Myanmar, China to Conduct Feasibility Study on Mandalay-Kyaukphyu Rail Link

By Nan Lwin 11 January 2021

YANGON—Myanmar and China have formally agreed to conduct a feasibility study on a crucial part of Beijing’s strategic railway plan to connect China’s southern city of Kunming and Myanmar’s Kyaukphyu port on the Bay of Bengal. Accessing the port will play a key role in China’s move to boost its presence in the Indian Ocean through its Belt and Road Initiative (BRI).

On Sunday, China Railway Eryuan Engineering Group (CREEG) (formerly China Railway Group Ltd) and Myanma Railways signed a memorandum of understanding (MoU) to begin the study of the Mandalay-Kyaukphyu Railway project. The project is an important part of Beijing’s long-delayed US$20-billion (26.7-trillion-kyat) China-Myanmar Railway plan, which was suspended under then-President U Thein Sein’s administration following strong local objections.

Under the BRI, Beijing plans to build a parallel expressway and railway from Ruili in Yunnan Province to Kyaukphyu, with a separate road running through northern Myanmar, the northeast states of India and Bangladesh.

In 2018, Myanmar and China agreed to study a proposed line from Muse (in Shan State, across the border from Ruili) to Mandalay. This would be the initial section of the railway and a component of the China-Myanmar Economic Corridor (CMEC), which is in turn a part of the BRI. During Chinese President Xi Jinping’s trip to Naypyitaw last year, CREEG handed over a report containing its findings from this study to Myanmar’s Transport and Communications Ministry.

If the entire project is completed, it will play a crucial role in the economic corridor, allowing China’s imports and exports to bypass the congested Strait of Malacca and the contested South China Sea, while boosting development in China’s landlocked Yunnan Province.

A statement from the Chinese Embassy said the two sides held in-depth discussions on technology and funding methods for the railway project during the past year, and decided to continue with the feasibility study for the Mandalay-Kyaukphyu stretch.

Chinese Ambassador to Myanmar Chen Hai said a railway line from Yunnan’s Dali (also known as Tali) to Ruili, China’s border town, would be complete by the end of 2023. The plan is to link this line with Myanmar’s Muse, in northern Shan State.

Chen said construction of the railway line in Myanmar will create a huge market for Myanmar and allow it to connect more easily to the vast Eurasian continent.

He added that it would contribute to the economic development of Myanmar and strengthen the process of national reconciliation and peace in the country.

China often touts the CMEC’s potential to bring development to Myanmar and claims that this development will in turn assist the peace process in ethnic areas. But experts have raised concerns that the railway project could burden Myanmar with unsustainable debt and provoke, rather than ease, armed conflict in the project areas. The railway will pass through armed conflict zones in Shan State.

A press release from the Chinese Embassy quoted Transport and Communications Minister U Thant Sin Maung as saying bilateral cooperation on the railway, including the Mandalay-Kyaukphyu section, is important for the joint construction of the BRI and the economic corridor.

He thanked China for its long-term support for the peace process and the development of the railway sector in Myanmar, adding that he believed the railway project will benefit the people of both countries.

Both the Mandalay-Muse and Mandalay-Kyaukphyu projects are based on ideas that have been floated before. Beijing and Naypyitaw signed an MoU to build a railway between Muse and Kyaukphyu in 2011. The entire line was to run 810 km. However, Myanmar suspended the project in the face of strong local objections, and the agreement expired in 2014.

Despite the suspension, China has continued with the construction of a stretch of railway from Kunming, the capital of Yunnan Province, to Ruili, with the aim of connecting it to Myanmar’s network in the future.

During the first term of Myanmar’s National League for Democracy-led government, China repeatedly pushed Naypyitaw to begin implementation of the rail projects. According to a report on the Muse-Mandalay Railway, the project will cost nearly $9 billion. Last year, the government revealed that it has been receiving assistance from a Swiss company on a review of a China-backed study of the project, including whether its cost is reasonable.

In June, Myanma Railways managing director U Ba Myint promised that Myanmar is carefully evaluating the project to ensure it poses no threat of harm to the country. He said the government would not implement it if it was found to have potential negative impacts for Myanmar.

Last year, Myanmar and China signed a concession agreement and shareholders’ agreement for the Kyaukphyu Special Economic Zone (SEZ) deep seaport project in Rakhine. It also received approval for the registration of a joint venture between a Chinese company and a government-backed committee to construct the project.

Located in northern Rakhine State, Kyaukphyu is a strategic hub for China, and already serves as the terminus for twin cross-border oil and gas pipelines between the two countries.

Myanmar joined the BRI in 2018 by signing an MoU on the establishment of the CMEC. The 1,700-km corridor is planned to run from Kunming to Mandalay, then east to Yangon and west to the Kyaukphyu SEZ.