Myanmar is set to receive a greater amount of the profit-sharing in a $7.2 billion deep-sea port development project in the town of Kyaukphyu in western Rakhine state, though negotiations with the main Chinese investor are ongoing, a commerce ministry official said Monday.
A consortium led by CITIC Group Corporation Ltd., China’s state-owned investment company, is negotiating the profit-sharing deal with Myanmar officials for the deep-sea port, which is part of two development initiatives that also include an industrial park for a special economic zone and residential condominiums on 4,200 acres of land in Kyaukphyu, Ramree, and Manaung townships.
The Myanmar government awarded CITIC the tenders for both projects in 2015.
The division of the profit will be changed according to the current government’s policy, and there will be more accountability when it is changed, said Khin Maung Lwin, assistant permanent secretary of Myanmar’s commerce ministry.
“We are still in discussions about the benefit sharing,” he told RFA’s Myanmar Service. “They [Myanmar officials] have proposed getting a higher percentage than they received previously under the previous government.”
“After we approve the rate, we have to sign a framework agreement,” he said.
The details will be publicly released after the talks conclude and the committee overseeing the investment agrees to disclose them, Khin Maung Lwin said.
RFA also contacted an official from the Myanmar Investment Commission (MIC), a government-appointed body that verifies and approves investment proposals and issues notifications about sector-specific developments, but he refused to answer questions about the project and suggested that the reporter contact the finance ministry.
CITIC Group officials were not available for comment.
Ownership stakes
Myanmar citizens in Rakhine and elsewhere have criticized the ownership terms of the original deal, which gave China an 85-percent stake and Myanmar a 15-percent stake, as unfair.
But last month, the consortium led by CITIC Group, agreed to lower its stake in the deep-sea port to 70 percent, Reuters reported on Oct. 18, citing Oo Maung, vice chairman of a government-led committee overseeing the project.
The proposal was sent to Myanmar Vice President Henry Van Thio for approval, though the two sides have not reached an agreement on financing details, the report said.
Kyaukphyu is a major town in Rakhine situated on a natural harbor in the northwestern corner of Ramree Island on Combermere Bay about 400 kilometers (250 miles) northwest of the commercial capital Yangon. Besides its natural deep-sea harbor, the area has abundant oil, natural gas, and marine resources.
The deep-sea port in Kyaukphyu is an important part of China’s “One Belt, One Road” development strategy, which focuses on connectivity and cooperation between Eurasian countries, giving the country access to the Bay of Bengal as an alternative route for oil imports.
The Kyaukphyu SEZ will be accessible to the Shwe gas field in the Bay of Bengal and an oil and gas terminal financed by Chinese state-owned oil company China National Petroleum Corporation, or PetroChina.
Reported by Wai Mar Tun for RFA’s Myanmar Service. Translated by Khet Mar. Written in English by Roseanne Gerin.