New Delhi: Amidst a fierce resistance in the country, Myanmar’s military junta government has granted further concessions to China to start the Kyaukphyu Special Economic Zone (SEZ) and port project, a development that will raise concerns for India.
Earlier this week, the junta and Chinese state-owned firm CITIC signed an addendum to the concession agreement for the Kyaukphyu SEZ and deep-sea port in a bid to expedite construction of the stalled project in western Myanmar’s Rakhine State.
The Kyakphau project was originally announced in September 2013 and an agreement was signed between the two countries in May 2014. In 2015, CITIC won the tender to build the Kyaukphyu SEZ and a framework agreement was signed in 2018 under the now ousted National League for Democracy government.
However, Chinese projects in Myanmar were facing trouble before Min Aung Hlaing overthrew the country’s elected government on February 1, 2021. Now they are beset by unrest, power shortages and transport woes. The Kyaukphyu project is one such example. Though a concession agreement was signed in 2020, work still remained stalled.
According to a statement issued by the Myanmar Commerce Ministry, an addendum to the concession agreement was signed on Tuesday for speedy implementation of the project.
“The addendum was signed for clearer and more accurate understanding of the concession agreement regarding the powers and responsibilities of both sides,” the Ministry said, without giving details of the additional concessions granted to the Chinese side.
The Kyaukphyu SEZ and deep-sea port are expected play a pivotal role in the 1,700-km-long China-Myanmar Economic Corridor, linking Kunming in Yunnan province of China to the Indian Ocean. The Kyaukphyu SEZ is allocated a budget of $1.3 billion, while the port’s budget is set at $7.3 billion. These developments will cover an area of 150 hectares on Maday Island and 96 hectares on Ramree Island, situated in Rakhine's Kyaukphyu Township. The project is part of Chinese President Xi Jinping’s Belt and Road Initiative (BRI), which aims to enhance connectivity and trade routes between China and other parts of the world.
However, India will be concerned about the geopolitical implications of the Kyaukphyu project. Kyaukphyu is strategically located along the Bay of Bengal, providing China with access to the Indian Ocean. This has raised concerns among India and other regional powers about the potential militarisation of the port and its implications for maritime security in the Indian Ocean.
The port is expected to be a part of China’s ‘String of Pearls’ strategy. The ’String of Pearls’ is China’s strategy of establishing a network of military and commercial facilities in the Indian Ocean region.
China has already developed the Gwadar port in Pakistan and Hambantota port in Sri Lanka and is helping develop the Chittagong deep-sea port in Bangladesh as part of this strategy. The Kyaukphyu port is considered by some analysts as one of the “pearls” in this string, potentially providing China with a military foothold in the region. This port is likely to emerge as a rival to the Sittwe port developed by India which is also located in Rakhine State of Myanmar.
The economic influence that China gains through the Kyaukphyu SEZ could allow it to exert greater influence over Myanmar. This influence could affect regional dynamics and potentially impact India’s interests, especially if it leads to a more significant Chinese presence in Myanmar.
The port is also critical for the transport of oil and natural gas from the Middle East and Africa to China, enhancing China’s energy security. The port will help China reduce its dependence on the Malacca Strait for energy imports from West Asia. This could indirectly impact India’s energy security if it leads to increased competition for resources in the region.
According to observers, the development of the Kyaukphyu port is part of China’s broader efforts to increase its influence in the Indian Ocean. This could be perceived as a challenge to India’s traditional dominance in the region, potentially leading to increased competition and strategic tensions.
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