Myan­mar’s role in shap­ing global ship­ping and lo­gis­tics chains through China’s Belt and Road dreams


Mizzima Business Weekly - - CONTENTS - An­dre Wheeler

It is no un­der­state­ment to say that there are tec­tonic shifts un­der­way for trade and ship­ping as trade lo­gis­tics and sup­ply chains are be­ing dis­rupted, not by tech­nol­ogy but the awak­en­ing of the long-asleep Silk Road. The sub­ject of this grand re­shap­ing of global trade links is trade be­tween China and Europe, val­ued at about US$600 bil­lion in 2017 and ex­pected to dou­ble by 2025. By value, 70 per cent of all cargo of this trade has been trans­ported by ocean, in­clud­ing 15 mil­lion bar­rels a day of the global daily oil pro­duc­tion.


The orig­i­nal Silk Road is be­lieved have com­menced in 1070 BC and ended in 1720 with the fall of the Mon­gol Em­pire. Devel­op­ment of Cen­tral Asia re­gion is cred­ited to the Han Dy­nasty, start­ing in in 207 BC. This vast trans­porta­tion net­work, con­nect­ing key mar­kets in Asia to Europe, passed through coun­tries like In­dia and In­dochina, pro­vid­ing the con­di­tions that gave China in­ter­na­tional trade lead­er­ship as the start and end points of key trans­port nodes.

In this re­gion, as ship­ping and nav­i­ga­tion meth­ods im­proved, with the rise of colo­nial­ism and the Straits of Malacca be­com­ing more nav­i­ga­ble, the maritime sec­tor grew in tan­dem, pro­vid­ing a sea al­ter­na­tive to the land belt.


Un­der the orig­i­nal Silk Road, Myan­mar was the main trade route be­tween In­dia and China. The Mon King­dom also served as im­por­tant trad­ing cen­tre in the Bay of Ben­gal. Fol­low­ing Bri­tain’s coloni­sa­tion, Myan­mar be­came the wealth­i­est coun­try in South­east Asia. It was once the world's largest ex­porter of rice. It pro­duced 75 per­cent of the world's teak and had a highly lit­er­ate pop­u­la­tion. This all changed once the coun­try gained in­de­pen­dence in 1948. The coun­try has since then de­clined to now be one of the poor­est coun­tries in the global econ­omy. One could ar­gue that there are many par­al­lels be­tween China and Myan­mar as both share a his­tory of de­cline and re-emer­gence as the new Silk Road, un­der the ban­ner of the Belt Road Ini­tia­tive, takes shape. It is also ironic that as the likes of the U.N. be­stows pariah sta­tus on the coun­try as was done post 1948, China has in­vited Myan­mar’s par­tic­i­pa­tion in the es­tab­lish­ment of a new global eco­nomic order.

When re­view­ing 2018, it is clear that this has been a wa­ter­shed year in the frag­ile tran­si­tion to democ­racy, a process that should not be hur­ried. Ini­tially Myan­mar was viewed by Chi­nese eyes as a gate­way to trade, just as was done un­der the orig­i­nal Silk Road. How­ever, with greater clar­ity emerg­ing through the devel­op­ment of the land belt and maritime roads and these two plans con­verg­ing at key ports, Myan­mar’s im­por­tance grew. No longer did China need In­dia as a west­ern gate­way, in­stead the likes of Kyauk Phyu and Mon State could re­place it. Myan­mar could once again be­come the gate­way to trade in Europe, Africa and the Mid­dle East.

Beyond build­ing point in­fra­struc­ture like ports and rail­way sta­tions, the BRI in­tends to carve out a global lo­gis­tics and trans­porta­tion net­work that con­nects those regions promis­ing high eco­nomic growth with strate­gic re­sources. For South­east Asia, pro­jected to be the world’s fourth largest mar­ket in 2030, the BRI con­nects a mar­ket of 600 mil­lion peo­ple to the rest of the world, boost­ing growth and vi­brancy for ASEAN’s ten coun­tries.

Re­view­ing 2018 and a look into 2019?

Myan­mar has seen a num­ber of devel­op­ments in 2018 that has helped es­tab­lish a solid plat­form go­ing into 2019. Pri­mar­ily among these is the recog­ni­tion of other na­tions in the im­por­tant west­ern gate­way sta­tus of Myan­mar - de­spite the UN and World Bank harm­ing Myan­mar’s eco­nomic progress through sanc­tions and other fi­nan­cial in­stru­ments. With both In­dia and Ja­pan hav­ing in­ter­ests in se­cur­ing port and ocean ac­cess in Sit­twe and Dai­wei re­spec­tively, has en­abled Myan­mar to se­cure ben­e­fi­cial agree­ments un­der the new China Myan­mar Eco­nomic Cor­ri­dor (CMEC), par­tic­u­larly in own­er­ship and loan fi­nance ar­range­ments. A good ex­am­ple is the re­cent agree­ment around the Kyauk Phyu port and spe­cial eco­nomic zone agree­ment.. Fur­ther­more the Kyauk Phyu Oil Pipe­line (240,000 bar­rels a

day with ca­pac­ity for 440,000 bar­rels per day) with its Gas pipe­line (12 Bil­lion cu­bic units a year), di­rectly sup­plies feed­stock to the An­ning re­fin­ery that is 28km SW of Kun­ming . Note that China’s en­ergy needs are met through four sup­ply chan­nels, one of which is Kyauk Phyu.

Myan­mar’s lead­er­ship also needs to eval­u­ate China’s par­tic­i­pa­tion from an in­formed po­si­tion. For ex­am­ple, a closer in­spec­tion of the much ma­ligned Sri Lankan port of Ham­ban­tota re­veals the Ham­ban­tota port is un­der Sri Lankan sovereignty, em­pha­sised by the re­cent re­lo­ca­tion of their south­ern naval fa­cil­ity to the port. Tak­ing a deeper look at the agree­ment, it is noted that both Chi­nese and Sri Lankan ven­tures share the rev­enue as well as op­er­ate the port. Se­cu­rity, how­ever, is the re­spon­si­bil­ity of Sri Lanka. These pro­vi­sions are guar­an­teed by the five par­ties to the agree­ment, namely: China Mer­chants Port Hold­ings, Sri Lanka Ports Author­ity, Ham­ban­tota In­ter­na­tional Port Group, Ham­ban­tota In­ter­na­tional Port Ser­vices and the Sri Lankan govern­ment. The deal to in­vest a fur­ther Us$1.3bn to de­velop a marine lo­gis­tics precinct, whilst split 70/30 in favour of China, has a 10 year pe­riod in which Sri Lanka can buy 20% of the debt back, giv­ing it 50/50 own­er­ship with China.

This should be the ba­sis for re­assess­ing My­it­some Dam as well as look­ing at other forms of elec­tri­cal power dis­tri­bu­tion and in­fra­struc­ture. This is par­tic­u­larly rel­e­vant when look­ing at the likes of new gen­er­a­tion coal fired power sta­tions (High ef­fi­ciency low emis­sions) as a so­lu­tion to base power pro­vi­sions. It is ironic that Myan­mar is ex­pected only to con­sider so called clean en­ergy sources when de­vel­oped na­tions have over 60% of their elec­tric­ity sup­plied by nu­clear, coal and hy­dro.

De­spite all the west­ern global neg­a­tive news around the peace process and al­leged hu­man rights vi­o­la­tions, Myan­mar has been able to push an agenda that sees peace and democ­racy be­ing achieved through eco­nomic devel­op­ment. By tak­ing ad­van­tage of its com­mon his­tory with both In­dia and China and its role in the an­cient Silk Road, it has a solid plat­form in which the coun­try can leapfrog poverty. It can do this by en­gag­ing in in­fra­struc­ture devel­op­ment that cre­ates a ba­sis upon which com­mer­cial ac­tiv­ity can be en­hanced and em­ploy­ment op­por­tu­ni­ties are cre­ated. I ex­pect that in 2019, Myan­mar will lever­age op­por­tu­ni­ties around elec­tri­fi­ca­tion and net­work con­nec­tiv­ity to fa­cil­i­tate de­liv­ery on eco­nomic re­form and devel­op­ment.

Newspapers in English

Newspapers from Myanmar

© PressReader. All rights reserved.