Insecurity plagues China-Burma investment

The billions of dollars that foreign countries, notably China, are pouring into Burma may not be secure, a leading conflict think tank has warned.

Burma’s many ethnic regions that have for decades been torn by civil war were signalled as areas of particular investment concern by the Centre for Peace and Conflict Studies (CPCS). Its Cambodia director, Emma Leslie, said that ethnic armies which have historically operated with some autonomy may lash out against new projects, particularly in the extractive sector, instigated in their territories by Naypidaw and Beijing.

“There is a real concern that the grievances of ethnic communities along the China-Myanmar [Burma] border is a real risk for Chinese investment,” Leslie was quoted by Reuters as saying.

The concern follows a series of bomb blasts at a controversial dam site in Burma’s northern Kachin state in April this year. The dam is being built for the Chinese state-owned China Power Investment Corporation and China Southern Power Grid Corporation (CSG).

“There are already indications of [this concern]. A bombing of a hydro-dam is an alert signal. People are not getting the benefit of that investment,” she said. Last year an exodus of 37,000 refugees into China that followed fighting between the Burmese army and an ethnic Kokang group drew a sharp rebuke from China.

Many of Burma’s foreign investment projects have been dogged by complaints about the absence of environmental and human rights standards, and inclusivity of local communities.

The delicate security situation has given added risk to strategic and expensive projects, such as the Yadana and Shwe gas pipelines, and has apparently required the forced removal and draconian security considerations that many companies would not tolerate in their own, more accountable, countries.

“When you’re in a situation where you can’t retaliate against your own government, you can retaliate against perhaps investment by outsiders.” Leslie continued. She made the comments during a presentation at the Foreign Correspondents Club of China.

The country is the third largest investor in Burma but is rapidly increasing its economic influence, particularly in the energy sector where it is seen to be in direct competition with Burma’s other neighbouring giant, India.

Delhi has however been developing energy projects, such as the Tamanthi dam in western Burma, as well as the Kaladan Multi-Modal Project that will eventually connect India’s North Eastern states to the Bay of Bengal.

The Shwe gas pipeline will be of particular strategic concern to China. Although the majority of the twin-pipeline will be buried underground, its very placement in Burma is to avoid the strategically delicate Straits of Malacca beneath Singapore, which is believed to see about a quarter of the world’s cargo pass through them, which includes around 15 million barrels of oil per day.

The sea route however is only 2.4 km wide and 25 metres deep, which rules out many of the world’s larger vessels. As well issues of access and piracy in the area, Beijing is also concerned about the potential for the straits to be blocked by foreign powers, notably the US, which keeps warships manning the route despite a rejection by Malaysia, Indonesia and Singapore of its request to police it unilaterally.

China has therefore encouraged Burma to build the Shwe pipelines to carry Middle Eastern and African oil offloaded in the Bay of Bengal through Burma to its southwestern Yunnan province. This will in the long run equate to roughly a $0.50 saving on the barrel. China can also tap Burma’s vast offshore gas reserves.

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