Myanmar keen to open up BRI projects to foreigners

by Dr. Sebastien Goulard

In late July 2020, the Myanmar authorities decided to subdivide certain tenders for the construction of Yangon New City, a BRI flagship project in Myanmar.

This decision will allow for more foreign companies, including European ones, to participate in the construction of the New City.

Myanmar and the BRI

Many BRI projects are planned in Myanmar. In a country that has for so long been confronted with secessionist movements, BRI projects will make it possible to better connect the regions . The China Myanmar Economic Corridor which will link Kunming, capital of Yunnan to the Indian Ocean, is an important segment of the new Silk Road. It will make it possible to better connect southwest China to world trade, whilst avoiding the Straits of Malacca.

For Myanmar, the completion of this corridor will modernize the country’s infrastructure even though some foreign investors remain reluctant to operate in the country due to the Rohingya crisis.

China: A firm foothold in Myanmar

The development of BRI projects in Myanmar is the consequence of China’s strong presence in the Burmese economy. China has become Myanmar’s largest trading partner and one of the main investors since 2018. The implementation of  BRI projects is occurring at the right time in Myanmar as the country begins to conduct economic reforms.

In January 2020, Chinese President Xi Jinping made a State visit to Myanmar to discuss the progress of BRI projects and agreed with the Myanmar authorities to increase cooperation between the two countries. This year was also declared as ‘China Myanmar Bilateral Cultural and Tourism Year’ to mark Sino-Myanmar relations. . Unfortunately, the Covid-19 crisis limited the festivities.

Yangon New City Project

In Myanmar, BRI initiatives include modernising the port of Kyaukpyu, on the western coast and the creation of a new city next to the old capital of Yangon.

Yangon is currently Myanmar’s main economic center, but with the opening up of Myanmar the current infrastructure may not be sufficient to sustain growth in future years. This is why the local authorities have launched a development project on the Western side of the Yangon River.

A relatively old project, first formulated in 2014, but which has been revised many times, due to its high costs and possible flood risks, the new city should be a model of sustainable development, with priority given to smart technologies. The new city will also be easily connected to Yangon.

Construction is to be carried out in two phases. The first phase, covering an area of ​​90 square km should be completed by 2025. The second, much more ambitious phase, includes a new port and is intended be started by 2050. Ultimately, the new city of Yangon would house more than 1.5 million inhabitants and cover an area twice the size of Singapore. But the development of this project will take time, which is why the Myanmar authorities have decided to revise it once again, in order to drive early results.

Revised Yangon New City Project

The New City project will be divided into several sub-programs as announced by Minister of Investments U Thaung Tun at a conference held on July 29th, 2020.

In 2018, the “New Yangon Development Company” (NYDC), a state-controlled company had signed a $1.5 billion contract with the Chinese company “China Communications Construction Company” (CCCC) for the construction and development of the area.

The Myanmar government did not cancel this agreement, but chose to divide up the master project, creating sub-projects that would be open to other companies following the principle of the “Swiss challenge”, that is to say that other companies will be able to win the bid if they offer better terms than CCCC.

The first sub-project, which is estimated at around $800 million, includes an industrial park, a bridge, and several commercial and residential areas.

The Myanmar government has asked several international consulting firms to oversee the organization of this ‘Swiss challenge’ in order to increase the project’s transparency.

According to Serge Pun, director of the NYDC, the construction of the new city as well as that of the other BRI projects will accelerate in the coming months whilst at the same time in a  post-Covid19 context, Myanmar will need to create new jobs. One of the reasons why the  project  was split is to rapidly build an industrial zone that can offer employment to the local population.

Opening up opportunity in Myanmar

The modification of the Yangon New City project also reflects the desire of the Myanmar authorities to open up the BRI projects and to be more transparent.

As well as Yangon New City, other projects continue to attract other Asian investors. In early August, Japan-based “Aeon Mall” announced the upcoming construction of a giant shopping center in Yangon, demonstrating the strong confidence of the group in the Myanmar economy.

Yangon’s economic development may attract many foreign companies, and ambitious European ones need to be ready to enter this market.