Myanmar, China to Sign Agreements on SEZ, Border Economic Cooperation During President Xi’s Visit

By Nan Lwin 10 January 2020

YANGON—Myanmar and China are planning to sign at least three memorandums of understanding (MOUs) paving the way for the construction of the Kyaukphyu Special Economic Zone (SEZ) in Rakhine State and promoting economic cooperation in border areas, during Chinese President Xi Jinping’s two-day visit to Myanmar next week.

Chinese Foreign Ministry spokesperson Hua Chunying announced on Thursday that Xi will visit Myanmar on Jan. 17-18 at the invitation of Myanmar President U Win Myint. Experts said the trip demonstrates Myanmar’s geographic importance to China’s effort to establish a strategic presence in the Indian Ocean, and is aimed at seeking Myanmar leaders’ support for backbone projects planned in the country as part of Xi’s ambitious Belt and Road Initiative (BRI).

Deputy Commerce Minister U Aung Htoo told the media on Thursday that the two sides plan to sign MOUs to promote trade ties and border economic cooperation, as well as on the Kyaukphyu SEZ.

The deputy minister said there are seven agreements under the Framework Agreement for the Kyaukphyu SEZ. During Xi’s trip, two of these will be signed, including a concessional agreement.

In November 2018 Myanmar renegotiated the share ratio agreement and signed a framework agreement for the Kyaukphyu SEZ, a key strategic component of the China-Myanmar Economic Corridor (CMEC), itself a part of the BRI. The project is expected to boost development in Yunnan province and provide China with direct access to the Indian Ocean, allowing its oil imports to bypass the Strait of Malacca.

The developer, China International Trust and Investment Corporation (CITIC), hired Canadian company HATCH to oversee the environmental and social impact assessments (EIA, SIA) and a geological survey for the port project in July, not including the SEZ. However, criticism has arisen among legal observers as to whether the developers are following the proper frameworks in line with Myanmar’s Environmental Law. The law states that any mega-project requires a site-wide environmental and social impact assessment. CITIC has not responded to the criticism.

U Aung Htoo said it will take at least a year to complete the EIA/SIA process. Work on a further agreement on construction of the deep seaport could begin after that process, he said.

Myanmar joined the BRI in 2018 by signing a 15-point MOU establishing the CMEC. Utilizing the interconnected transportation infrastructure of China and Myanmar, the 1,700-kilometer CMEC will run from Kunming in China’s Yunnan Province through Shan State’s Muse to Mandalay in central Myanmar, and then branch out to Yangon and the Kyaukphyu Special Economic Zone (SEZ) in western Rakhine State.

The BRI is Xi’s signature foreign policy project. Unveiled in 2013, it is also known as the Silk Road Economic Belt and the 21st-Century Maritime Silk Road. The project aims to build a network of roads, railroads and shipping lanes linking at least 70 countries from China to Europe passing through Central Asia, the Middle East and Russia, fostering trade and investment.

On Thursday, Commerce Minister U Than Myint told media that the Chinese president’s trip is a positive sign for China-Myanmar relations.

U Than Myint said an agreement would be signed between the two countries in which China would ease restrictions on imports of products from Myanmar.

“It will enhance trade relations with China,” he said.

Xi would be the first Chinese president to visit China’s southern neighbor in nearly two decades. With China and Myanmar due to celebrate 70 years of diplomatic relations this year, preparations for Xi’s trip have been under way for some time. Chinese Foreign Minister Wang Yi and Myanmar State Counselor Daw Aung San Suu Kyi met in early December in Naypyitaw to discuss preparations.

It will be Xi’s second visit to Myanmar. He visited the country in 2009 as vice president. During that trip, China and Myanmar signed 16 memorandums of understanding (MOUs) on technical cooperation, the implementation of hydropower projects, the China-Myanmar Oil and Gas twin pipeline project, and the Kyaukphyu SEZ.

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