The city of Kyaukphyu, a major town in Rakhine state, in Western Myanmar, is located in a privileged area in the Bay of Bengal. Nestled between India and China, Kyaukphyu is poised to become one of the major global trade hubs in the near future.
After two years of negotiations, the Myanmar government signed in November 2018 a framework agreement with China’s state-owned CITIC Group to develop a Deep Sea Port in the area, that will be key to boost the trade between China and the West .
The port will give China access to the Indian Ocean and will become the shortest and most economical gateway for trading goods between China and India. The new route will save about 5,000km in sailing distance for shipments traveling between China and India . Thus, the Kyaukphyu port is a key project in the China Belt and Road Initiative, a government plan to expand Chinese influence in more than 60 countries in Asia, Africa and Europe, through infrastructure projects.
However, many in Myanmar worry about the preferential rights that will be given to China in the project and the debt that it might create for the country. According to a Reuters investigation , Beijing pushed for preferential access to the deep sea port, taking a 70-85 percent stake in the project, whose cost was estimated at the beginning at $7.3 billion . The Myanmar government would have proposed a 50/50 joint venture, an offer rejected by CITIC, according to the news agency. Eventually, the cost of the project was reduced to $1.3 billion .
The economic zone faces opposition from activists and residents who criticized the tender process for its alleged lack of transparency and said the development would have a negative impact on local people .
Other controversial projects are linked to the port. Thus, the Kyaukphyu Deep Sea Port is the first stage of the Kyaukphyu project that will also include a Special Economic Zone that will be built later on . The Special Economic Zone will put about 20,000 people at risk of losing their homes due to land acquisition for the zone, according to the International Commission of Jurists, a human rights watchdog .
The port in Rakhine State will also be the entry port for the Shwe oil-gas pipeline that will send the oil brought from the Middle East to China, after being stored at the port. In September 2018, the Myanmar government also signed a Memorandum of Understanding on the establishment of the China Myanmar Economic Corridor that will connect Kunming, in Yunnan Province in Southern China, to the Kyaukphyu port .