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.