December 31, 2015 / 10:17 AM / 3 years ago

China's CITIC wins projects to develop Myanmar economic zone

YANGON, Dec 31 (Reuters) - Consortia led by China’s CITIC Group Corporation have won bids for two projects to develop a special economic zone in Myanmar’s western Rakhine State, underlining Beijing’s intent to expand its foothold in a country now on the radar of Western investors.

One consortium won a tender to build a deep sea port on the Bay of Bengal, while another consortium won a contract to develop an industrial area, managers of the economic zone said on Thursday.

Both projects are part of Myanmar’s plan to boost the region’s economy with the Kyaukphyu Special Economic Zone, and they add to China’s portfolio in one of Myanmar’s poorest states.

China already has oil and gas pipelines from Kyaukphyu, across Myanmar to China’s Yunnan province, bypassing a potential shipping chokepoint of the Malacca Strait.

CITIC’s consortia include China Harbor Engineering Company Ltd., China Merchants Holdings, TEDA Investment Holding and Yunnan Construction Engineering Group.

The only non-Chinese company involved is Thailand’s Charoen Pokphand Group, according to China’s Xinhua news agency.

Myanmar’s parliament approved development of the economic zone on Tuesday despite opposition from activists and lawmakers who criticised the tender process and said the development would have a negative impact on the people.

“It isn’t known whose land will be seized and how they will be compensated,” Ba Shin, a lower house MP for Kyaukphyu, said. “Nothing is known about the potential developers and investors. There are growing concerns and doubts among the people due to lack of transparency.”

CITIC was not immediately available for comment.

Rakhine State saw outbreaks of religious violence between Buddhists and Muslims in 2012 and 2013. The majority of the country’s marginalized Rohingya Muslims live there.

China enjoyed a cozy relationship with Myanmar under a junta that ruled for 49 years until 2011, when power was ceded to a semi-civilian government headed by President Thein Sein.

Thein Sein re-engaged with western nations, including the United States and pushed back on some Chinese initiatives, most notably suspending a dam project in 2011. Despite that, China remains Myanmar’s largest trade partner.

The junta left the economy in tatters. Reforms under Thein Sein’s government have opened some sectors to foreign investment and growth has accelerated - from a low base.

The development of special economic zones is one of the policies aimed at stimulating growth. Japanese firms drove development at Thilawa, another zone, near Yangon city.

A winner for a third part of the project, a housing development, was not selected due to a dearth of qualified bidders, the Kyaukphyu SEZ Bidding Evaluation and Awarding Committee said in a statement.

Editing by Simon Webb and Robert Birsel

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