China and Myanmar signed the framework agreement for the Kyaukpyu Port Project, as reported by Caixin on November 7. The first-phase construction of a terminal with capacity for two to three vessels will involve an initial investment of USD1.3bn, down from a previous estimate of USD1.6bn. The port project will be carried out in four phases. A Chinese consortium will take a 70% stake in the port project with the remaining 30% split between the Myanmar government and a consortium of local businesses. The Myanmar stake was increased from the previously agreed 15%. Investors in the China consortium include China Merchants Group, China Harbour Engineering, Tianjin Teda Group [000652:CH], Yunnan Construction Engineering and Thailand’s Charoen Pokphand Group [CPOKY:US].
The Kyaukpyu port is the first project to move forward under the China-Myanmar Economic Corridor, part of the Belt and Road (BaR) Initiative. Kyaukpyu port is located at the west end of the 1,700 km corridor that will connect Kunming, the capital of China’s Yunnan province, to Myanmar’s major economic hubs. Total investment in the port was estimated at more than USD7bn, of which Chinese financing could account for as much as 85%. However, the framework agreement will be just the beginning of a lengthy procedure before construction starts, including the signing of several related contracts and regulatory approval. BaR projects were delayed for years in Myanmar, due to fears of excessive debt for the developing country. However, memorandum of understanding (MoU) signed in September sped up the BaR projects, as the governments agreed to collaborate in infrastructure, manufacturing, agriculture, transport, finance, research, and technology.