Myanmar’s Union Govt Splits Up Huge China-Backed New Yangon City Project

Construction News Myanmar
NYDC CEO Serge Pun

Myanmar’s Union Govt Splits Up Huge China-Backed New Yangon City Project

The Union government has unbundled a controversial Chinese-backed multibillion-dollar new city project across the Yangon River from Myanmar’s commercial hub and is finalizing the hiring of an international consultant to assist in the selection of a developer for the newly compartmentalized project.

Known as the New Yangon City project, it is an element of the China-Myanmar Economic Corridor (CMEC), which is a part of China’s Belt and Road Initiative (BRI). The CMEC will connect Yunnan province in China to Mandalay in central Myanmar, Yangon New City in the south and the Kyaukphyu Special Economic Zone in the west.

The Yangon regional government-backed New Yangon Development Company (NYDC) initially signed a US$1.5-billion (2.03-trillion-kyat) framework agreement in 2018 with Beijing-based China Communications Construction Company, Ltd. (CCCC) to draw up a proposal for the infrastructure project. The 20,000-acre (nearly 8,100-hectare) New Yangon City project is slated to include five resettlement areas, two bridges, an industrial estate, and commercial and residential areas as well as related infrastructure. The Yangon government’s 2019 guidebook listing the city’s projects—the Yangon Project Bank— estimates the New Yangon City project’s total cost at $8 billion.

However, the project has been a source of controversy due to its flood-prone location as well as CCCC’s involvement. The Hong Kong-listed, Chinese state-owned company has been accused of engaging in corruption and bribery relating to development deals in at least 10 countries in Africa and Asia.

Since its formation, the NYDC has said that while CCCC was the frontrunner for the project, the selection process to find the developer would follow the so-called “Swiss Challenge” model, in which other candidate firms would be invited to beat CCCC’s bid. However, the huge amount of the initial investment required has all but deterred other investors.

On Wednesday, a senior official familiar with the project told The Irrawaddy that the $1.5-billion project has been unbundled by the Union government due to the sheer scale of the mega-investment required, making it possible for other companies to join the Swiss Challenge.

“The newly unbundled project would be worth around $800 million,” the senior official said.

The unbundled project will include an industrial zone of 3 square kilometers—a portion of the originally planned 13-square-kilometer industrial estate—with supporting infrastructure; as well as a bridge spanning the river, connecting the new city with Kyimyindine Township on the Yangon side; five resettlement areas; as well as commercial and residential areas measuring 9 square kilometers. However, the official said the dimensions of the area still need to be finalized.

The 3-square-kilometer industrial zone is part of the government’s urgent plan to create job opportunities for migrant laborers who have returned home from overseas amid the COVID-19 pandemic.

“We hope to start it [the unbundled project] within this year,” said the official, explaining that it would only be possible after the selection of a developer through the Swiss Challenge.

To make the Swiss Challenge transparent as well as to properly scrutinize the project proposals submitted by concerned companies, a Union government-level tender committee sent terms of interest to six international consultancy firms.

“Three have responded to the enquiry. We are finalizing our selection,” the official added.

During Chinese President Xi Jinping’s visit to Myanmar early this year, the two sides inked a letter of intent on the development of Yangon City—including the new city project—among other concession and shareholder agreements. Chinese Ambassador to Myanmar Chen Hai recently noted that construction of the pilot area for the New Yangon City Project is expected to start soon, saying fresh progress has been made on all three pillars of the CMEC.

U Khine Win, the executive director of the Sandhi Governance Institute, welcomed the compartmentalization of the project, saying it reduces the risk for Myanmar—at least lowering the possibility that a sole Chinese company will dominate the whole project.

“But it would be better if some relevant committees, like the BRI steering committee led by Daw Aung San Suu Kyi, made [the details] public as they said there would be transparency when it comes to BRI project,” he said.