China Moves Closer to Control of Deep-Water Port Project at Kyaukphyu, Myanmar

On August 6, Myanmar’s government investment agency approved the registration of a Chinese joint venture company that has been established to implement the still pending Kyaukphyu deep-water port project in Myanmar on the Bay of Bengal.  The port has been described in local media as the “backbone” of Beijing’s planned China-Myanmar Economic Corridor (CMEC).  Moreover, the recent approval of the joint venture is seen as a critical step forward for the project after years of delays.

The new joint venture is called Kyaukphyu Special Economic Zone Deep Seaport Co. Limited and is a 70–30 joint venture between CITIC Myanmar Port Investment Limited (a subsidiary of China’s state-owned CITIC Group Corporation) and Myanmar’s state-backed Kyaukphyu Special Economic Zone Management Committee.

The project has has been delayed, in part, by the controversy surrounding the overall influence that China’s involvement in such an important national project might provide.  Since its inception in 2015, the Chinese port project has also been burdened by concerns over the dual-use naval capability it could offer China in the Indian Ocean and the significant debt burden that it would create for Myanmar with Beijing.  To assuage these concern, in 2017, CITIC reduced its stake in the port project from an initial 85 percent to the presently configured 70 percent majority position.

Ultimately, the port is envisioned to connect southern China to the Bay of Bengal on the Indian Ocean via a series of Chinese-built railway and road networks through Myanmar that are also under consideration.  The port is already connected overland to China by a dual-strand oil and gas pipeline that became operational in 2017.  The Kyaukphyu port will also be adjacent to an industrial zone constructed by CITIC under a 51–49 partnership with Myanmar’s government.