Delayed dam project awaits resolution in Myanmar

By Li Ruohan Source:Global Times Published: 2019/2/21 22:38:41

Project suspension undermines China-Myanmar trust: analyst

The confluence of the Ayeyarwady River and the Mali and the N'Mai rivers. The Myitsone dam was to be located a mile downstream of this point. Photo: Yu Jincui/GT

 Though Myanmar officials have expressed their appreciation for the benefits of the Belt and Road Initiative (BRI), Chinese analysts noted that more practical outcomes should be delivered apart from optimistic plans, as some BRI projects still face uncertainty in the Southeast Asian country.   

A positive momentum to further promote the implementation of the China-proposed initiative in Myanmar has been seen recently, analysts said. 

During a visit to the China-Myanmar border in Southwest China's Yunnan Province from Saturday to Monday, Chinese State Councilor and Foreign Minister Wang Yi stressed that the stability of border areas is directly related to joint efforts to promote cooperation under the initiative. 

Also on Monday, Myanmar State Counselor Aung San Suu Kyi said BRI could bring opportunities to Myanmar and the region, at the first meeting of the steering committee for the implementation of tasks relating to the initiative, the Xinhua News Agency reported.

Projects under the initiative have been yielding progress that benefits both locals and Myanmar's industrial modernization, analysts noted. 

China Railway Eryuan Engineering Corporation has started a partial survey for the Muse-Mandalay-Kyaukphyu railway line. 

The project is expected to be one of the largest road and railway projects in the country, the Myanmar Times reported on February 1. 

The program comes after Myanmar and China's CITIC Group signed a framework agreement on the Kyaukphyu Special Economic Zone (SEZ) Deep-Sea Port Project in November 2018.     

Generally speaking, BRI projects are proceeding smoothly in Myanmar and the atmosphere for cooperation is sound. 

The Myanmar side has attached great importance to the projects, said Song Qingrun, a research fellow at the China Institute of Contemporary International Relations in Beijing. 

The projects have improved local infrastructure, benefited residents and brought a sound image of Chinese investors, said Song.

Challenges ahead

Obstacles and challenges for China-Myanmar cooperation remain and it will still take time to address them, insiders told the Global Times. They cited the complicated social and political situation in the country.  

For instance, negotiations on the suspended Myitsone hydropower project, one of the most important but unsolved issues in China-Myanmar infrastructure cooperation, needs a practical outcome. 

The abrupt suspension of such a significant project has blurred political trust between China and Myanmar, Fan Hongwei, an expert on Myanmar issues at Xiamen University, told the Global Times. Whether the issue could be addressed properly concerns the Myanmar government's credibility and its capability to provide a sound environment for foreign investors amid challenges, said Fan.  

Speculation is rising in Myanmar about the future of the project since the Chinese Embassy in Myanmar issued a statement on January 12 saying "if this issue fails to be resolved after a long delay, it will seriously hurt the confidence of Chinese entrepreneurs in investing in Myanmar."  

Relevant parties from China and Myanmar are in close contact and negotiations to "properly address" the issue, a source with inside information on the project told the Global Times.  

The source, who requested anonymity due to the sensitivity of the issue, did not elaborate on whether a preferred solution has been agreed upon.  

Though the project suspended in 2011 is unlikely to be re-launched in the short term, both sides are making constant efforts to find a solution that satisfies the basic interests of both sides, said Fan.

"But practical outcomes, or progress, need to be seen in the negotiations," he said. "Myanmar cannot keep the Chinese side waiting forever."

Since January, alternatives have been raised by the Myanmar side. Thaung Tun, chairman of Myanmar's investment commission, listed options including scaling back the dam, moving it to a different location or offering the operator an alternative project at an investment conference on January 29, Reuters reported. 


Despite the Western media's biased reporting to provoke nationalist sentiment in Myanmar, the project and its benefits for Myanmar are well accepted in the country, said the anonymous source. 

Myanmar stands to gain about $18 billion in tax revenue, free power and shares during the first 50 years of its commercial operation, according to Upstream Ayeyawady Confluence Basin Hydropower Company (ACHC), the joint venture developer established by the Myanmar government, China's State Power Investment Corporation (SPIC) Yunnan International Power Investment and the Myanmar-based Asia World Company. 

Abolishing the project without convincing reasons or proper replacement would damage the Myanmar government's credibility and increase concern from foreign investors, analysts noted.  

The Myanmar government might need to repay the Chinese developer some $800 million if they cancel the project as the money has already been spent on feasibility and technical studies, bridges, electrical grid updates and other support infrastructure, the New York Times reported in 2017.  

"There are technical and other measures to address the environmental impact. Myanmar has an urgent need for energy and its options are very limited," said Fan.

Less than 40 percent of Myanmar's population has access to electricity, according to a market overview published by the US website in November 2018.   

It is essential Myanmar continue reform and expand its energy infrastructure to support the country's continued economic growth, said the website, which is sponsored by US Department of Commerce's International Trade Administration.  

Despite the suspension of the Myitsone project, other Chinese hydropower projects are operating normally to secure electric supply for Myanmar residents and the Chinese investor is proactively fulfilling its social responsibility in Myanmar, said Fan. 

He noted that those efforts help clear misunderstandings among Chinese investors.   

More political wisdom is needed from Myanmar's ruling National League for Democracy (NLD) as it needs foreign investment for its political mission to practically improve people's life, said Fan. 

The anonymous source noted that the suspension of the Myitsone project that operates in accordance with local law and regulations has also made it harder for Chinese companies to ask for more loans from banks for their project in Myanmar.  

Investors will think twice before rolling out other mega-projects in the country as the issue remains unsettled, the official said. 

Such risks are also weighed by investors from other Southeast Asian countries such as Sri Lanka and Malaysia, said Fan.   

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