An overview of the $9bn China-backed proposal for Myanmar’s Kyaukpyu port
In 2015, China’s state-owned investment giant CITIC Group won a tender to build a massive port at Kyaukpyu, a town in the west of Myanmar.
The $9bn agreement was struck on the basis of CITIC assuming a 70% share, with the Myanmar government and local operators receiving the remaining 30%.
Three years on, however, and the project appears to be in doubt.
- Mitsubishi Corporation to lead $110mn upgrade of ports in Basra, Iraq
- Innovate to survive: The value of new technology in construction
- Read the latest edition of Construction Global magazine
According to the Financial Times, sources close to the Aung San Suu Kyi administration say it is looking to reduce the cost of the project amid fears that it would fall under Chinese control if Myanmar defaulted on debts.
The $9bn sum is also up to seven times the cost of Chinese-backed port projects carried out in Sri Lanka and Cameroon.
But what potential benefits might it bring to the Rakhine state of Myanmar and the country as a whole?
If completed, the port would open up substantial trade with the southwest of China, for it would provide Chinese companies a direct corridor into the Indian Ocean. Indeed, it is seen as a key part of its $1trn Belt and Road Initiative.
The proposed port site is also strategically placed in terms of oil and gas shipping, with recently built pipelines running through to this part of the coast.
China is also willing to finance Myanmar’s stake in the project, and would run the zone for up to 75 years.
However, many commentators point to other examples of China-backed ports which have caused trouble for countries of similar size to Myanmar.
In 2008 Sri Lanka began work on a joint project at Hambantota, but could not repay loans arranged to finance the construction costs. As a result, it has sacrificed control to China for 99 years as a means of debt relief.
France to invest €1.8bn in Egypt’s infrastructure
France will invest a total of €1.8bn into Egypt’s infrastructure focusing specifically on upgrading the Cairo Metro, building a railway to Sudan, and developing water and energy schemes. Officials have called the investment a “major boost to bilateral cooperation”.
The Cairo Metro
Included in the financing is a concessional government loan of around €800mn to upgrade Line 1 of the Cairo Metro, introduced in the 1980s. The financing will pay for 55 trainsets for the line and is provided by the French engineering company, Alstom.
Line 6 is also due to be upgraded using further state-guaranteed loans worth up to €2bn. Bruno Le Maire said that this would be negotiated over the next six months. France and Egypt have worked in close cooperation ever since Abdel Fattah al-Sisi became president in 2014, despite differences over human rights and strong criticism of Egypt by rights activists and some foreign states.
Nine more projects over the next half a decade
A further €1bn from France’s development agency, Agence Française de Développement (AFD), aims to cover a range of other projects over the next half a decade.
These projects include a railway line between Aswan, southern Egypt, and Wadi Halfa in Sudan, as well as several projects in the renewable energy and water purification industries. Bruno Le Maire, France’s Finance Minister, said Egypt was a “strategic partner and commercial dealings with it would be developed. France will substantially increase its direct exposure to Egypt, becoming the first counter-party for government to government loans,” he said.
According to Le Maire, the AFD will also €150mn to support the construction of a universal health insurance programme. French contractors such as Vinci and Bouygues have a long history of working on the Egyptian capital’s underground system.
Talking about the relationship between France And Egypt, Le Maire concluded: “France will substantially increase its direct exposure to Egypt, becoming the first counter-party for government to government loans”.