By Chris Devonshire-Ellis, the Founding Partner and Chairman of Dezan Shira & Associates

With both China and Russia gearing up for overseas rail and Arctic shipping potential to Europe, positive moves to accept and accommodate improved rail links are being taken in the Baltics. Russia has recently signaled its desire to extend and redevelop passenger rail services from St. Petersburg to Berlin in a route that sees cross-border travel through Latvia, Lithuania, the Western Russian enclave of Kaliningrad, and through Poland.

Estonia, to the north-east, has also been discussing improvements with Russia concerning both road and rail connectivity, with the Deputy Minister of Transport of the Russian Federation Sergey Aristov stating in April that Estonia and Russia have reached an agreement regarding the re-establishing of their cooperation in transportation. Aristov was reported as saying the discussions were “very positive.” Estonia was represented by Ahti Kuningas, deputy secretary general for transport at the Ministry of Economic Affairs and Communications, Priit Rohumaa, chairman of the supervisory board of Estonian Railways, and the Estonian Ambassador to Russia Arti Hilpus. According to Ambassador Hilpas, discussions revolved around the potential for high speed links and Russian/Estonian highway collaborations.

These developments are partially geared to accentuate the increasing amount of Chinese freight trains arriving in Europe via Kazakhstan and Russia, and to allow both Chinese and Russia trade access too and obtain supplies from the Baltics. At present, much of the rail traffic enters the EU into Poland via Belarus, further south, leaving the Baltics and Nordic nations out of the loop. Chinese-European freight is seeing a 100 percent increase this year, compared to 2016, with 1,000 freight trains expected to make the journey during 2017. Such growth rates are only expected to continue. Coming Europe’s way are Chinese electronics, going the other – are valuable and perishable European consumables.

Getting the Baltics configured into this trade, both from the mutual access perspective as well as services provision, is also inspiring some serious infrastructure developments. Both Estonia and Finland are discussing the possibility of connecting to each other via a 90 km, Helsinki-Tallinn undersea tunnel. A one-way journey would take just 30 minutes, as opposed to an effective 3 hour (including airport time) trip to take the 60 minute Turboprop, and the 2 hours by ferry.

Helsinki and Tallinn jointly represent an economic area populated by 1.5 million people, and there is active inter-city movement of people for work and leisure as well as freight traffic. Last year, Tallinn processed 10 million port visitors, with Helsinki reporting 11.5 million marine passengers passing through. Traffic between the two port cities in particular saw major growth last year and tens of thousands embark on work-related trips between the two cities weekly. The EU-funded studies, which are being undertaken by a consortium of interested businesses, are expected to produce initial feasibility results later in the year. These are to include cost-benefit analyses and impact assessments for both the rail and marine options, how the undersea tunnel can be technically implemented, and price tag determinants for construction, maintenance, and rail traffic. It will also sketch out the project’s main features, including location of routes, stations, and rolling stock depots.

These are part of Rail Baltica, a greenfield rail transport infrastructure project intended to integrate the Baltic States in the European rail network. The project includes five European Union countries – Poland, Lithuania, Latvia, Estonia, and Finland. It will connect Helsinki, Tallinn, Pärnu, Riga, Panevežys, Kaunas, Vilnius, and Warsaw, and is expected to be completed by 2026.

Russia is not part of this grouping, as it is not an EU nation. Nonetheless, bilateral discussions between Russian Railways and the same group of nations have been and continue to take place. An example is the Kouvola Rail Forum taking place in Finland this September. The program specifically deals with the Eurasian Land Bridge, China rail, and Finnish-Russian rail connectivity, which has been upgraded in recent years to almost wholly electrified routes.

The Taiwanese electronics business MIPRO recently won a €22.3m contract awarded by the Finnish Transport Agency (Liikennevirasto) for the renewal of signalling systems at Niirala, Kotolahti-Mussalo, and Vainkkala marshalling yards in eastern Finland, which connect directly with Russia and the Russian Railway and highway network, although these require some development on both sides. However, both Finland and Russia recognize this, and are taking steps to integrate technological systems such as the introduction of RFID remote identifier systems. These in particular, offer potential benefits along the entire supply chain – from customers and operators to handlers and border authorities, benefiting China, Russia, and EU customers and smoothing over the entire supply chain.

Finland has also been discussing the potential for a US$3.4 billion “Arctic Corridor” that would connect Northern Europe with Russia, China, and Arctic Ocean deep-water ports. The idea is being pitched by a group of Finnish academics and business leaders, and would connect the city of Rovaniemi in northern Finland with the Norwegian port of Kirkenes on the Barents Sea. Ships could move goods from China as well as oil and gas from Arctic fields in Russia westward along the Northern Sea Route to Kirkenes. Cargo would be offloaded to the railway and sent southward through rail connections to Scandinavia, Helsinki, the Baltic states, and the rest of Europe. The Chinese routes for this are explained in the article “China’s Maritime Arctic Silk Road On Ice”.

“The Arctic Corridor project sees OBOR as very important as it provides an alternative to connect Asia with the Arctic and Europe.” said Timo Lohi, a spokesman for the Arctic Corridor project. Lohi also notes that Kirkenes in Norway is the closest Western port to Asia. Kirkenes Port is also ice-free, allowing the use of larger vessels and saving on ice-breaking costs.

These developments, tucked away into North-Eastern Europe, seem a long way from China when viewed on traditional flat maps. However, this is the top of the world, and distances are actually shorter than they appear. A direct flight from Helsinki to Beijing for example takes just 6 hours.

It should be remembered that Finland is a major gateway into Russia and also offers mutual access to China for electronics, as well as high quality Finnish goods to China. The same applies to the Baltic nations of Estonia, Latvia, and Lithuania, with Estonia especially having tied itself to developing China trade services as well as being a viable rail and sea port. While much of this depends upon the acceptance of Russia, and Russian Rail operators in the Baltics, a politically tricky subject at present, should military and security concerns be put to rest, the Baltics region can become a major player in future Chinese and Russian regional trade. Regional manufacturers should be looking at adjusting quality consumer products to Chinese tastes, and especially the sustainable, yet exotic (such as Nordic meats and fish) in addition to high quality clothing and other consumables. The services industries and development funds in particular, in everything related to transportation, warehousing, logistics, and related IT within the region should be keeping an eye on these possibilities. The EU’s next major capital city as concerns OBOR and influence may well be Helsinki.

This article was first published on Silk Road Briefing. Please click to read the full report.

With Hanoi's light-railway network scheduled to become operational in 2018, the broader Belt and Road picture is coming into focus with many of the initial phases of its development programme now approaching completion.

Hanoi's light-railway system: An integral part of the BRI's long road to completion.

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By Richard Ghiasy and Jiayi Zhou - Stockholm International Peace Research Institute (sipri)

Executive summary

This one-year desk and field study has examined the Silk Road Economic Belt (the ‘Belt’) component of China’s Belt and Road Initiative from a security perspective. The report has three components: (a) it has analysed what the Belt essentially is, what has driven China to initiate it, and how it relates to China’s own security interests; (b) it assesses what the Belt’s security implications are and might be in two selected regions of the Eurasian continent (in this report ‘Eurasia’ refers to the combined landmass of Europe and Asia), namely Central and South Asia; and (c) based on the sum of these findings, this study elaborates on whether the Belt is a platform for European Union (EU)–China cooperation on mitigating security threats throughout Eurasia, and provides policy recommendations to the EU on how to proceed. In the context of the report, ‘security’ is defined broadly in relation to intra- and interstate stability: it encompasses human security and developmental conditions.

The Belt is a still-evolving, long-term Chinese vision for Eurasian infrastructural development, connectivity and economic cooperation. There exists a vast vacuum of critical infrastructure in large parts of Eurasia, which many relevant states are not able to fill, even with the aid of existing multilateral development funds. The Belt intends to fill much of this vacuum, and while the political longevity of the initiative and efficacy of its implementation remains to be seen, it has been received with enthusiasm throughout many parts of Eurasia.

In official terms, the Belt is framed as a relatively altruistic offering, based on the principles of mutual benefit and win–win. It sets no a priori limitations on actors, methods or norms, and permits for a great deal of flexibility. In this regard, it has the potential to become a leading model of bilateral and multilateral economic cooperation in Eurasia. However, a number of stakeholders are sceptical of its feasibility, specifically in reference to security challenges throughout Eurasia. There are additional concerns about its geopolitical underpinnings, namely that the initiative is not in fact sufficiently multilateral, and serves to expand China’s strategic political and economic influence among participating states. There is little official Chinese discourse on its political drivers, which contributes to this speculation.

But what is clear is that the Belt is driven by a wide range of motivations, including enhancing China’s domestic economic security by increasing its global economic and, particularly, financial clout, mitigating security threats, and garnering strategic space. Indeed, it has evolved beyond any singular issue to become a convergence and clustering of multiple diplomatic, domestic socioeconomic, financial, geoeconomic and geopolitical interests and drivers, as well as pre-existing governmental overtures and proposals. Whether it is able to successfully further China’s interests in relation to these issues remains to be seen.

Regardless, China’s expanding overseas economic footprint through the Belt will, over the long term, serve as additional impetus for it to take leadership in global governance and regional and local state security affairs. Indeed, the Belt corresponds with China’s increasingly proactive security concepts, which stress common security through development and economic cooperation. The initiative may become one of the cornerstones of Asian economic growth and integration, and eventually of closer political and security cooperation among states, but the pathway to this scenario is long and fraught with obstacles. Without clearly defined targets it is difficult to assess the Belt in terms of success, or failure, over time.

Indeed, China may have overestimated local institutional and economic governance capacity and its own financial and diplomatic clout. It may also have underestimated the breadth of the geopolitical difficulties it may encounter. Political tensions and turmoil within Eurasian states may impact the Belt, but the Belt itself also interacts mutually with these dynamics. Some implications of the Belt on security dynamics in Central and South Asia are as follows.

1. In both Central Asia and South Asia (specifically Pakistan), the Belt could exacerbate governance problems, primarily economic accountability and corruption. It could also potentially help to keep regimes in place that have a poor democratic or developmental track record and exacerbate structural elements of instability. It may, however, stimulate greater stability if the local governments can utilize Belt capital to foster inclusive and sustainable socioeconomic growth.

2. In Central Asia, the Belt could potentially stimulate greater cooperative efforts and political will among states to effectively address underlying regional hazards in the interest of mutual economic benefit.

3. In South Asia, the Belt’s China–Pakistan Economic Corridor (CPEC), has raised political temperatures between India and Pakistan. India strictly opposes CPEC, and while the Belt is not a harbinger of new conflict, it has so far intensified historic competition over influence in South Asia. Furthermore, at this stage, the Belt has little potential to help thaw relations between Pakistan and Afghanistan, but there may be prospects for this over the medium to long term.

4. For now, the Belt does not structurally conflict with Russian security or Eurasian Economic Union (EEU) objectives, whether nationally or in Central Asia. More specific local sources of insecurity in Central and South Asia exist with or without Belt presence. They are not easily resolved on their own accord, and the Belt is, at the very least, an opportunity to begin to address these common challenges.

Indeed, the Belt can provide public goods that could potentially catalyse socioeconomic development in Central and South Asian countries. However, positive developmental spillovers of the Belt will also very much depend on the practical details of implementation: the distribution of spoils and benefits, both between Chinese stakeholders and local states, as well as between the ruling elite in those states and other sections of the population. It will require a more comprehensive commitment to policies that foster human security, rather than only regime- and state-centric security, both by China and, particularly, local actors.

Inevitably, the Belt impacts EU security interests in both Central and South Asia. Greater interconnectivity potentially facilitated by the Belt gives the EU impetus to think more strategically and contribute more proactively to stability outside of its immediate neighbourhood. This, however, requires the EU to develop its own strategic vision for stability and security in Eurasia as a whole, and the role it sees for itself and stakeholders within that picture. Such a vision would be an ideal starting point from which to assess the Belt. At present, bar the EU–China Connectivity Platform, Brussels does not have a common voice and strategic response to the Belt.

At an institutional level, the EU still requires a more comprehensive understanding of the Belt’s strategic implications in their totality before it engages in the Belt in greater measure. This includes understanding all of the Belt’s implications on the EU’s own stated foreign, security and economic interests.

The Belt, as a loose and non-institutionalized framework that proceeds largely through economic projects, is not itself an ideal platform for the EU and China to collaborate on topics of hard security. However, in relation to Belt implementation, this report concludes that there are potential cooperation opportunities within the realm of human security and development.

The EU, in coordination with other relevant stakeholders, could utilize the opportunity presented by the Belt to engage China and pull it closer towards the type of ‘rules-based global order’ most in line with its own interests and values. There is value in EU engagement with China on a range of associated non-traditional and soft security topics, from sustainable development and energy security to regional integration and governance.

However, cooperation in practical terms may be hampered by differences in approaches and political values. While the Belt is largely in line with the EU’s interests in Central and South Asia, implications for the EU’s normative and value-based agenda remain in question. As such, one feasible and relatively apolitical avenue for the EU and China to cooperatively engage with the Belt is through the common framework of the United Nations Sustainable Development Goals (SDGs). Indeed, the Belt is a potential accelerant to the achievement of the SDGs, and both China and the EU view socioeconomic development as being heavily linked to stability and security in the relevant states of Central and South Asia.

More concretely, this report recommends that the EU considers the following.

Over the short term

1. Allocating more human capital at the European External Action Service (EEAS) and other relevant agencies to map and monitor Belt security implications. Building on this, reach out to relevant Chinese authorities to discuss and map the Belt’s short-, medium- and long-term security implications, and how these affect EU foreign and security interests. This can serve as a framework through which unfolding implications can be monitored and assessed.

2. Establishing more robust and frequent in-country dialogues with China at the level of embassies and missions, as well as with other third-party actors such as nongovernmental organizations (NGOs) and organized business, with the minimal goal of greater Belt security information and risk evaluation sharing. This could also be utilized to explore synergies in developmental and soft security programming between the EU and China. Local states and third-party actors could share information, and case studies for best practices in engaging China could be developed.

3. Engaging with China, the UN and other Belt stakeholders through the Global Development Framework and UN Agenda 2030, to maximize benefits to human security, state-societal resilience, and social returns of Belt investment in infrastructure and associated sectors. Outside of UN channels, this could take place through the annual bilateral development dialogues at senior official levels, as established in the EU–China 2020 Agenda for Cooperation.

Over the short to medium term

4. Delineating an EU vision for a more stable and secure Eurasia. This would need to incorporate the EU’s own strategic role in Eurasia, its views on Asian security architecture and its vision for governance vis-à-vis other important stakeholders, including not only the United States and China, but also India and Russia, middle powers, and local actors. This vision would need to include policy suggestions for a more unified and strategic EU approach to security interests in Central Asia and South Asia. This vision could then act as the guideline for all EU endeavours in, and assessment of, other Eurasian security and connectivity proposals, including the Belt.

5. Providing technical and development-security policy assistance for Belt participating states to better utilize and align Belt funding for purposes of sustainable national economic development, human security provision, and local states’ own commitments to the SDGs. This could be done in coordination with Chinese actors. Many Belt-participating states lack the institutional capacity to pursue such agendas effectively, and the EU’s competitive advantages and soft power could translate into much-needed expertise.

6. Taking the lead with key continental Eurasian actors, China, India and Russia, and other relevant actors to set up a joint consultative Belt coordination mechanism. As the Belt’s footprint grows, so will security implications to all these and smaller actors. All interested Belt stakeholders should engage in closer joint analysis, planning and monitoring. This assessment should be comprehensive and include the Belt’s development and integration vision, including routes and trade flows. These are better coordinated in advance so that possible future post-implementation friction is avoided and EU economic security interests are promoted.

7. Tailoring EU developmental programming in relevant states in response to changing economic or business landscapes as shaped by the Belt, for instance, through (a) educational and vocational training programmes in associated technical industries to maximize local job creation and poverty reduction; (b) the use of existing environmental protection programmes to monitor and minimize the ecological footprint of Chinese large-scale investments; or (c) complementary projects in social infrastructure. This could be done in greater coordination with Chinese stakeholders, as well as in conjunction with local civil society, to ex ante minimize any socioeconomically disruptive aspects of Belt projects.

Over the medium term

8. Seeking a role in and/or dialogue mechanism with the Shanghai Cooperation Organization (SCO) and the Conference on Interaction and Confidence-Building Measures in Asia (CICA): it is likely that these bodies will play an increasingly important role with regard to discussions on the Belt’s security dynamics and, in the case of the SCO, of actual security policies and related activities. In addition, the EU could seek greater security dialogue with China through the Organization for Security and Co-operation in Europe (OSCE) or the Asia–Europe Meeting (ASEM).

9. Engaging with China, Afghanistan and other relevant stakeholders on assessing how the Belt, specifically the CPEC component, may be best utilized to contribute to Afghanistan’s fragile security situation. This could be spearheaded through Track 1.5 dialogues. The EU has invested substantially in Afghanistan since 2001 (by any measure): it is therefore only logical that it has a say in regional integration efforts. Chinese and Pakistani interest in developing, connecting and safeguarding CPEC cannot be underestimated and could be utilized strategically to improve Afghanistan’s stability.

10. Exploring longer-term joint investment projects in third countries, and deepening cooperation between relevant Chinese funding institutions, including the Asian Infrastructure Investment Bank (AIIB), and those such as the European Investment Bank (EIB) or European Bank for Reconstruction and Development (EBRD), as well as other relevant banks and developmental agencies, as a means of raising procurement, regulatory, environmental, labour and other investment standards. This could help to (a) mitigate risks that Belt investment could exacerbate poor economic governance in relevant states; (b) minimize any socio-politically disruptive investments; and (c) pave the way for increased EU private sector engagement in these regions.

Please click to read the full report.

With its foreign-policy pivot towards China, the Philippines looks to have secured extensive mainland investment in its own ambitious infrastructure-redevelopment programme as part of President Xi Jinping's far-reaching Belt and Road Initiative.

Reflecting on change: Manila Bay girds itself for a major infrastructure upgrade.

By pivoting his foreign policy towards China, Rodrigo Duterte, the President of the Philippines, has cannily delivered a huge fillip for his administration's Philippine Development Plan (PDP) – a strategic infrastructure roadmap designed to reinvent the country's economy. At the heart of the PDP are seven massive infrastructure projects, together representing an investment of some P270 billion (US$5.36 billion). Following the President's tactical realignment, it is now expected that China will play a key role in delivering a number of these projects as part of its ambitious Belt and Road Initiative (BRI).

Signalling the start of this China-Philippines infrastructure initiative, the Philippine government and a number of public and private Chinese agencies recently signed a Memorandum of Understanding (MoU). This commits the various parties to a far-reaching infrastructure-development programme, one designed to improve mobility and development across the various regions of the country with a particular focus on the island of Mindanao. Among the priorities identified are enhancing ship-passenger connectivity and cargo handling, providing solutions to Metro Manila's worsening traffic situation and helping to remedy the country's current internal transport problems.

According to Ning Jizhe, Deputy Chairman of the National Development and Reform Commission of China (NDRC), China is fully behind Duterte's 10-point socio-economic agenda, especially where it overlaps with the objectives of the BRI. Speaking after the signing of the MoU, he said: "We hope both sides can nurture these plans and that Chinese business will now be keen to invest in the Philippines."

The eagerness of China to invest in the country was underlined by the recent visit to Manila by a number of senior mainland officials. It is believed that the delegation – which included a Vice-governor of the state-owned China Development Bank and a Vice-president of the similarly state-owned China National Technical Import and Export Corporation – discussed the possibility of developing the port facilities of Manila, Cebu and Davao. The latter is one of the principal cities of Mindanao and was Duterte's former mayoral seat.

The delegation also reviewed proposals for the expansion of the Manila Harbour Centre, allowing it to handle larger vessels. The P7.4 billion project would require the reclamation of 50 hectares of Manila Bay in addition to the 79 already reclaimed to facilitate the development of the Manila North Harbour Centre, the country's largest international commercial port for bulk and break-bulk cargoes.

Commenting on the success of the visit, Red Romero, the Vice-chairman of R-II Builders, the Manila-based construction company that manages the Centre, said: "While this is not the first time we have entertained a Chinese delegation, this group was far more enthused about the project than any previous Chinese visitors."

In other moves, the Philippine government has already green-lit work on a US$183 million container port in Cebu. In order to deliver the project, Mega Harbour Port and Development, the lead contractor, has partnered with China Communications Construction Co (CCCC) Dredging, the world's largest dredging company.

The new facility – billed as Cebu International Port – will extend across an 85-hectare expanse on the shores of the town of Consolacion. Among its proposed resources is a 1,200-metre-long berthing facility.

Explaining the need for the new facility, Edmund Tan, the Cebu Port Authority's General Manager, said: "The proposed new Cebu International Port is expected to provide a lasting solution to the congestion problems at the existing Cebu port as well as the shallow water depth of the Cebu international container berths."

In terms of added connectivity, the Cebu Provincial Government has announced it is seeking Chinese backers for its Trans-axial Highway Project. As well as a 280-kilometre road connecting the northern and southern tips of Cebu, the project's remit extends to a seven-kilometre-long seaport, a 550-hectare reclamation project for Talisay-Minglanilla-Naga and four economic zones in Cebu's Second to Fifth districts.

Expanding upon his plans for the province, Hilario Davide III, the Governor of Cebu, said: "As Chinese financiers are looking to invest in the province, we have pitched the Trans-axial Project to them."

For China's part, its interest in the Philippines was rekindled only after Duterte's administration softened its stance over the controversial South China Sea issue. While the administration may still not view China as an entirely friendly neighbour, it is clearly eager to benefit from its largesse as the Philippines looks to develop its own local infrastructure.

It is not all just about investment dollars, however. A recent joint statement by Dr Zhang Yuyan of the China Academy of Social Sciences and Dr Federico Macaranas of the Asian Institute of Management (AIM) suggested that the Philippines should also take advantage of China's huge expertise in the field of infrastructure construction. Speaking during a recent AIM forum in Makati City, Zhang said: "There is huge, huge room for co-operation."

Geoff de Freitas, Special Correspondent, Cebu

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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

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