Following the Myanmar military’s seizure of power in 2021, analysts speculated that Chinese companies would take advantage of the military-appointed State Administration Council (SAC)’s diplomatic and economic isolation to push through infrastructure projects under the China-Myanmar Economic Corridor (CMEC), a component of the Belt and Road Initiative. Almost three years since the putsch, however, progress on pre-project work has been snail-paced, with little hard evidence to suggest that any CMEC projects are actually moving closer to the construction phase.
Only the Kyaukphyu special economic zone and deep-sea port projects in Rakhine State appeared to be making concrete progress since the military seized power. In September 2021, a consortium comprising CITIC Construction and CCCC FHDI won a tender to carry out geotechnical investigation and survey work. In February 2022, consultancy Myanmar Survey Research (MSR) was awarded a tender to conduct an environmental and social impact assessment (ESIA) for the construction of the deep-sea port components and a 15 kilometer road linking Made and Ramree islands.
MSR previously said it was aiming to complete its ESIA in July 2023, and project construction was expected to begin after the geotechnical surveys and ESIA were completed. The MSR website, however, does not show any ESIA progress updates since August 2022. In June 2023, CITIC Group (Myanmar), the developer of the Kyaukphyu projects, stated that “the geo-survey of the project is closing while steady progress is made in ESIA,” although there was no mention of plans to begin construction. No further updates have been published since specifying when the survey and ESIA will be completed.
Moreover, Myanmar news outlet BETV Business reported in mid-October that Chinese and Myanmar officials had agreed in principle to reopen negotiations on the Kyaukphyu projects, with SAC chair Senior General Min Aung Hlaing reportedly expressing willingness to renegotiate the agreement. The original project agreement signed in 2015 valued the project at $7.3 billion with the CITIC-led consortium holding an 85 percent stake. These large project costs and Chinese shareholding led the civilian government led by Aung San Suu Kyi to renegotiate the agreement in 2018, reducing the total cost to $1.3 billion and dropping the Chinese consortium’s stake to 70 percent.
These media reports on the possible further renegotiation of the projects have not been confirmed by Chinese or Myanmar officials or state-backed media. If true, though, it could explain the silence on the status of pre-project surveys and would also cast significant doubt on the likelihood of construction beginning in the near future, particularly given that no details have been provided on what outcomes each side is aiming for from a renegotiation. Project costs are likely much higher now than the $1.3 billion agreed in 2018, due to significant price inflation for construction materials and energy in recent years, which may be why a renegotiation is being sought.
The other major CMEC project appearing to have made headway since 2021 is the Muse-Kyaukphyu railway. This project is to be developed in two phases, with the Muse-Mandalay section alone said to cost $8.9 billion, although again the costs are likely much higher than the estimates made prior to the COVID-19 pandemic. In October 2019, Myanma Railways, China Eryuan Engineering Group (CEEG), and China Railway Group signed an MoU to conduct the feasibility studies for the project, and an environmental assessment was approved in 2022. In February this year it was reported that CEEG had resumed “preliminary work” on the railway, with construction work on the first section expected to start in 2025.
Affordability concerns and questions over how project finance will be raised are obvious reasons to doubt that construction will begin any time soon. But more significantly the railway faces long-standing and existential security threats. Even prior to the military takeover, the International Crisis Group warned that construction of the railway project could result in the further militarization of northern Shan State, as the project could become a military target for insurgent groups operating in the conflict-stricken region.
This situation has visibly been exacerbated since 2021 and the Myanmar military is evidently seeing its grip weaken in areas along the railway’s proposed route. On October 27, the Three Brotherhood Alliance – comprising the Arakan Army, the Myanmar National Democratic Alliance Army, and the Ta’ang National Liberation Army – launched a coordinated offensive against the military and its allies in northeastern Myanmar. Battles were reported in townships close to the China border and along major trade routes. On November 1, SAC spokesperson Zaw Min Tun said in a statement that the military had lost control of Chinshwehaw in Shan State, a major border town through which over $450 million worth of Myanmar-China trade passed through from April to September. With these conflicts ongoing, geotechnical surveys cannot be carried out, while existing concerns among Chinese officials and company executives over whether the Myanmar military can reliably protect Chinese assets and personnel will be amplified.
Also signaling caution from Chinese officials on accelerating CMEC projects is that while the Chinese Communist Party has effectively recognized the SAC as the de facto authority in Myanmar, Min Aung Hlaing has yet to be invited to China, denying him the recognition that he seeks. Notably, he did not attend the 10th anniversary celebration of the Belt and Road Initiative in October, despite reportedly heavy lobbying from the SAC for an invite.
While Chinese officials give the SAC a lukewarm shoulder, Myanmar state newspapers report almost daily on cordial meetings between Russian and Myanmar officials. Min Aung Hlaing met Russian President Vladimir Putin in Moscow in September last year, offering him overt recognition from a fellow authoritarian leader.
A handful of Myanmar-Russia project MoUs have also been signed recently. In February this year, the SAC signed an agreement with Russia’s Rosatom State Atomic Energy Corporation to build a small modular reactor in Myanmar, and in June a preliminary agreement to cooperate on nuclear energy was signed. Rosatom subsidiary NovaWind also signed MoUs on feasibility studies for 372MW wind farms in Myanmar in June, with preparations for early development works on the projects expected to be launched “very soon.” Independent media also reported that the tender to implement and operate the $1.5 billion Shweli-3 hydropower project in northern Shan State would likely be won by a Russian company.
On the surface, these high-level meetings and MoU signings suggest that Russia is poised to enter a new era of economic relations with Myanmar with a focus on energy infrastructure development, departing from what has historically been a transactional relationship in the defense sector. There is plenty of positivity coming from Russian and Myanmar officials regarding these projects, but significantly, no details have been provided on how the projects will be financed or how they can actually be implemented given the ongoing economic and security turbulence in Myanmar, including currency volatility and trade and foreign exchange restrictions.
The potential for nuclear power cooperation beyond small test projects remains premature, given that Myanmar’s talks with Russia on nuclear technology are not new and no apparent progress has been made on previous agreements. In 2007, under the military administration headed by Than Shwe, the countries signed an agreement on nuclear cooperation that would have seen the establishment of a 10MW light water-moderated nuclear reactor, though no further developments took place. In 2015, under ex-general Thein Sein’s administration, Myanmar signed another MoU with Russia on cooperation related to nuclear technology, the details of which were not made public, and no apparent progress was made on this initiative either.
Many observers are also skeptical that there is serious interest in the Shweli-3 hydropower project tender from any foreign investor. The tender documents state that the investor would be allowed a maximum 35 percent foreign investment shareholding and it is doubtful that any Myanmar company, including crony conglomerates, would be able to raise the significant capital needed to make up the other 65 percent, valued at around $1 billion. There is also no evidence to suggest that a Russian company is able or willing to invest around $500 million in a single project in Myanmar. Russia has been in a military and economic quagmire since its invasion of Ukraine, and it would be extraordinary if it was able to mobilize such resources for a risky Myanmar project when the country’s own financial and material resources are needed at home. Bids for the tender were due on September 24, and no announcement has been made on the outcome.
Whether for Russian or Chinese entities, it would also make little sense for an investor to commit to major and politically charged infrastructure projects when the shape of a future Myanmar administration remains unclear. The military’s timeline for a staged election is currently touted for 2025 following what will be a contentious national census in 2024. The SAC’s promised election dates have been pushed back multiple times, and there’s every reason to doubt that it can stick to its own timelines. Moreover, the military’s control in part of the country, particularly in areas where large infrastructure projects are supposed to be constructed, is increasingly being challenged on multiple fronts by resistance groups that have popular support and a regular supply of weapons and ammunition.
Glowing state media reporting can easily be treated with cynicism given both Myanmar and Russian officials have an interest in projecting an image of friendly relations amid the international isolation of both regimes. MoUs and feasibility studies are relatively cheap and non-committal tools to buy time or project an image of cooperation when the reality is that project risks at a certain time are insurmountable and there is no viable route to raising project finance. The outcome may be that, as in the case of the CMEC, Russia-Myanmar projects are indefinitely put on the back burner.
It will be a case of “seeing is believing” on whether Myanmar-Russia or CMEC projects actually go ahead.