Myanmar’s role in shaping global shipping and logistics chains through China’s Belt and Road dream 

15 December 2018
Myanmar’s role in shaping global shipping and logistics chains through China’s Belt and Road dream 
A general view of the a gas pipeline project in Kyauk Phyu, Rakhine State. Photo: EPA

It is no understatement to say that there are tectonic shifts underway for trade and shipping as trade logistics and supply chains are being disrupted, not by technology but the awakening of the long-asleep Silk Road. The subject of this grand reshaping of global trade links is trade between China and Europe, valued at about US$600 billion in 2017 and expected to double by 2025.  By value, 70 per cent of all cargo of this trade has been transported by ocean, including 15 million barrels a day of the global daily oil production.


The original Silk Road is believed have commenced in 1070 BC and ended in 1720 with the fall of the Mongol Empire. Development of Central Asia region is credited to the Han Dynasty, starting in in 207 BC. This vast transportation network, connecting key markets in Asia to Europe, passed through countries like India and Indochina, providing the conditions that gave China international trade leadership as the start and end points of key transport nodes.

In this region, as shipping and navigation methods improved, with the rise of colonialism and the Straits of Malacca becoming more navigable, the maritime sector grew in tandem, providing a sea alternative to the land belt.


Under the original Silk Road, Myanmar was the main trade route between India and China. The Mon Kingdom also served as important trading centre in the Bay of Bengal. Following Britain’s colonisation, Myanmar became the wealthiest country in Southeast Asia. It was once the world's largest exporter of rice. It produced 75 percent of the world's teak and had a highly literate population.  This all changed once the country gained independence in 1948. The country has since then declined to now be one of the poorest countries in the global economy. One could argue that there are many parallels between China and Myanmar as both share a history of decline and re-emergence as the new Silk Road, under the banner of the Belt Road Initiative, takes shape.  It is also ironic that as the likes of the U.N. bestows pariah status on the country as was done post 1948, China has invited Myanmar’s participation in the establishment of a new global economic order.

When reviewing 2018, it is clear that this has been a watershed year in the fragile transition to democracy, a process that should not be hurried. Initially Myanmar was viewed by Chinese eyes as a gateway to trade, just as was done under the original Silk Road. However, with greater clarity emerging through the development of the land belt and maritime roads and these two plans converging at key ports, Myanmar’s importance grew. No longer did China need India as a western gateway, instead the likes of Kyauk Phyu and Mon State could replace it. Myanmar could once again become the gateway to trade in Europe, Africa and the Middle East.

Beyond building point infrastructure like ports and railway stations, the BRI intends to carve out a global logistics and transportation network that connects those regions promising high economic growth with strategic resources. For Southeast Asia, projected to be the world’s fourth largest market in 2030, the BRI connects a market of 600 million people to the rest of the world, boosting growth and vibrancy for ASEAN’s ten countries.

Myanmar has seen a number of developments in 2018 that has helped establish a solid platform going into 2019. Primarily among these is the recognition of other nations in the important western gateway status of Myanmar - despite the UN and World Bank harming Myanmar’s economic progress through sanctions and other financial instruments.   With both India and Japan having interests in securing port and ocean access in Sittwe and Daiwei respectively, has enabled Myanmar to secure beneficial agreements under the new China Myanmar Economic Corridor (CMEC), particularly in ownership and loan finance arrangements. A good example is the recent agreement around the Kyauk Phyu port and special economic zone agreement.. Furthermore the Kyauk Phyu Oil Pipeline (240,000 barrels a day with capacity for 440,000 barrels per day) with its Gas pipeline (12 Billion cubic units a year), directly supplies feedstock to the Anning refinery that  is 28km SW of Kunming . Note that China’s energy needs are met through four supply channels, one of which is Kyauk Phyu.

Myanmar’s leadership also needs to evaluate China’s participation from an informed position. For example, a closer inspection of the much maligned Sri Lankan port of Hambantota reveals the Hambantota port is under Sri Lankan sovereignty, emphasised by the recent relocation of their southern naval facility to the port. Taking a deeper look at the agreement, it is noted that both Chinese and Sri Lankan ventures share the revenue as well as operate the port. Security, however, is the responsibility of Sri Lanka. These provisions are guaranteed by the five parties to the agreement, namely: China Merchants Port Holdings, Sri Lanka Ports Authority, Hambantota International Port Group, Hambantota International Port Services and the Sri Lankan government. The deal to invest a further Us$1.3bn to develop a marine logistics precinct, whilst split 70/30 in favour of China, has a 10 year period in which Sri Lanka can buy 20% of the debt back, giving it 50/50 ownership with China.

This should be the basis for reassessing Myitsome Dam as well as looking at other forms of electrical power distribution and infrastructure. This is particularly relevant when looking at the likes of new generation coal fired power stations (High efficiency low emissions) as a solution to base power provisions. It is ironic that Myanmar is expected only to consider so called clean energy sources when developed nations have over 60% of their electricity supplied by nuclear, coal and hydro.

Despite all the western global negative news around the peace process and alleged human rights violations, Myanmar has been able to push an agenda that sees peace and democracy being achieved through economic development. By taking advantage of its common history with both India and China and its role in the ancient Silk Road, it has a solid platform in which the country can leapfrog poverty. It can do this by engaging in infrastructure development that creates a basis upon which commercial activity can be enhanced and employment opportunities are created. I expect that in 2019, Myanmar will leverage opportunities around electrification and network connectivity to facilitate delivery on economic reform and development.