India needs to keep its eyes open, lest it loses Myanmar to China
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Issue Courtesy: South Asia Monitor | Date : 13 Jun , 2016

Source: Directorate of Investment and Company Administration, Ministry of National Planning and Economic Development, Government of Myanmar

China is now all set to gain a major advantage in the strategic scenario of South Asia as Myanmar has awarded contracts to a China-led consortium for constructing a deep-sea port and a special economic zone (SEZ) in a place called Kyaukphyu which is situated right on the Bay of Bengal. The above mentioned six member consortium will be led by the Citic group of China and the only non-Chinese member of it will be the Charoen Phokphand of Thailand. 

The entire project is worth $ 280 million and apart from the deep sea port it will also comprise of a 978 hectare industrial zone and a housing project of 494 hectares. Of all the ongoing foreign funded projects in Myanmar the Kyaukphyu SEZ is strategically the most important one as it will give China a direct overview of the Indian Ocean’s busy shipping lane through which passes most of China’s energy supplies.

India will make a costly mistake if it does not take into account several interesting equations now metamorphosing in Myanmar; a country which is vital for the successful implementation of its Act East policy. Aung San Suu Kyi, the foreign minister and state counselor of Myanmar who had a large part of her education in India, is now clearly showing a propensity of turning towards China while the Tatmadaw or the Myanmar army, a very powerful institution of the country, had started moving slowly away from Beijing since 2011.

It is true that the previous quasi-military regime of Thein Sein had awarded the Kyaukphyu SEZ project to the China dominated consortium in December last. But it is also believed in diplomatic circles that Thein Sein was forced to do this after intense pressure from Beijing, particularly a show of strength by the Chinese army on Myanmar’s north eastern border last year in the wake of the Tatmadaw’s retaliatory actions against the secessionist Kokangs who are Mandarin speaking Han Chinese inhabiting the northern part of the Shan state.

However, the new democratic government of Htin Kyaw is likely to continue with the Kyaukphyu project as it is being described to be one which will contribute $ 10 billion to Myanmar’s annual GDP by 2020. But much of the Chinese infrastructure projects in Myanmar defies commercial rationale and rather fit in Beijing’s strategic idea of One Belt One Road (OBOR).

Let us take the case of the two Chinese pipelines originating at Kyauphyu in Myanmar and terminating at Kunming of China for transporting oil and gas. Still now not much is known about the volume of gas transportation, but the oil pipeline is working up to only fifteen percent of its capacity and China has already either cancelled or postponed its plan for a big refinery in Kunming. So the pipeline is not meant to serve any immediate purpose but is being kept in readiness for serving a long term strategic goal.

The location of the Kyaukphyu deep water port, quite near the landing point of the crude oil terminal meant for the above-mentioned pipeline, is therefore significant. Moreover Guangdong Zhenrong, another Chinese commodity trading company, has bagged another contract to build up a composite project comprising a $ 3 billion refinery and an oil terminal at a place named Dawei, a south eastern coastal city of Myanmar.

India’s best bet in Myanmar is the Kaladan multi modal transport project which envisages linking of the Sittwe port of Myanmar with India’s north eastern state of Mizoram by upgradation of the Kaladan river waterways and construction of all weather roads in Myanmar and Mizoram. This project will establish a linkage between the Sittwe port and all the ports situated on India’s eastern coastline. But the project is languishing. Originally scheduled to be completed in 2015 the target date has now been extended to 2019.

Policy makers in New Delhi understand the importance of Myanmar in the geo strategic scenario of South and South East Asia and that is why the amount of grant for completion of the Kaladan project has been raised from USD 82 million to USD 440 million.

From 2010 to 2013-14 China’s influence in Myanmar was on a downward scale. It again picked up from 2015 when Chinese cumulative investment in Myanmar reached USD 15.41 billion mark. China is now the largest investor in Myanmar and its investment amounts up to 26.06 percent the total USD 59.15 billion investment made in that country.

Moreover the Kyaukphyu deep sea port will be an important acquisition for China so far as the much talked about strategic-military doctrine of “the string of pearls” is concerned. Just think of a straight imaginary line from Kyaukphyu in the north to Hambantota port of Sri Lanka, another Chinese acquisition, in the south and the threat to the Indian naval base at the Andaman Islands is complete.


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The views expressed are of the author and do not necessarily represent the opinions or policies of the Indian Defence Review.

About the Author

Amitava Mukherjee

is a senior journalist and commentator writing on issues related to Bangladesh, Myanmar and the Indian North-East. He can be reached at:

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