China seeks up to 85% stake in strategic port in Myanmar

YANGON: China is looking to take a stake of up to 85 percent in a strategically important sea port in Myanmar, according to documents reviewed by Reuters, in a move that could heighten tensions over China’s growing economic clout in the country.

Beijing has been pushing for preferential access to the deep sea port of Kyauk Pyu on the Bay of Bengal, as part of its ambitious “One Belt, One Road” infrastructure investment plan to deepen its links with economies throughout Asia and beyond. A consortium led by China’s CITIC Group has proposed taking a 70-85 percent stake in the $7.3 billion deep sea port, according to negotiating documents seen by Reuters and three people familiar with the talks between the Chinese state-owned conglomerate and Myanmar’s civilian government.

The size of the proposed Chinese stake is substantially larger than the 50/50 joint venture proposed by Myanmar late last year, an offer rejected by CITIC, said two people involved in the talks.

Well-placed sources told Reuters last month that China had signalled it was willing to abandon the controversial $3.6 billion Myitsone dam project in Myanmar, but would be looking in return for concessions on other strategic opportunities in the Southeast Asian nation - including the Bay of Bengal port. Kyauk Pyu is important for China because the port is the entry point for a Chinese oil and gas pipeline which gives it an alternative route for energy imports from the Middle East that avoids the Malacca Straits, a shipping chokepoint.

The port is part of two projects, which also include an industrial park, to develop a special economic zone in Myanmar’s western Rakhine State. CITIC was awarded the lead role in both initiatives in 2015.

Beijing-based CITIC, China’s biggest and oldest financial conglomerate, did not respond to several requests for comment on Friday. China’s Foreign Ministry did not immediately respond to a faxed request for comment. Negotiations between Myanmar and CITIC, which sources said were set to start next week in the country’s commercial hub Yangon, come amid a Chinese diplomatic push to forge better ties with its resource-rich neighbor. — Reuters