China finalises talks on Kyaukphyu port in Myanmar

Myanmar is negotiating with a Chinese consortium to develop a deep-sea port in Kyaukphyu (Rakhine state, western Myanmar) on the Bay of Bengal as part of the planned Kyaukphyu Special Economic Zone (SEZ), informs Xinhua. The negotiation between Myanmar’s Commerce Ministry and the China International Trust and Investment Corporation (CITIC) is expected to reach an agreement soon.

As we wrote earlier, the Kyaukphyu port development forms a strategic point within China’s Maritime Silk Road, a series of ports running from Malacca Strait to Sri Lanka (Colombo), Pakistan (Gwadar) and further westwards to the Mediterranean Sea. The port development in Kyaukphyu includes an oil terminal, already operational since 2013, which handles tankers from the Middle East and feeds the cross-border pipeline to Yunnan province in Western China, thus bypassing the Strait of Malacca. The pipeline, that connects PetroChina’s new refinery in Kunming, was opened in 2017 and is expected to supply about 6% of China’s crude imports.

In December 2015, the CITIC Consortium won tender for the implementation of two projects – an industrial park and a deep-sea port on 1,737 hectares of land. These projects represent two of the three components of the Kyaukphyu SEZ project.

The CITIC Consortium comprises China’s state-owned groups – CITIC (finance), China Harbor Engineering Company Ltd., China Merchants Holdings (International), TEDA Investment Holding and Yunnan Construction Engineering Group, as well as Thailand’s Charoen Pokphand Group. The consortium will form joint ventures with local Myanmar companies for the construction and operation of the two projects.

The deep-sea port project will consist of the MADE Island Terminal and YANBYE Island Terminal, totally with 10 berths. Its designed annual capacity is reported to be 7.8 mln tons of bulk cargo and 4.9 mln TEU containers, which may be upgraded up to 7 mln TEU in case of an increased container throughput.

The development will include a road and a bridge connecting the port with the industrial park. The construction of the Kyaukphyu port will consist of four phases and take 20 years.

Myanmar’s parliament voiced support of the SEZ project saying that it would be beneficial for the economic growth of the country and particularly for the Rakhine state.

According to the CITIC Consortium, the Kyaukphyu SEZ development will create over 100,000 new jobs for local people every year. By 2025, 90% of the project managers’ positions will be undertaken by Myanmar local people. Once in full operation, the two projects will bring approximately USD 10 bln in annual GDP for Myanmar.