Myanmar has seen a quick economic development since the military junta launched political reforms towards democracy in 2011 after almost 50 years of dictatorship. One of the strategies followed by the government to boost this growth has been the establishment of Special Economic Zones (SEZ) .
One of the areas chosen to host one of those Special Economic Zones has been Kyaukphyu, a coastal town in the restive area of Rakhine state, in the Eastern part of the country. The project was first announced in September 2013 and will consist of three projects: a deep-sea port, (see related conflict, below) an industrial park, and a residential area . The deep-sea port, whose framework agreement was made in November 2018 , will be the first phase of the project.
When the project was announced, Rakhine state was already submerged in a wave of racial violence after a Buddhist woman was found dead with signs of sexual abuse . Buddhists communities blamed the Rohingyas, a Muslim minority that lives in the area, and clashes between Rakhine Buddhists and Muslims spread. The tensions intensified in August 2017 after the Myanmar army launched a crackdown against a new Rohingya insurgency group that has driven over 700,000 Rohingya refugees across the border into Bangladesh .
The project is directly linked to Chinese investment and has been considered key for the Belt and Road Initiative strategy . When finished, the Kyaukphyu SEZ will become an important link in the trade with India and towards the West, and will give China access to the Indian Ocean. One of the main uses of the deep-sea port will be the trade and storage of oil that will be later sent to China through the highly controversial Shwe oil-gas pipeline, recently opened.
The project is expected to be developed by the China state-owned group CITIC, through several of its subsidiaries such as China Harbor Engineering Company Ltd, China Merchants Holdings, TEDA Investment Holding [TTEDA.UL] and Yunnan Construction Engineering Group [YNCEG.UL]. The Thai conglomerate Charoen Pokphand Group (CP Group) is also involved in the project .
The project has been criticized for being a potential ‘debt trap’ for Myanmar due to the high investment required and the disfavorable conditions given by China . According to Reuters, CITIC would have proposed taking a 51 percent stake in the $2.3 billion industrial park, an offer Myanmar has agreed to.Also, about 20,000 residents of Kyaukphyu Township may lose their land as a result of the land acquisition for developing a Special Economic Zone (SEZ), according to the International Commission of Jurists . The NGO has also accused the project of breaching Myanmar’s land laws.