China to reduce Kyaukpyu port share
China has agreed to reduce its stake in a proposed deep-sea port in Rakhine State in Myanmar to 70% amid local concerns about Beijing’s growing economic power in the country, a senior government official has said.
According to Reuters, Oo Maung, vice chairman of a government-led committee overseeing the project, said that Myanmar had pushed for a bigger share of the roughly $7.2bn port in Kyaukpyu during negotiations with CITIC Group - China’s largest conglomerate – and that a deal was reached in September.
“Locals from Rakhine and communities across Myanmar think that the previous 85%/15% agreement is unfair to Myanmar,” he said.
“People disagree with the plan and the government is now trying to make a better deal.”
Mr Maung said that the new proposal has been sent to the office of Henry Van Thio, Myanmar’s vice president, for approval, but that the two parties have not yet agreed on financing details, with further negotiations necessary to move the project on.
In May, Reuters reported that CITIC, which is owned by the Chinese state, had proposed taking a 70% to 85% share in the port, which is part of China’s ‘Belt and Road’ infrastructure investment venture aimed at furthering its links with economies both in and outside of Asia.
The port’s proposed location is on the Bay of Bengal, an entry point for a Chinese oil and gas pipeline that offers it a different route for energy imports from the Middle East avoiding the shipping chokepoint of the Malacca Strait.
In 2015, CITIC won the bid to develop both the port and an industrial park, with both projects forming the components of the development of a Special Economic Zone (SEZ) in Kyaukpyu.
CITIC’s consortiums include China Merchants Holdings, Yunnan Construction Engineering Group, TEDA Investment Holding and China Harbour Engineering Company with the only non-Chinese state-owned company involved being Thailand’s Charoen Pokphand Group.
In all, 52 Myanmar companies will contribute to half of Myanmar’s share in the port, San Myint, general manager of the local consortium Myanmar Kyaukpyu Special Holding Company, explained.
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