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Myanmar group highlights risks at China-backed projects

Thiha Ko KoChan Mya Htwe  The Myanmar Times Tue, June 30, 2020

YANGON – The Sandhi Governance Institute, a civil society group that observes local projects, has flagged “risky conditions” and a lack of transparency at the New Yangon City Project (NYCP) in a report dated June 24.

“There should be more transparency involved in this project. For example, key data should be readily available and transparent,” said U Khine Win, executive director of Sandhi Governance Institute.

The project is risky because of the huge costs and prolonged implementation period, according to the report. It also warned that several areas within the site of the project are likely to be flooded.

“And, the NYCP is not included in Myanmar Project Bank, implying that the project is not a government priority,” U Khine Win said.

On June 24, New Yangon Development Company, the developer of the NYCP, said it had submitted the environmental impact assessment (EIA) reports covering five project proposals involving bridges, power, industrial estates, freshwater supply and wastewater treatment to the authorities. An initial environmental examination report for road projects is also complete.

The reports have been submitted to the Environmental Conservation Department (ECD) under the Ministry of Natural Resources and Environmental Conservation. If approved, the ECD will issue Environmental Compliance Certificates.

Launched by the Yangon regional government in March 2018, the US$1.5 billion (K2.8 trillion) NYCP covers an area twice the size of Singapore. It is being developed across Twante township, Kyeemyindaing township and Seikgyi Kanaungto township, south-west of Yangon.

 

An agreement was signed with China Communications Construction Company (CCCC) to build two bridges, roads, power plants, water and wastewater treatment plants and a 10-square-kilometre industrial estate. The regional government has since come under fire for doing so without calling a tender.

High risks for MEDZ

In a separate report released earlier this month, the Sandhi Governance Institute also flagged the need for more transparency in implementing the Myitkyina Economic Development Zone (MEDZ), noting that there are “high risks” of the project sustaining losses.

The MEDZ is a Public Private Partnership (PPP) between Yunnan Tengchong Heng Yong Investment Company (YTHIC) and the Kachin State Government and considered to be part of the China-Myanmar Economic Corridor.

The MEDZ could exacerbate already negative perceptions of Chinese investment because of its location in a region prone to ethnic conflict and other illicit activities, the report said.

For example, there might be risks for project operation and maintenance work in the area due to illegal dealings at the China-Myanmar border area. “There are illegal timber, precious stones and product smugglings at the China-Myanmar border in Kachin State and the influx of Chinese workers appointed for MEDZ development projects might make things worse. As the project term is 50 years, illegal goods might enter along with tax-exempted equipment, such as construction machineries,” said U Khine Win.

The project might also lead to financial and economic risks for the Kachin State Government. Although the MOU notes the total cost for the whole project at $ 400 million, there is no statement for PPP monetary management and capital gains tax rates are not defined. Although the project costs are stated publicly, there are no estimates for profits and economic opportunities.

As such, “the project is a high-risk high- return investment as there might be huge profits or insolvency issues as well,” the report said.

U Khine Win added that the MEDZ could face similar challenges as the Dawei Special Economic Zone (SEZ) in Tanintharyi due to its size and scale. The project will be implemented across 2000 hectares of land near Myitkyina, Kachin State.

He said Dawei SEZ was delayed for years after the developed wasn’t able to raise the $8 billion needed for its implementation over 3000 hectares of land. – Translated

https://www.mmtimes.com/news/group-highlights-risks-china-backed-projects.html

From: THE MYANMAR TIMES, MYANMAR Tue, June 30, 2020

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