Kyaukphyu Special Economic Zone (KP SEZ)

China International Trust and Investment Corporation (CITIC) Consortium is leading project development of the deep seaport and the industrial zone, both of which are scheduled to occur in phases. The CITIC-led consortium includes China Harbour Engineering Company Ltd., China Merchants Holdings, TEDA Investment Holding and Yunnan Construction Engineering Group, and Thailand’s Charoen Pokphand Group. The consortium holds a 70 percent stake in the deep seaport and 51 percent of the industrial zone, while the Government of Myanmar owns the remaining shares. In August 2020, a joint venture company, the Kyaukphyu Special Economic Zone Deep Seaport Co. Limited, was approved to implement the port project with 70–30 percent ownership split between CITIC Myanmar Port Investment Limited (a CITIC subsidiary) and the Kyaukphyu Special Economic Zone Management Committee, with CITIC committing US$1.3 billion of investments in the initial phase.

Governance and Transparency

Kyaukphyu is unique in that it was the only one of Myanmar’s three SEZs to follow a “business-to-business” model at its conception. However, since that time, it has been reorganized as a government-to-government arrangement. The Kyaukphyu SEZ project seems to have been carried out following the regulations governing Public-Private Partnerships (PPP) in Myanmar. Bidding was competitive and open and followed international best practices. All tender documents were published online. A Singapore-based firm was hired to carry out a market survey and develop a regional master plan before the selection of CITIC.

There were, however, shortcomings in the process. The environmental and social impact assessments were not completed before bidding, and it is not clear whether technical specifications in the tender process included environmental standards. Moreover, government contracts with the CITIC group are not publicly available.

Civil Society Complaints

Despite local communities having raised environmental and social impact concerns from the outset of the project, the government failed to address these concerns in a timely or effective fashion. The area residents had previously suffered land confiscation and economic hardship when a gas pipeline was constructed under the military regime and were naturally suspicious of the new administration’s pledge to conduct the new megaproject fairly and equitably. Kyaukphyu also suffered in the sectarian violence that wracked the Rakhine State, and the SEZ threatens to exacerbate lingering ethnic tensions. The government has pledged compensation for any land appropriation made as part of the Kyaukphyu SEZ, following the precedent set with the Thilawa SEZ. However, over 10,000 villagers in the SEZ area reported having received no clear information about land relocation or compensation, and the rate of payment has not been set.

To capture different practices, quality and level of transparency, researchers are asked to answer six related questions for each data point. 1 point is assigned for each question to which the answer is “yes.” Each data point therefore has a total score between 0 and 6, where “0” means no information was publicly available at the time of research (not transparent) and “6” means full transparency.