Business delegations are flocking to Myanmar in hopes of securing access
to previously closed markets and resources. From the construction of
economically and geopolitically significant ports and pipelines, to the
development of hydroelectric dams and a modern energy infrastructure, Myanmar's
transformation promises to have a major impact on the region's economy.
Competition for these contracts
and concessions has brought the interplay between Chinese, regional and Western
commercial interests into sharp relief. Myanmar's metamorphosis into a
potential engine for economic growth is thus inextricably linked to the larger
competition between China and the West for influence in the Asia-Pacific.
With its expansive Indian Ocean
coastline and strategic location in Southeast Asia, Myanmar is prime for
massive port development. The country already boasts three large port
development projects: Sittwe on the northern coast and Dawei in the South. These
projects represent a microcosm of the battle for influence between China and
their regional and global competitors for both economic preeminence in Myanmar
and security over critical maritime trade routes.
Financed and constructed by
India, the Sittwe port represents one part of the Kaladan Multimodal Transit
Transport Project, a sweeping initiative designed to link eastern India with
Myanmar and, by extension, the rest of the region via sea, waterways and
highways. New Delhi views the megaproject as integral to its “Look East''
policy, which seeks economic growth and political influence through the
development of ties with regional neighbors.
Last month's meeting between
Myanmar President Thein Sein and India's Lower House Speaker Meira Kumar led to
the announcement that the two sides plan to accelerate the implementation of
the Kaladan Transit project. The announcement not only underscored warming
bilateral ties but also highlighted the project's overall importance in the
current economic and political context.
India's US$100 million investment
in the Sittwe port could thus be viewed as a linchpin in New Delhi's greater
drive to expand its regional influence by helping Myanmar to overcome its
economic underdevelopment and chronic mismanagement after decades of military
rule.
Like Sittwe for India, the port
at Kyaukphyu is a cornerstone in China's strategy in Myanmar and the region
more generally. For Beijing, Kyaukphyu, only about 100km south of Sittwe, is of
central importance as it forms the foundation for its investments in both
energy production and delivery infrastructure in Myanmar. Additionally, the
port provides valuable land-based access to the Indian Ocean, something that
China has craved for decades, including as an alternative route for its fuel
shipments from the Middle East.
Just as in the case of the
Chinese-funded (and now controlled and administered) Port of Gwadar in
Pakistan, Beijing views deep water ports in South Asia as essential for its
economic development and geopolitical ambitions. At the same time, ethnic and
political unrest in Myanmar's Rakhine state has illustrated to the world, and
China in particular, that instability and security concerns could impact the
development of the ports in Myanmar.
Though it shares some similarities
with Sittwe and Kyaukphyu, the planned construction of a port at Dawei on
Myanmar's southern coast faces bigger obstacles. Originally conceived as a
massive joint venture between Thailand and Myanmar to be completed by 2020, the
project has encountered major hurdles to implementation, including doubts from
potential Japanese investors about the feasibility of the US$58 billion
megaproject.
Dawei, initially designed as a
special economic zone replete with high-speed railways, modern highways and the
region's largest industrial park, aimed at connecting Myanmar with the wider
regional economy.
Kyaukphyu represents the entry
point of Chinese-funded twin oil and gas pipelines that will run across Myanmar
into southwestern China's Yunnan province. Not only will these pipelines become
a reliable means of delivering energy imports from the Middle East and Africa
directly to China without having to navigate the narrow Strait of Malacca and
increasingly volatile South China Sea, they will also provide China a potential
direct line to over 20 new offshore oil and gas exploration blocks that will go
up for international auction in April.
For China, the pipelines are the
focal point of a comprehensive energy and investment strategy in Myanmar.
However, these plans, too, have encountered difficulties. The recent renewal of
civil war in Kachin State after 17 years of a ceasefire has hampered the
development and inauguration of the pipeline. Security has become such a
concern for China that the Chinese are paying are reported to be paying
Myanmarese soldiers in the north for security for pipeline construction.
A 2008 study by Earth Rights
International noted ''At least 16 Chinese multi-national corporations have been
involved in 21 onshore and offshore oil and natural gas projects in [Myanmar],
including all three major Chinese oil and natural gas companies Sinopec, China
National Petroleum Corporation (CNPC), and China National Offshore Oil
Corporation (CNOOC).'' The fact that so many Chinese investors are involved in
every aspect of Myanmar's energy shows the degree to which Myanmar fits into
China's long-term energy security plans.
The Chinese-funded Myitsone Dam,
a $3.6 billion hydroelectric power development project on the Irrawaddy River
in Kachin State, has also courted controversy. An estimated 90% of the power
generated from the dam would be exported to southwestern China at a time when
Myanmar still suffers from chronic power shortages. Violence and insecurity,
environmental concerns and issues of national pride have all contributed to the
project's suspension.
Beijing has served as host to
several rounds of peace talks between Kachin rebels and the Myanmar government,
so far to little avail. Beijing has taken on the unfamiliar role of peace-maker
in an effort to influence the negotiation process, in the hope that a lasting
peace will allow the Myitsone dam project to resume.
Ethnic conflicts, though
sometimes problematic for investors, have not impeded Myanmar's overall drive
towards economic development and progress. Although rapid development financed
by foreign capital could, without regulation, destabilize Myanmar's fragile
transitional economy, the benefits achieved in poverty reduction alone are
expected to outweigh the costs. Perched between China and India as a gateway to
Southeast Asia, Myanmar is now well-poised to profit from the geostrategic
competition for its resources, contracts and markets.
Eric Draitser
Business & Investment Opportunities
Saigon Business Corporation Pte Ltd (SBC) is incorporated in Singapore since 1994. As Your Business Companion, we propose a range of services in Strategy, Investment and Management, focusing Health care and Life Science with expertise in ASEAN 's area. We are currently changing the platform of www.yourvietnamexpert.com, if any request, please, contact directly Dr Christian SIODMAK, business strategist, owner and CEO of SBC at christian.siodmak@gmail.com. Many thanks.
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