A Pagoda in Bagan
SUMMARY
On May 25, concerns over the price tag attached to a Myanmar port construction (China’s CITIC Group won the rights 3 years ago) arose as experts questioned why the project would cost so much. In addition, the less than flattering reports of China’s motivation behind the $7.5 billion deep-sea port in Kyaukpyu are being questioned by critics of the One Belt One Road Initiative (OBOR) also known as the Belt & Road Initiative (BRI). The location of the port provides strategic and economic benefits, potentially giving China direct economic access to the Indian Ocean. The project is currently under Myanmar government review, as concerns grow of massive debt burdens to China make the infrastructure project less attractive. Foreign and western investment seem unlikely as Myanmar’s human rights issues and ethnic disputes act as a deterrent for investors. Without $2 billion from outside investors, Myanmar would risk relinquishing control over the project to China.
FAO GLOBAL ASSESSMENT
While the port may very well bring new economic activities to the region, investors and firms looking to enter the region need to be careful about what entities they involve themselves with. The Myanmar government, and military specifically, is facing a great deal of criticism regarding the treatment of the ethnic Rohingya (Muslim) people and affiliating with the wrong partner or government organization could put a firm in a bind if sanctions are put in place, not to mention the potential public relations issues that a firm may get entangled in without proper due diligence. Firms should conduct thorough research and due-diligence before agreeing to partnerships or entering joint ventures in Myanmar, and focus on building relationships with local communities and non-government affiliated companies.
Related Links
- Asia Times – Myanmar risks falling into a China debt trap
- Global Times – B&R debts to be addressed: analysts
- Bloomberg – China’s $7.5 Billion Myanmar Port ‘Crazy,’ Suu Kyi Adviser Says
Analyst Bio
Dillon Billingham – International Business Associate
Dillon Billingham is currently studying at University of South Carolina’s Darla Moore School of Business, majoring in international business and finance while minoring in Chinese studies with a data analytics concentration. His focus is on the promotion of US-China business through mutually beneficial relationships.
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