With its abundant natural resources and its unmatched geographical advantages, Myanmar could benefit hugely from the Belt and Road Initiative, but only if it can secure the massive investment needed for its required infrastructure upgrade.
Can Belt and Road investment trigger a new dawn for Myanmar's infrastructure upgrade?
The benefits Myanmar could receive as a consequence of China's Belt and Road Initiative are potentially massive, not least because of its strategic location. The country, after all, sits between southern China and the massively populous markets of Bangladesh and India. Myanmar also has ports on the Bay of Bengal, which – if they were to be made more accessible – could offer China substantially shorter shipping routes to the West. To cap it all, Myanmar is also rich in raw materials – oil, gas and hydropower – all of which are in relatively short supply in China.
It was back in 1999 that the idea of a Bangladesh-China-India-Myanmar (BCIM) Economic Corridor was first put forward, though it was not until 2013 that all four nations truly embraced the project. In August last year, an official statement was released reaffirming the overall commitment to the project following a state visit to China by Aung San Suu Kyi, Myanmar's State Counsellor. Unequivocally committing her country to the project, the statement read: "Myanmar welcomes China's Belt and Road Initiative and the move to establish the Bangladesh-China-India-Myanmar Economic Corridor."
Essentially, the BCIM is a multi-modal, 2,000km infrastructure project designed to link the southern Chinese city of Kunming with Mandalay, one of Myanmar's key economic hubs. Along the way, it would run through Dhaka, the capital of Bangladesh, before ultimately terminating in Kolkata, India's second largest city.
Although the project is still at the planning stage, it is widely expected that Myanmar would benefit immensely from the enhanced regional connectivity. Set at the veritable crossroads of India's Look East and China's Go West policies, Myanmar is the gateway to a staggering 2.3 billion potential consumers in its neighbouring countries. There is even the possibility of luring substantial trade away from Singapore as China looks to implement trade and energy routes beyond the Strait of Malacca.
Assessing the country's potential to rewrite the global trade rulebook, Andre Wheeler, Chief Executive of Asia Pacific Connex, an Asia-Pacific-based specialist oil and gas consultancy, said: "Myanmar – together with what is happening in Europe and in Baku [the capital of Azerbaijan] – is about to totally change the logistics balance that has dominated East-West trade for the past 40 years. It will allow manufacturers in once-isolated, low-cost production areas to access rail links for the first time. Studies have already shown that rail freight will be considerably cheaper than using the existing maritime routes."
It is a sentiment endorsed by Mark Rathbone, Asia-Pacific Capital Projects and Infrastructure Leader for PwC Singapore. Addressing the issue, he said: "Myanmar's geographical proximity to Kunming could also contribute to its shipping business. The Yunnan capital would be able to use Myanmar's existing ports to transport goods to Africa and the Middle East."
The big 'if', though, that brings this all into question is the country's lack of infrastructure and the financial resources required to implement any required upgrade. In 2015, the United Nations Economic and Social Commission for Asia and the Pacific (ESCAP) deemed Myanmar to have the largest infrastructure deficits in the region, while The World Economic Forum ranked Myanmar 141 out of 148 countries in its 2013-2014 Global Competitiveness Report. In concrete terms, as it were, in 2015 only 38.9% of the country's roads were paved, while its overall road density was among the lowest in the region.
Historically, China was Myanmar's largest investor during its years of international seclusion, supporting a number of strategic infrastructure projects, including oil and gas pipelines, ports and dams. Since the country began its opening-up process in 2010, investment has accelerated.
In the 2015-2016 period, the country received US$9.4 billion in FDI, $8 billion in 2014-2015, and $4.1 billion in 2013-2014. In the past fiscal year, the oil and gas sector attracted the biggest investment, followed by transport and communications, then manufacturing. Singapore topped the list of foreign investors, having provided $4.3 billion across 55 projects. China, Myanmar's biggest trading partner, was in second place, having invested $3.3 billion.
Despite these sizable sums, this is still seen by ESCAP as representing only a fraction of what is truly required. The country's largest cities, for instance, require an investment of $146 billion in the years running up to 2030 just to meet the infrastructure requirements of their existing populations and expected new arrivals. According to figures from the Asian Development Bank, the country still needs to find $80 billion if it is to meet its 2030 development targets.
Among the major projects already under development is Hanthawaddy International Airport, one of the most ambitious infrastructure projects ever undertaken in the country. When completed, it will be Myanmar's largest airport, replacing Yangon Mingalardon Airport as the primary gateway to the country. Changi Airport Group, a Singaporean consortium, has won the $1.5 billion bid to implement the first phase, with the Myanmarese government having secured a 40-year loan from the Japanese government to fund the project.
An artist’s impression of Hanthawaddy International Airport, the proposed new gateway to Myanmar.
In terms of the country's other priority projects, the Dawei Deep Sea Port and Special Economic Zone is envisioned as Myanmar's largest industrial and trade zone. Thailand is a major partner in the project and the Japanese government has again shown interest in providing the financing.
Another major initiative is the Myitsone Dam, a $3.6 billion hydroelectric power project located at the junction of the Mali and N'Mai rivers and the source of the Irrawaddy River. Once completed, the dam will form part of the Myitsone Hydroelectric Project and be the largest of seven dams planned along the rivers, with a joint installed capacity of 13,360 MW.
The dam is expected to be completed in 2019 and will be the 15th-largest hydropower station in the world. The project has been undertaken by Upstream Ayeyawady Confluence Basin Hydropower, a joint venture between the China Power Investment Corporation, the Asia World Company of Burma and Myanmar's Ministry of Electric Power.
Geoff de Freitas, Special Correspondent, Yangon