Fri 23 May 2014
Filed under: Business / Trade,News
MADAY ISLAND, Myanmar—Towering maps and billboards greet visitors to this sparse island by the Bay of Bengal, the starting point of twin oil and gas pipelines that run across Myanmar to China.
“Our aspirations are as high as the ocean waves,” reads a sign in Chinese. “In the past, when we came here, there was nothing but barren land and the ocean,” it says. “But now, everything has changed.”
The $2.5 billion pipeline project, which has started pumping natural gas and will soon start transporting crude oil across Myanmar to China’s under-developed Yunnan province, has transformed this remote island, where towering refineries now stand in place of shrubbery.
But the Chinese energy project occupies only a part of Myanmar’s vision for the place.
Capitalizing on the Chinese deep-sea port built for the pipelines, Myanmar is moving forward with a plan to create a 1,400-acre special economic zone in the neighboring seaport town of Kyaukphyu, which it hopes will become an important trading center in Asia, connecting the economies of China, India and Southeast Asia.
The zone is a crucial test for relations between China and Myanmar, analysts say. With a major Chinese project already here, Myanmar’s northern neighbor and largest trading partner would naturally be a key source of needed large-scale investment.
“If there’s anyone that might be interested in this project, it would be the Chinese,” said Alecia Quah, a senior analyst at IHS’s economic and country-risk unit.
Still, it remains to be seen whether Chinese investors will have the same appetite for investment here as they did in 2010, when they first embarked on the billion-dollar pipeline project, now the world’s fourth-largest energy transportation route. Since Myanmar undertook change and embraced China’s rivals, such as Japan and the U.S., its relations with China have grown colder.