Cri­sis, back­lash, Kyauk­phyu and Kal­adan: fu­ture of Rakhine’s econ­omy

The Myanmar Times - Weekend - - Business - 8 CHAN MYA HTWE chan­myahtwe@mm­times.com U Oo Than Naing Re­gional MP

THE econ­omy and busi­nesses in the re­source-rich Rakhine State are throt­tled by the cri­sis as well as the ac­com­pa­ny­ing in­ter­na­tional back­lash, dash­ing any hope of mas­sive for­eign in­vest­ment in the near fu­ture. In the meantime, lo­cal com­mu­ni­ties in Kyauk­phyu have de­manded the stake ra­tio of the pro­posed Kyauk­phyu port to be re­struc­tured so as to al­low a higher ra­tio for Myan­mar. Nay Pyi Taw is ne­go­ti­at­ing with the stake­hold­ers on ad­just­ing the own­er­ship per­cent­age be­tween the two con­sor­tiums.

Cri­sis and trade De­spite the fact that Rakhine is not in Myan­mar’s heart­land ge­o­graph­i­cally, the state is cru­cial for the coun­try’s econ­omy. In ad­di­tion to the renowned Nga­pali beach, Rakhine State holds enor­mous eco­nomic po­ten­tial be­cause the state has oil, nat­u­ral gas fields and mar­itime re­sources from the Bay of Ben­gal.

How­ever, Rakhine re­mains the sec­ond poor­est state in the coun­try. Com­mu­nity and eco­nomic de­vel­op­ment are still lag­ging be­hind, de­spite of the gov­ern­ment’s plan to im­ple­ment an ar­ray of projects, such as the Kala­tan River project. Among the in­ter­na­tional play­ers, China has shown in­ter­est in Rakhine with promis­ing (and po­ten­tial) prospects.

Fol­low­ing the re­cent at­tacks in Au­gust, the gov­ern­ment’s in­for­ma­tion min­istry has failed to ef­fec­tively con­vey ac­cu­rate in­for­ma­tion to the world. Mis­in­for­ma­tion per­sisted un­til State Coun­sel­lor Daw Aung San Suu Kyi clar­i­fied the sit­u­a­tion in a speech on Septem­ber 19.

None­the­less, in­ter­na­tional pres­sure has in­creased. This pres­sure poses a chal­lenge to the State’s econ­omy, said U Oo Than Naing, MP from Ye­thetaung township in Rakhine State.

Out of all for­eign in­vest­ment in Myan­mar, Western coun­tries only amount to less than 10pc, ac­cord­ing to the Di­rec­torate of In­vest­ment and Com­pany Ad­min­is­tra­tion (DICA). They con­trib­ute lit­tle to the de­vel­op­ment of Myan­mar and to sup­port­ing demo­cratic val­ues, said U Oo Than Naing.

This year, the Myan­mar In­vest­ment Com­mis­sion (MIC) is­sued li­censes to two com­pa­nies to build the sta­tion for sup­port­ing oil and nat­u­ral gas in the Bay of Ben­gal with the per­mis­sion of the state gov­ern­ment and the Min­istry of Elec­tric­ity and En­ergy.

U Khin Maung Nyo, free­lance eco­nomic colum­nist, is con­cerned that the in­ter­na­tional pres­sure on Rakhine State may worry for­eign in­vestors about the area’s sta­bil­ity, which can hin­der the eco­nomic prospects of Rakhine.

“The in­sta­bil­ity is not just in Rakhine State, it is slow­ing down in­vest­ment and de­ci­sions in the whole coun­try. Due to the im­pact of the me­dia on the is­sue, some for­eign tourism agen­cies be­lieve that the in­sta­bil­ity is only lim­ited to Rakhine, but oth­ers be­lieve it is af­fect­ing the en­tire coun­try.

“In any case, Rakhine tourism suf­fered from the change in the per­cep­tion of for­eign­ers,” he said.

From the cur­rent sit­u­a­tion, there doesn’t seem to be signs of eco­nomic sanc­tions on Myan­mar, so the sit­u­a­tion will not be wors­en­ing, said U Khin Maung Nyo.

The cur­rent con­flict in Rakhine State only takes place in Maung­daw re­gion in the north­ern part of Rakhine. The rel­e­vant gov­ern­ment and state gov­ern­ment have been do­ing their best to sta­bilise the re­gion. For now, the Rakhine State’s econ­omy has stag­nated.

Lo­cal cit­i­zens in Rakhine State ei­ther earn a liv­ing by fish­ing at sea (30pc of the pop­u­la­tion do so), or do busi­nesses re­lated to agri­cul­ture (70pc do so). Al­though rice is a sta­ple crop, farm­ers are fac­ing dif­fi­cul­ties as they can­not get a good price. Be­cause of the in­sta­bil­ity, fish­er­men can­not go at sea, push­ing them to­ward un­em­ploy­ment.

In this view, the re­gional un­rest also af­fected the seafood fac­to­ries in Maung­daw re­gion in terms of re­duced pro­duc­tion, ac­cord­ing to Rakhine State Fish­eries Depart­ment Di­rec­tor Dr Nyunt Wai Maung. “Our Rakhine State’s eco­nomic is much re­duced. We have many nat­u­ral re­sources on sea and land. We also have moun­tains. We, Rakhine cit­i­zens, are starv­ing de­spite the fact that we have many nat­u­ral re­sources,” U Oo Than Naing, a re­gional law­maker, told The Myan­mar Times.

“We want to es­cape away from that sort of life. We want the econ­omy to im­prove. We want for­eign in­vest­ment to come to our re­gion. We want them to learn about our re­gion’s real sit­u­a­tion and to pass the mes­sage. We want only in­vest­ments which will ben­e­fit our coun­try. We don’t want in­vest­ment which does noth­ing for us,” he added.

China’s Kyauk­phyu China’s Kyauk­phyu deep-sea port and Spe­cial Eco­nomic Zone (SEZ), which started un­der U Thein Sein’s gov­ern­ment, are cur­rently be­ing de­vel­oped in Rakhine State. Daw Aung San Suu Kyi signed up to the China-led Belt and Road Ini­tia­tive when she vis­ited Bei­jing in May.

An MOU is ex­pected to be signed be­tween Chi­nese state-owned CITIC which won the ten­der to es­tab­lish the port and the SEZ - and the state gov­ern­ment. The de­vel­op­ments of Kyauk­phyu re­gion will be shaped by th­ese two projects, ex­plained U Kyaw Aye Thein, Rakhine State plan­ning and fi­nance min­is­ter.

Lo­cal com­mu­ni­ties ob­served that Rakhine State econ­omy is in a dif­fi­cult po­si­tion to de­velop. There has not been any for­mal agree­ment be­tween the two par­ties.

Un­der U Thein Sein’s gov­ern­ment, CITIC was con­tracted to im­ple­ment the projects with the con­di­tion that the Chi­nese con­sor­tium will in­vest up to 85 per­cent in the strate­gic port. This was not well re­ceived by the lo­cals, U Oo Than Naing said.

As a re­sult, the Na­tional League for Democ­racy-led gov­ern­ment is cur­rently work­ing on a change in the own­er­ship per­cent­age be­tween the two con­sor­tiums.

Lo­cal com­mu­ni­ties have ex­pressed their de­sire that Kyauk­phyu SEZ is struc­tured in the same way as Thi­lawa SEZ – Myan­mar owns 51pc while Ja­pan owns 49pc. Ad­di­tion­ally, there are con­cerns about land com­pen­sa­tion, which has not been planned, a lo­cal con­sid­er­ably larger than Thi­lawa SEZ, the cur­rent ar­range­ment is one-sided so it does not suf­fi­ciently ben­e­fit the re­gion and lo­cal econ­omy. On the other hand, bet­ter syn­ergy with lo­cal com­mu­ni­ties could has­ten the re­al­i­sa­tion of the project, the re­gional law­maker noted.

“Why can’t the gov­ern­ment dis­close the Kyauk­phyu project de­tails with trans­parency? The union gov­ern­ment is tak­ing the lead on this but the Rakhine State par­lia­ment was not up­dated with all the in­for­ma­tion,” U Oo Than Naing ex­plained.

In­dia’s Kal­adan Kal­adan multi-modal project is sup­ported by a full grant from In­dia. Sit­twe jetty and Paletwa ma­rine ter­mi­nal have al­ready been com­pleted. When the jetty op­er­ates, bi­lat­eral trade will im­prove. In its wake, the de­vel­op­ment of agri­cul­ture, live­stock and SME will fol­low.

“The down­turn in re­gional in­vest­ment will not worsen, thanks to projects such as Kyaukpyu SEZ and Kal­adan project. Chi­nese in­vest­ment and trade are im­por­tant for Myan­mar, and re­la­tions with In­dia is good as they side with us,” an eco­nomic ex­pert said.

The US and other Western coun­tries do not have much in­vest­ment in Myan­mar. In­vest­ment agree­ments be­tween Myan­mar and the EU are not yet signed. Only once the in­vest­ment pro­tec­tion agree­ment is signed will they in­vest more in Myan­mar. Ir­rel­e­vant of the Rakhine is­sue, EU in­vest­ment will not come in en masse. It will take time for re­gional de­vel­op­ment projects to take shape, eco­nomic ob­servers said.

Tourism and pro­mo­tion Rakhine has a long coastal line well suited for re­gional tourism. Nga­pali beach in Rakhine State ranks as the 8th best beach in the world, ac­cord­ing to CNN 2016 rat­ing. Dur­ing tourism sea­son, the coast host many vis­i­tors with in­suf­fi­cient ho­tels. The state gov­ern­ment plans to ex­pand the re­sort area. Along th­ese lines, Kan Thar Yar beach in Gwa township is cur­rently be­ing de­vel­oped.

A cir­cu­lar road along the beach from Gwa to Aye­yarwady Re­gion was agreed by Rakhine State and Aye­yarwady Re­gion gov­ern­ments this year to strengthen eco­nomic co­op­er­a­tion. It aims to de­velop tourism de­vel­op­ment, elec­tri­fi­ca­tion, and trade from Aye­yarwady to Maung­daw trade zone and in­ter­na­tional mar­ket via Sit­twe jetty.

“If re­sources in Rakhine are ex­ploited, Rakhine econ­omy will de­velop a lot, we hope. There are some beaches on a path from Gwa to Aye­yarwady. But due to the dif­fi­culty in trans­porta­tion, those ar­eas are not de­vel­oped. We agreed to pro­vide elec­tric­ity on Gwa,” Rakhine State plan­ning and fi­nance min­is­ter U Kyaw Aye Thein said.

There are many prospects for Rakhine’s de­vel­op­ment fol­low­ing ho­tel up­grades in Nga­pali and Thandwe, he said.

A del­e­ga­tion led by the tourism Union Min­is­ter U Ohn Maung will at­tend a photo tourism pro­mo­tion in Ja­pan to at­tract tourists in Rakhine State, Kayah State, Chin State and Tanintharyi Re­gion. The state gov­ern­ment is also plan­ning to hold an in­vest­ment fo­rum tar­get­ing in­ter­na­tional in­vestors next year.

“We are plan­ing to hold an in­vest­ment fo­rum to show that only a part of Rakhine is un­sta­ble and the re­main­ing ma­jor­ity area is peace­ful,” he added.

For­eign in­vest­ment in Nga­pali ho­tels cre­ates job op­por­tu­ni­ties for lo­cal peo­ple and a cer­tain per­cent­age of the tax rev­enue from the re­gion is be­ing al­lo­cated by the Union Gov­ern­ment to the state gov­ern­ment.

More in­vest­ment would cre­ate more job op­por­tu­ni­ties and foster pros­per­ity and hence sta­bil­ity, nu­mer­ous gov­ern­ment of­fi­cials and lo­cal busi­ness­men em­pha­sised.

‘We, Rakhine cit­i­zens, are starv­ing de­spite the fact that we have many nat­u­ral re­sources. We want to es­cape away from that sort of life. We want the econ­omy to im­prove. We want for­eign in­vest­ment to come to our re­gion.’

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