SINGAPORE – The $7.5 billion price tag for a Chinese-built deep-sea port in the Myanmar town of Kyaukpyu was “crazy” and “absurd,” according to a key adviser to Myanmar’s leader Aung San Suu Kyi.
China’s CITIC Group, which won a tender to build the port three years ago, has valued the port and an accompanying special economic zone at around $10 billion.
“That’s crazy,” Sean Turnell, special economic consultant to Suu Kyi, told a seminar in Singapore on Friday. “That’s way, way, way beyond what you would need for something like that, and this is something the government has paid attention to,” he said.
CITIC, China’s first state-owned investment corporation, has proposed taking a 70 percent stake in the project, with the remainder split between the Myanmar government and a consortium of local firms. The Chinese company would run the zone for up to 75 years and would finance Myanmar’s stake.
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China and Myanmar are locked in negotiations over the financing of the project, which the Myanmar government hopes will attract industry and create jobs.
Turnell, a professor at Australia’s Macquarie University who has researched Myanmar’s economy for over 25 years, said the message the Myanmar government wanted to send was that they still believe the port is a good idea. “But it doesn’t need to be $7 billion.”
The recent Panama Canal expansion project only cost $5.25 billion. “The idea that a port in Myanmar would cost $7 billion is absurd,” he said.
What most concerned the Myanmar government, Turnell said, was the precedent set by the $1 billion Hambantota port in Sri Lanka, where the government in Colombo borrowed heavily to build the port, but couldn’t repay the loans and gave China a 99-year lease for debt relief.
“The example that stands out, that has been really taken notice of in Myanmar,” Turnell said.
To buy into the Kyaukpyu port, the government “will have to borrow from the Export-Import Bank of China about $2 billion to $3 billion,” he said. “So in other words what’s on the table here is exactly what was on the table in Sri Lanka.”
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The Kyaukpyu port showed individual countries had to keep their national interests in mind when negotiating with China about the Belt and Road Initiative, Turnell said. It must be managed in a way “that is not going to cause debt distress, is actually good for China as well.”