Written by: Geoff de Freitas, Special Correspondent, HKTDC
Although Myanmar had reported just 224 cases of Covid‑19 and six associated deaths as of 1 June, the virus outbreak has still had serious economic consequences for the 54‑million‑strong Southeast Asian nation. In particular, the lockdown in China disrupted supply chains, while the global measures to contain the pandemic triggered a dramatic decline in Myanmar’s tourism sector, cutting off one of the country’s key revenue sources.
In early May, in a bid to help mitigate the growing economic crisis, the Ministry of Labour, Immigration and Population singled out 21 sectors where business activity could continue in spite of the overall lockdown. Although the designated sectors included port services, construction, export / import, transportation, logistics and freight, the move did little to ensure the continuity of the country’s many projects backed by the Belt and Road Initiative (BRI), China’s ambitious international infrastructure development and trade facilitation programme.
The enforced hiatus of many such projects comes just months after a major effort to reboot the programme, which, back in January this year, saw Chinese President Xi Jinping undertake the country’s first state visit to Myanmar since 2001. During the visit, the agenda was dominated by moves to reinvigorate the country’s BRI programme, resulting in the signing of 33 bilateral accords geared to unlocking infrastructure spending. Overall, particular priority was given to relaunching three key BRI‑backed projects – New Yangon City; a high‑speed rail (HSR) link between China’s Yunnan province and Myanmar’s second‑largest city Mandalay; and the Kyaukpyu Deep-Water Port.
Ever since the BRI was first mooted back in 2013, Myanmar has been seen as an integral part of the overall strategic masterplan. Not only is it geographically positioned as a key nexus for trade interchange between India, Bangladesh, Southeast Asia and China, but its siting along the Indian Ocean coastline also facilitates the rapid shipping of China‑made goods to the Middle East and Europe. Of particular benefit to the mainland’s western provinces, it completely bypasses the busy South China Sea routes and negates the need for any lengthy voyage around the Malay peninsula. Indeed, its advantages have already seen the Kyaukpyu Port functioning as a regional hub for the pipelines transporting oil and gas from Kunming, the capital of Yunnan province.
Further developing the port has become a key component of the BRI‑backed China-Myanmar Economic Corridor, a priority trade facilitation route that will stretch from Kyaukpyu to Mandalay and then on to the Myanmar / Yunnan border. In order to ensure the corridor delivers on its full potential, it is envisaged that it will be powered by a series of new road and rail links – including the Mandalay‑Yunnan HST service – as well as a range of next‑generation energy utilities and industrial parks. To the south of the country, meanwhile, the building of New Yangon City – a major residential and commercial complex adjoining Yangon, the country’s economic hub and former capital – and the development of the nearby Thilawa Industrial Zone are also set to provide an essential commercial boost, if completed.
Such ambitious infrastructure developments, however, are inevitably costly, and the country was already facing mounting economic problems well before the Covid‑19 outbreak. Tellingly, Myanmar’s per capita GDP was just US$1,326 in 2018, with data from the country’s Finance Ministry indicating that 40% of all households live below or close to the poverty line.
Exacerbating this, inbound investment has also been falling. In the first quarter of 2020, Myanmar received just US$500 million in foreign direct investment – down $800 million year‑on‑year, according to the Ministry of Investment and Foreign Economic Relations. Given the country’s parlous financial situation, as well as the uncertainty occasioned by the ongoing coronavirus outbreak, it seems Myanmar’s much‑needed infrastructure upgrade may have been well and truly consigned to the back burner.
Geoff de Freitas, Special Correspondent for the Hong Kong Trade Development Council wrote this article and we republish this article by kind permission of the HKTDC. For more information on the activities, events and research of the Hong Kong Trade Development Council, please visit them on the web at: https://hkmb.hktdc.com/en