Deal to Be Signed for BRI-Related Economic Zone in Myanmar's Kachin State

By Nan Lwin 7 October 2019

YANGON – The Kachin State government is planning to sign an agreement next month on the establishment of a China-backed economic zone, paving the way for the Belt and Road Initiative (BRI) project.

Under the China-Myanmar Economic Corridor (CMEC) agreement, which is also a part of Chinese President Xi Jinping’s grand BRI vision, Kachin State signed a memorandum of understanding (MOU) with Yunnan Tengchong Heng Yong Investment Company (YTHIC) in May 2018 for implementation of the Myitkyina Economic Development Zone.

The project, also known as the Namjim Industrial Zone, is 25 km from Myitkyina, the Kachin capital.

“We are expected to sign an agreement next month,” the Kachin State chief minister, Dr. Khet Aung, told The Irrawaddy.

“Currently, we are finalizing detailed negotiations and a full master plan from the Chinese company.”

YTHIC and the Myitkyina zone committee, formed by the Kachin State government, are expected to build the massive site on approximately 19 sq. km along the historic Ledo Road.

The road was built during World War II so the Allies could supply Chinese troops fighting the Japanese. It linked Ledo, in Indian Assam, and Kunming in China’s Yunnan Province.

The project is expected to cost more than US$400 million (612.5 billion kyats) and include nearly 500 factories and 5,000 buildings.

Kachin’s chief minister said the state government would sign a joint-venture agreement after the initial deal.

He said domestic investors would be invited to back the project.

“We hope the project construction will get off the ground early next year,” the chief minister said.

The development zone is one of the lesser-known Chinese-backed projects in Kachin State and has received criticism over a lack of transparency.

In July, the Kachin government first admitted it was engaging in discussions with the Chinese company over the project.

After he visited the site in December, then Chinese Ambassador Hong Liang said the zone would be a crucial part of the BRI.

The BRI is Xi’s grand vision to create trade routes to Europe, Central and Western Asia, Africa and Russia.

It aims to link nearly 70 countries and two-thirds of the world’s population.

According to the MOU viewed by The Irrawaddy, YTHIC and the state government agreed to establish a joint-venture company to implement the zone.

Both sides agreed that YTHIC would loan the money to pay for feasibility studies and the environmental impact assessment. But the joint venture company must repay YTHIC for these expenses.

According to the agreement, the joint-venture company will obtain a 50-year lease for the land and the government must transfer the land rights within 90 days of the company’s formation.

The MOU says the Kachin government must form investment organizations for the economic zone.

It is required to secure official permission for the project and apply for tax exemptions.

The MOU says the Chinese company has full authority to invite third-party investors and no similar project will be allowed near Myitkyina for 15 years.

When The Irrawaddy visited the site in April, landowners said they were concerned about the threat of confiscations.

Land-grabbing is a major issue in Kachin State, especially in Waingmaw Township across the river from Myitkyina, where there is a proliferation of Chinese-operated banana plantations. The Kachin parliament’s complaints committee said it had received 345 complaints since the National League for Democracy took office in 2016, including 179 complaints over land seizures.

A group of landowners have negotiated over 2.6 sq. km inside the site.

They say they are yet to receive a reply from the government about compensation.

Lawyer U Gannes Basnez, who works with residents, told The Irrawaddy: “We are aware the government is going to take further steps [by signing an agreement] to implement the project. But the landowners have not received any response from the government.”

He added, “We will face that issue using the law.”

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