In the seaside market, stalls of seafood unloaded from wooden fishing boats floating in the rubbish-strewn harbor have been joined by stacks of Chinese-made toys and smartphones. Nearby, cattle graze between building sites as high-rise offices and hotels replace weather-stained bungalows. Fine-dining rooftop restaurants and a golf course underline the sense of transition.
Much of the development, and a jump in land prices, are anticipating a gigantic prize for this remote Myanmar town of 50,000 people: $10 billion to build a deep-sea port and industrial zone, financed by China. The investment plan -- seven times the cost of Chinese-built ports in Sri Lanka and Cameroon -- has put Kyaukpyu at the center of a debate in Myanmar and across Asia as to who really benefits from China’s grand Belt and Road strategy.
“The real danger of the port is that its extreme expense could lead the Myanmar government to take out an unsustainable level of debt,” said Greg Poling, director of the Asia Maritime Transparency Initiative, at the Center for Strategic and International Studies in Washington. “That, in combination with other current and future projects in Myanmar, could in the coming years lead to a debt trap.”
Those concerns have stalled development since the previous military government chose China’s CITIC Group to build the port three years ago. CITIC, China’s first state-owned investment corporation, has proposed taking a 70 percent stake in the project, with the remainder split between the Myanmar government and a consortium of local firms. The Chinese company would run the zone for up to 75 years and would finance Myanmar’s stake.
“We keep hearing it will be built since 2015, but nothing has happened so far,” said Shwe Shwe Maung, 34, the head of KaBalan, a village of 460 households in the area marked for the economic zone. “We don’t know exactly what the impact will be, but we’re all hoping that it will bring jobs.”
Some senior government officials are concerned that a nation with a smaller economy than the Dominican Republic may struggle to service and repay the billions of dollars Myanmar would need to borrow for the project.
“The amount of interest is quite substantial, and not like the loans we got from the Japanese government -- the loans from China are much more expensive,” said Soe Win, a member of the ruling National League for Democracy’s central economic committee and a candidate to become Myanmar’s next central bank governor. He declined to give details of the proposed
The Japan International Cooperation Agency is helping finance a $3.28 billion economic zone at Thilawa port, south of Yangon. The Thilawa development has raised further questions about Myanmar’s need for such a large facility in Kyaukpyu (pronounced CHOW-pew) or whether it would simply be a conduit for China, run by Chinese companies.
“Is this deep-sea port being made to benefit Myanmar?” said Ken Tun, founder and chief executive of Myanmar’s Parami Energy, the only local firm to be shortlisted for the development. “If we have a deep sea port, but it’s not controlled by Myanmar, that’s a problem.”
One major concern for some members of the government is what happened in Sri Lanka. In 2008, a joint venture with China began building a deep-water port at Hambantota. When Sri Lanka couldn’t repay the loan for the project, it ended up ceding the port to China for 99 years last year in exchange for debt relief. “China is trying to influence political events in Myanmar in many ways,” Soe Win said in an interview. “But what we are afraid of is that we will end up like Sri Lanka.”
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Toe Aung Myint, permanent secretary of the Myanmar Ministry of Commerce, which oversees the project management committee, rejects the suggestion that the port would entail too much debt, saying construction would happen in stages.
“Myanmar and Sri Lanka are not the same,” Aung Myint said in an interview. “Only based on the success of the first phase, we will do another phase.”
CITIC directed questions regarding the port to the Myanmar government. “We are unable to disclose information regarding the negotiation to the public,” Zhang Yue, the head of CITIC Myanmar, said in an email.
Soe Win isn’t the only one worried about the long-term plans for Kyaukpyu. Located on the eastern edge of the Bay of Bengal, the town is almost directly opposite INS Varsha, where the Indian navy will base its new fleet of nuclear submarines.