to operate casinos,” and casinos are the zone’s primary source of revenue, according to its business plan.

The project has drawn criticism from locals over what they see as a lack of transparency, as well as confusion over the scale of construction and a growing influx of Chinese migrants. In addition, suspicions have been aroused over possible illicit activity and concerns about the social impacts of casino businesses. In June, the Myanmar government said it had formed a tribunal to investigate the project. The team has been unable to visit the site, however, due to COVID-19.

The Chinese Embassy in Myanmar on Tuesday said it was aware of media reports describing locals’ concerns over the negative impacts of the project. “The Chinese and Myanmar governments attach great importance to related issues and have always maintained close communication and coordination,” the statement said.

The embassy’s statement referred to the government’s special agency set up to investigate the project “in accordance with laws and regulations.” It added, “China expresses its support [for] this.”

IHG’s website also claims that the project is a part of China’s ambitious Belt and Road Initiative (BRI) and that the goal of the project is to make a significant contribution to the huge infrastructure scheme.

According to the Chinese Embassy, the project is a third-country investment and has nothing to do with the BRI. It stressed that the Chinese and Myanmar governments have a clear consensus on this.

In 2018, the Myanmar Investment Commission (MIC) approved US$22.5 million (30.42 billion kyats) in investments for the Shwe Kokko development project, including the construction of 59 villas within three years on 10.3 hectares of land in Myawaddy Township. In 2019, local media reported that construction activities in Myawaddy had far exceeded the approved scale of the project. Later, the project was temporarily suspended for breaching investment regulations following on-site investigations by Karen State authorities.

According to the IHG website, the company’s plans call for the entire project to cover nearly 30,000 acres (12,140 hectares) stretching for 19 km along the border with Thailand at an estimated cost of $15 billion. The development involves luxury housing, condominiums, hotels, shopping centers, golf courses, casinos, gambling and entertainment, tourism, culture and agriculture.

The Chinese Embassy said China’s position on the issue of cross-border gambling is consistent and clear—that Chinese capital is not allowed to invest in local casinos, Chinese citizens are not allowed to participate in casino operations, and Chinese citizens are not allowed to visit local casinos.

The embassy said China is strengthening its cooperation on law enforcement and security with Myanmar, stepping up efforts to crack down on cross-border illegal and criminal activities such as illegal gambling and telecommunications fraud, and safeguarding social security.

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