A railway project that aimed to connect Kyaukpyu in Myanmar with the southwestern Chinese city of Kunming has been halted, according to media reports.
The passenger and cargo link, which was earlier scheduled to be completed by 2015, has stalled as China has let the agreement on the project implementation expire, the reports said.
There are various theories as to the reason why the project was halted. The rumors range from Myanmar people objections to intervention from Japan, National Business Daily reported Wednesday.
“Chinese did not to sign another contract… the project will not be implemented as there were objections from people, social organizations,” Eleven Myanmar reported over the weekend, citing Myint Wai, manager of Myanmar’s Ministry of Rail Transportation.
Under a memorandum of understanding signed in April 2011, the Kyaukpyu-Kunming railway project was expected to be implemented within three years. However, no work has been carried out on the project until April 2014, the report said. Under the original plan, China was to invest US$20 billion in the project in return for getting the operating rights on the rail line for 50 years.
Now, the stalled initiative means that China Railway Engineering Corp. (00390.HK, 601390.CN) which was responsible for the construction is losing a big overseas deal. The report, however, quoted Beijing Jiaotong University professor Zhao Jian as saying that the impact on China Railway would be limited.
The rail line was planned to be constructed in several phases. The first phase would have seen the Chinese border town of Jiegao, which is already part of the existing Chinese rail network, connected to the Myanmar border town of Muse.
Zhao said that if the project went well, exports goods from China could have reduced their dependence on the Strait of Malacca for shipments, and deepened the economic exchanges between China and Myanmar.
Wen Wei Po cited Jin Canrong, deputy president and professor at the School of International Studies at the Renmin University of China, as saying that the project’s halt would have a bigger impact on Myanmar’s economy rather than on China.
Jin added that Japan has a huge influence on the Southeast Asian nation. Some political parties in Myanmar have criticized the Chinese project for potential damage to the environment.
Japan provided 7.8 billion yen (US$76.9 million) to help Myanmar on its infrastructure without any political conditions.
“Myanmar is at a strategic location, as it connects to other Association of Southeast Asian Nations and south Asia countries,” Japan’s Foreign Affairs minister Fumio Kishida has said.
The Kyaukpyu-Kunming railway project had faced quite a few problems right from the beginning. In 2011, China’s commerce ministry said construction was being stopped as the size of the rail bars was different between the two countries. The Myanmar elections also had some impact on the project.
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