China’s reported majority Kyaukphyu stake in stark contrast with Thilawa
The difference between foreign ownership of Japan-led Thilawa project and that of China-led Kyaukphyu project is very “stark” and “noticeable”, the chair of a Singapore-based think tank told The Myanmar Times.
Simon Tay is speaking at the 2nd ASEAN-Myanmar Forum hosted by the Singapore Institute of International Affairs on June 28 in Sedona Hotel. Zarni Phyo / The Myanmar Times
After the 2nd ASEAN-Myanmar Forum hosted by the Singapore Institute of International Affairs (SIIA) in Sedona Hotel on June 28, Simon Tay, SIIA chair, sat down with The Myanmar Times for an exclusive interview.
AS part of the interview, The Myanmar Times asked the academic about his take on China’s alleged majority stake in Kyaukphyu port.
A consortium led by China’s CITIC Group has proposed taking a 70-85 percent stake in the US$7.3 billion deep sea port, according to Reuters on May 5. One of the sources, who declined to be named, said CITIC was in the “driving seat” on the port project, and that Myanmar was unlikely to ask for a stake of more than 30pc due to opposition from the Chinese firm.
“I guess it’s up to Myanmar people and Myanmar government,” Mr Tay said, when asked about China’s majority stake in Kyaukphyu.
But he added that the difference in foreign ownership between the China-led Kyaukphyu project and Japan-led Thilawa Special Economic Zone (SEZ) is “stark” and “noticeable”.
The Japanese government, through Japan International Cooperation Agency (JICA), and a consortium of Japanese companies own 49 percent of Myanmar Japan Thilawa Developemt (MJTD), while the Myanmar government and companies own 51pc of the joint venture.
“The difference between Thilawa and Kyaukphyu is very stark and noticeable. The Japanese really make an effort to work with Myanmar by giving Myanmar 51 percent.
“Of course, the 2pc isn’t so important [practically] but it is an important symbol as a sign of friendship and equality.
“Of course almost all the companies in Thilawa are actually Japanese.
“The Japanese are really trying to make an effort to be a partner rather than to dominate,” he said.
Citing examples of Norway’s sovereign wealth fund and Saudi Aramco, Mr Tay argued that oil and gas is a politically sensitive sector and hence Kyaukphyu is more sensitive than the manufacturing-based Thilawa.
The Kyaukphyu port is the entry point for a Chinese oil and gas pipeline which allows Chinese import from the Middle East to bypass the Strait of Malacca.
“The kinds of industry in the two projects are different. Thilawa is more manufacturing and logistics-focused, among other things. That is not so sensitive.
“Oil and gas is usually very sensitive because it’s literally out of the ground of your country.
“If I was advising the Chinese, I would never ask for 85 percent in natural gas and oil because it’s the heritage and soil of Myanmar. Myanmar, like every country, is proud of something that literally goes out of your [Myanmar’s] soil,” he said.
Another reason he would advise against the reported majority stake is the need for the project to take a long-term approach and benefit the Myanmar people.
One of the sources told Reuters that “Some people worry that China would have the power to do anything they want and control the project if it owns 85 percent,” and added that Myanmar doesn’t have other options due to the government’s financial constraints.
“I am not against oil and gas, but sometimes there would be environmental issues and other problems. “You want to structure the Kyaukphyu project so you are always aware that, unlike Myitsone dam, you cannot take the benefit and leave the problems behind [to the community].
“Those [objectives] are not easy to meet, you must find a formula to create benefit for the whole Rakhine State – create jobs for the people, make sure the environment is not so bad, don’t take too much land from them…
“I think those formula must be found,” he said, adding that “If you give someone 85 percent of the vote, or ownership of the project, I think it’s very hard.”
“If the [Reuters] report is true, it’s unwise for China and for Myanmar in the long term,” Mr Tay cautioned.
In the forum, Mr Tay said there are many countries in the region competing with Myanmar for FDI.
“Vietnam is ahead of you [Myanmar] and they are quite big as well. Sri Lanka is, maybe, behind you after so many years of civil war but they are opening up and trying to get investments.
“I am optimistic on Myanmar and I have tried to engage Myanmar for many years but I think this government has a certain timeline of which they must start to really implement. Otherwise, foreign investors will start going elsewhere,” he made the remarks during the forum.
Translation by Su Phyo Win
For more details : http://www.mmtimes.com/index.php/business/26622-china-s-reported-majority-kyaukphyu-stake-in-stark-contrast-with-thilawa.html