The Myanmar military regime continues to work with China to develop the Kyaukphyu Special Economic Zone (SEZ) and a deep-sea port in Rakhine State’s Kyaukphyu despite the fact that the town has been encircled by troops of the ethnic Arakan Army (AA).
On Tuesday, junta Minister of Investment and Foreign Economic Relations Kan Zaw addressed a meeting of Myanmar’s Central Working Group for Special Economic Zones, which he chairs, in Naypyitaw. He called for effective collaboration between Kyauk Phyu SEZ Consortium Company Ltd.—formed as a Myanmar Government Designated Entity—and China’s CITIC Consortium, as well as collaboration with relevant ministries to expedite the project and compliance with regulations.
The Kyaukphyu port and SEZ are key to the planned 1,700-km China-Myanmar Economic Corridor connecting Kunming in China’s Yunnan province to the Indian Ocean. Kyaukphyu is the starting point of the China-Myanmar pipeline, which carries natural gas to Yunnan.
The budget for the Kyaukphyu SEZ is US$1.3 billion, while the port is expected to cost $7.3 billion. They will span 150 hectares on Maday Island and 96 hectares on Ramree Island in Rakhine’s Kyaukphyu District.
Since launching a military offensive in November 2023, the AA has captured 14 of 17 townships in Rakhine State, gaining control over many Chinese projects and seizing the junta military’s Western Command headquarters.
Among the Chinese investment projects now under AA control are wind power projects in Ann, Gwa and Thandwe signed in March 2023. The three towns have all been seized by the ethnic armed group.
Kyaukphyu town remains under the control of the regime, but it is encircled by AA troops.
On Dec. 29, after gaining control over much of Rakhine, the AA expressed its readiness to resolve the conflict in the state through political means.
Amid escalating armed conflicts in the country, the regime and Chinese state-owned firm CITIC signed an addendum to the concession agreement for the Kyaukphyu deep-sea port in December 2023.
The AA has welcomed any foreign investment that guarantees mutual benefits for Rakhine State and investors, while promising to protect existing investments and the security of investors.
One Kyaukphyu resident said the two sides are in a wait-and-see posture in Kyaukphyu because of the extensive Chinese interests in the area, despite heightened military tensions and occasional skirmishes.
China has repeatedly urged the regime and its opponents in Myanmar to protect Chinese projects and businesses, and the safety of their employees. Beijing and the regime are working to set up a joint venture security company to protect Chinese investments in Myanmar.
