Myanmar port financing concerns dismissed

By Li Sikun and Chu Daye Source:Global Times Published: 2018/6/12 23:08:40

Debt worries just speculation as plan for project not finalized: official

Concerns that a planned deepwater port near the town of Kyaukpyu in Myanmar may drag the country into debt are excessive because the plan has not yet been finalized, a Myanmar official said recently.

The comment came after Bloomberg reported on May 25 that Sean Turnell, special economic consultant to Myanmar's leader Aung San Suu Kyi, had described the $7.5 billion deep-sea port to be built by Chinese firms as "crazy" and "absurd."

The report was followed by general concerns that Myanmar could fall into a debt trap if it has to borrow heavily to support the project.

According to an authoritative translation obtained by the Global Times on Tuesday of an interview with the Myanmar Times, U Aung Soe, director general of the Ministry of Commerce of Myanmar and secretary of the Central Working Committee for Myanmar Special Economic Zones, allayed concerns over the debt and equity issues with the Kyaukpyu deep-sea port. Although the Myanmar Times run an English website, the interview was not translated.

According to U Aung Soe, the concerns are just speculation, as no final agreement has been reached over the business model for the port between the Myanmar side and the Chinese investors.

CITIC, China's State-owned investment corporation, is negotiating with the Myanmar government and local investors on the proposed project.

The deal has not been finalized, so whether the government needs to invest with just the land in exchange for equity in the project or needs to borrow more money has not been decided, U Aung Soe said.

If the government does need to borrow money to maintain its stake, there will be thorough consideration of how to avoid excessive debt, the official said.

Turnell reportedly pointed to the possibility that the Myanmar government would have to borrow heavily to finance its stake in the port.

Sources close to the matter said that while there are several equity plans, with the stake owned by the Myanmar government ranging from 15 percent to 30 percent, the government could use its land in exchange for capital. The land will be used for port construction and operated under a concession.
If the government wants the higher 30 percent stake, it would probably need to borrow $1.1 billion but Myanmar companies could assist with this, the sources told the Global Times.

China and Myanmar have carried out successful economic cooperation in recent years. State-owned oil giant China National Petroleum Corp's natural gas terminal sits on an island just southeast of Kyaukpyu, transporting gas from the Middle East to China's western provinces through a land pipeline that stretches for 2,400 kilometers.

Even the identity of Turnell is in question. The Global Times has learned from sources that the title of special economic consultant, as mentioned by Bloomberg, was not recognized by the Myanmar government.

Posted in: ECONOMY

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