The following is an abridged version of Myanmar economist U Myint’s assessment of China’s Belt and Road Initiative and how it may affect Myanmar.
In recent years, Myanmar’s decision-makers have interacted with Chinese partners on infrastructure and investment projects in a seemingly dichotomous manner. But in a sense their decisions reflect a practical logic that takes into account the concerns of both the communities affected by those projects and the population at large. The abrupt suspension in 2011 of the billion-dollar hydropower dam project at Myitsone in Kachin State and the more recent agreements entered into by the current government to bring Myanmar closer into the Belt and Road Initiative (BRI) orbit present contrasting examples of Myanmar’s approach to Chinese projects in the country.
Myanmar hit the “pause” button in its infrastructure deals with China on 30 September 2011, when the Union Solidarity and Development Party (USDP) government led by President Thein Sein suspended the Myitsone dam project for the duration of his administration. That administration ended in March 2016, and the question of whether the project should be resumed or not, and of whether something else could be done with it, has become a heated and emotional issue.
In today’s Myanmar, the democratically-elected National League for Democracy (NLD) government seems to have moved to the “fast-forward” option in its economic interactions with China. A memorandum of understanding for the China-Myanmar Economic Corridor (CMEC) was signed in September 20181. A related agreement to develop a deep-sea port at Kyaukphyu in southern Rakhine State, together with a special economic zone (SEZ), was signed in November 2018. The 1,700-kilometer corridor would connect Kunming, the capital of China's Yunnan Province, to Myanmar's major economic centres – Mandalay and then Yangon — and to the Kyaukphyu SEZ. It would link the least and most developed areas of the country.
The CMEC project raises a series of issues that some view as a greater threat than the Myitsone dam. While the Myanmar government is not noted for taking bold moves or making firm decisions on complex issues, the CMEC may represent an exception, not least because it is linked to China’s Belt and Road Initiative (BRI). How then, shall the country go forward as a relative newcomer to the BRI experience, with the lessons available from other parts of the region and the globe?
THE MYITSONE DAM CONTROVERSY
The strong views on the stalled Myitsone dam project expressed by former Ambassador Hong Liang of Chinese Embassy in Yangon, published on the Embassy’s Facebook page, and also in a People’s Daily editorial, have revived and heightened the controversy. The statements reveal China’s view that the Myitsone project is an important part of the BRI and that any further delay in its construction could hamper bilateral relations, including investor confidence, and affect Myanmar’s credibility. The NLD government has resorted to the long tradition in Myanmar of problem-solving by committee. A 20-member commission to review the Myitsone dam project including its environmental and social impacts, has produced two reports. These have yet to be released publicly, leading to speculation that the reports probably found the project had more disadvantages than advantages for Myanmar.
Concerns and misgivings among the Myanmar people over the Myitsone project were further stoked when Ambassador Hong Liang, visited Myitkyina, the capital of Kachin State, in late December 2018. Upon meeting with Kachin political and religious leaders, the ambassador claimed that some Kachin leaders supported the project. This caused dismay and disbelief and a storm of protests, demonstrations, and intense and widespread calls for the termination of the project.
Several technical and environmental assessments, including a 2018 report on Myanmar’s hydropower sector, offer evidence for the case not to resume the dam project. The Myitsone issue has also rallied people of different ethnic nationalities and faiths around a broad consensus against resumption. Even a cabinet member has weighed in with his views. Several remarks made by Thaung Tun, the Union Minister for Investment and Foreign Economic Relations, indicate a growing realisation that Myanmar should consider Malaysia’s example of maintaining good bilateral relations with China by negotiating new projects while sending a clear signal that projects concluded with a previous regime may not be in the best interests of all concerned.
So, doing “something else in place of the Myitsone dam”, as Thaung Tun suggests, may be to embark on CMEC and Kyaukphyu SEZ in close cooperation with China.
Patience, hard work and a more inclusive approach to economic development on Myanmar’s part will set the country speeding along on the New Silk Road. What will this entail for Myanmar? In my view, information and implementation go hand-in-hand.
ENSURING THAT THE PUBLIC IS BETTER INFORMED
A Chinese academic has pointed out that Myanmar society is largely not aware of the BRI and that knowledge of the initiative is limited to government officials and elites engaged in policy research or dealing with China. The BRI information gap in Myanmar is not so much about the lack of access to information, which is readily available on the Internet, but more about the extent of awareness of Myanmar’s involvement in BRI projects. Details of projects and agreements are usually not released publicly, or widely shared in discussions within the policy and research communities in Myanmar.
While national newspapers cover visits of senior Chinese officials to engage in talks with senior Myanmar officials on the BRI, details of what is discussed are usually not reported. There are also complaints that decisions regarding the BRI are conducted “upstairs”, while mid- to lower-level officers are kept in the dark. Obviously, this must change. Not only officials down the line but also experts, specialists, researchers, civil society organizations and members of the public need to be informed, and consulted where their inputs are necessary, or in areas where they will benefit or be affected by BRI projects.
For example, if we know more of the economic and strategic importance placed by China on the CMEC and the Kyaukphyu SEZ, we will be able to identify how Myanmar can benefit from both a substantial increase in infrastructure investments from China and a growing economic hinterland in western China.
ACCELERATING CMEC IMPLEMENTATION
- There are several measures and approaches that Myanmar may adopt to accelerate the CMEC Plan for mutual benefit in its BRI engagement in the coming years.
- It is both politic and practical to start with an official announcement that the Myitsone Dam project will be replaced by the CMEC Plan.
- Myanmar can leverage on China’s preference for the CMEC Plan to obtain funds necessary to upgrade infrastructure, in connection with the support for national reconciliation and the peace process, such that the CMEC becomes a key component in Myanmar’s BRI engagement.
- There is considerable discussion of and debate over large infrastructure projects, with regard to environmental, social, economic and corruption risks, among others. These risks, and the lessons and advice from other countries’ experiences, should be taken into account in Myanmar’s negotiations with China on BRI projects.
- More openness and transparency are clearly required to restore trust and confidence in project implementation. All officials down the line, as well as experts and specialists, and members of the public must be kept informed of details of Myanmar’s participation in the BRI; their views must be sought and taken into consideration in project formulation and implementation.
- As the CMEC project activities pass through many of Myanmar’s ethnic minority areas, it will be desirable to enact laws to ensure that the human and economic rights of minorities are not adversely affected by the project. Such a law already exists in Myanmar2 in the form of the 2015 Protection of the Rights of National Races Law. Article 5 of this law stipulates that indigenous peoples should receive complete and precise information about business activities in their areas before implementation, so that ethnic groups may negotiate with the government and project proponents. This stipulation has not been implemented, but it should be.
- The European Union has emphasized the need for a fairer trade arrangement with China by jointly engaging to reform the World Trade Organization (WTO) with special attention to industrial subsidies. Similarly, Myanmar needs to negotiate and set up a fairer trade arrangement with China, as many Myanmar businesses and industrial establishments stand to lose out from an influx of competitively priced trade and goods from China. Since Myanmar still has least developed country (LDC) status, it may be feasible to approach the WTO’s Sub Committee on Least Developed Countries to help Myanmar address this problem.
- The CMEC, like any other project, will have its costs and benefits. And the standard economic cost/benefit principle is to proceed with a project if its benefits are larger than its costs. It is important to measure costs and benefits, as well as clearly to identify who benefits and who bears the costs. There have been discussions and debates on this topic among prominent academics and experts, facilitated by the media community in Myanmar. However, the decline in government-media relations over the past years may hinder the growth of a responsible and investigative media that provides the public with useful analyses and information on a big and complex project like the CMEC. It is my hope that journalists and reporters may be given the freedom and scope necessary to provide the Myanmar people with balanced and objective ideas and information for the smooth implementation of the CMEC.
- There are elements of the old in the new, which we can adapt to present circumstances. Trade along the ancient Silk Road was a venture over thousands of miles of uncertain terrain inhabited by isolated tribes and ethnic communities. It was a remarkable achievement. The ancient business people were able to pull it off thanks to their entrepreneurial spirit of entering into new ventures and territories, a willingness to take risks, and, more importantly, the ability to establish good personal contacts and relationships with native dwellers they encountered along the way. They did so mostly by both learning from and sharing knowledge, skills, ideas and experience3. This spirit of sharing and cooperation to solve common problems, and joint efforts to improve roads and passage-ways inspired the launch of the New Silk Road4. There is however a significant difference between the old and new Silk Roads. The old Silk Road was private-sector driven while the New Silk Road is mainly government or public-sector driven. Both the governments of China and Myanmar, at their highest levels, have made formal commitments to engage in BRI projects for enhanced cooperation for mutual benefit.
In May 2019, the government of Myanmar set out the terms upon which it would negotiate BRI project agreements with China. These include stipulations that Myanmar should be allowed to do the following:
a. seek financing from international financial institutions to implement the projects.
b. invite international tenders to ensure international investment in the projects.
c. choose projects that create mutual benefits for both sides.
These stipulations will help address the key issues highlighted in this paper with regard to Myanmar’s on-going BRI engagement with China. Moreover, the commitment made in May 2019 that “each of the project’s details will be publicized when it comes time to make decisions on implementation” will improve transparency and accountability and be much welcomed by the people of Myanmar and by the country’s development partners.
EQUAL PARTNERSHIP AND MUTUAL RESPECT
On top of all this, Myanmar today faces complex political, humanitarian, economic, environmental and social constraints that will need to be handled with considerable patience, care, and effort. China, with is long history of dealing with Myanmar, is aware of these constraints, and in recent years has offered assistance and facilitation in several areas. In this context, and with looming uncertainties in the global and regional economic outlook, it is essential that Myanmar’s relations with China be based on the principle of equal partnership and mutual respect. Cooperating as an equal partner with mutual respect is necessary to guard against the possibility of Myanmar becoming overly dependent on, and dominated by, China in the current quest for national reconciliation, peace, stability, and prosperity. Such an outcome would be detrimental for both countries.
In other words, to have mutually beneficial results from BRI engagement, China and Myanmar must cooperate as equal partners with respect for each other. It is encouraging to note that the Myanmar government is aware of the need to forestall undesirable outcomes, as made clear in the May 2019 press briefing on the BRI mentioned above.
In fact, it is not just the BRI “basket” that counts for pursuing peace and prosperity. Myanmar must continue with its efforts to actively exchange views and ideas, taking due account of good and workable advice and recommendations. It must also take account of the moral and material support currently forthcoming from its ASEAN partners and from other key regional players as well as from the United Nations and Myanmar’s traditional bilateral and multilateral development partners on the world stage.
Although the private-sector driven process that characterized the old Silk Road is still highly relevant, the challenges and opportunities that we are faced with in travelling on the New Silk Road – after thousands of years – are obviously different. There is a clear need at this time for government facilitation and support for the private sector and for the good of the general public through good governance, the rule of law, improved provision of essential public services (such as education, health, transport, clean water supply and electricity), environmental protection, and formulation and implementation of economic policies for equitable, inclusive and sustained development. These measures provide the enabling environment for private-sector led growth. Hence, we envisage the Chinese and Myanmar government authorities cooperating to set up such effective enabling environments for their private sectors to increase connectivity, share skills and knowledge, engage in joint efforts to promote trade and investment – the efforts that will enable Myanmar to proceed from the present pause to a fast forward status under the BRI framework in the coming decade and beyond.
U Myint with a Ph.D. from University of California, Berkeley, has held the posts of Lecturer at Institutes of Economics and of Education in Yangon; Chief of the Economic Division, Myanmar Ministry of Foreign Affairs; Senior Economist at the United Nations; and Chief Economic Advisor to former President U Thein Sein. At present, U Myint is a Director at the Tun Commercial Bank and Economic Advisor to the Union of Myanmar Federation of Chambers of Commerce and Industry.
The present paper is a condensed version from the author’s contribution to the centennial magazine of the Union of Myanmar Federation of Chambers of Commerce and Industry, on the topic “Myanmar: Going from Pause to Fast Forward with China’s Belt and Road Initiative,” forthcoming in late 2019. The ISEAS Myanmar Studies Programme initially borrowed the title of this paper from Daniel Kahneman, Thinking, Fast and Slow (New York: Farrar, Straus and Giroux, 2011).
PART 2 in a series entitled SILK ROAD BLUES featured in Mizzima Weekly Issue 49 this week.
Check out Part 3 tomorrow