According to the Asian Development Bank (ADB), Myanmar's inadequate infrastructure is the major cause of the nation's poverty and regional inequality. In 2020, half of Myanmar's population lacked access to the nation's electricity grid and average electrification rates in rural areas were a mere 16%. In rural areas where 70% of the population resides, 1 in 4 people lack access to safe water. Furthermore, only 40% of the nation's road network is paved, with 20 million people (out of a population of 54 million) lacking access to all-weather roads. These dire statistics illustrate the severity of Myanmar's infrastructure gaps and its impediment to economic growth and poverty alleviation.
The Global Infrastructure Hub estimates that Myanmar's infrastructure requirement measures up to $224 billion over the next 20 years. However, current trends in infrastructure investments suggests that there is an infrastructure investment gap of $112 billion. The Myanmar Government is heavily reliant on funding through foreign direct investment to fill this investment gap – to put this reliance into perspective, out of the 27 currently planned energy infrastructure projects, 20 involve foreign investors.
China's controversial investments in Myanmar's infrastructure developments
With investors from Western countries reluctant to invest in Myanmar due to concerns pertaining to political risks and human rights violations sparked by conflict in Rakhine state, China has stepped in to fill much of the void in Myanmar's infrastructure funding needs. China's infrastructure development in Myanmar is encapsulated by the China-Myanmar Economic Corridor (CMEC) which involves several infrastructure projects supporting connectivity and trade between the two countries. These infrastructure projects include expansive rail networks, seaports, gas and oil pipelines, industrial zones and significant upgrades to Myanmar's energy production capacity and electrification.
However, China's dominant presence in Myanmar's infrastructure developments is not without controversy. Infrastructure developments tied to the CMEC have raised numerous concerns on their lack of transparency, failure to engage meaningfully with affected communities and poor consideration of social, environmental and inclusive growth outcomes. For instance, the currently suspended $3.6B Myitsone Dam, arguably the most controversial Chinese infrastructure development in Myanmar over the last decade, led to the displacement of over 12,000 ethnic Kachin people without adequate compensation and overlooked its significant detrimental impact, such as the disruption of the natural ecosystem downstream from the hydropower dam which had the potential to affect the livelihoods of 3 million people who rely on fishing and farmable fertile lands downstream.
The controversial nature of China's infrastructure projects in Myanmar raise further concern in the context of the country's struggle with internal conflict which has lasted over six decades. Past poor decision-making in major projects have been a key source of conflict between the Myanmar Government and ethnic armed groups vying for self-determination. The Myitsone Dam itself sparked nation-wide protests and clashes between the Kachin Independence Army (an ethnic armed organisation) and the Myanmar Government Military.
Infrastructure investments and COVID-19 economic recovery
Although concerns are widespread, China's infrastructure investments in Myanmar show few signs of slowing. Following Xi Jinping's visit to Myanmar in January 2020, China and Myanmar signed several deals covering politics, trade and investments intended to accelerate and expand the infrastructure developments along the CMEC. Amidst the severe economic strain brought on by COVID-19, China's Ambassador to Myanmar reaffirmed the regional power's commitment to agreed-upon investments in the same month the World Health Organisation (WHO) declared the COVID-19 outbreak a global health crisis.
In the six months following WHO's announcement, Myanmar was relatively spared from the onslaught of COVID-19, reporting fewer than 400 cases amongst a population of 54 million. However, since then, multiple outbreaks throughout September and October 2020 have brought that number more than 30,000 and lockdowns across townships and cities have ensued, further threatening Myanmar's economy which is already facing headwinds due to COVID-19 induced slowdowns in China and across the globe. In its COVID-19 Economic Relief Plan, the Myanmar Government has outlined plans to fast-track infrastructure projects, raising further concerns that they may push through infrastructure projects without adequately considering their risks, which include conflict issues, lack of bankability and unsustainable debt structures.
Understanding interests behind public infrastructure projects
As Myanmar's Government turns to infrastructure to spur economic growth and develop the nation, it must undertake considerable measures to ensure that major infrastructure projects serve the best interests of Myanmar's people. A history of controversy and the expediting of infrastructure projects give reasonable cause for concern that decision-making in infrastructure developments will fail to adequately consider risks and the needs of the people. This concern is further compounded by the country's weak institutions and poor government capacity which expose Myanmar's infrastructure developments to corruption and rent-seeking behaviours.
As shared by Naw Show Ei-Ei Tun, the Deputy Chief of Party of Yangon-based USAID Transparency and Inclusive Growth Activity, "public infrastructure projects need to be considered based on whether they are in line with national development goals instead of on an ad-hoc basis. Although infrastructure projects will be a key part of Myanmar's economic recovery, a sound regulatory regime and more capable government institutions are also essential to ensure that they are in line with our economic and social needs, conflict-sensitive where necessary, and make positive impacts on the livelihoods of the broader population, including vulnerable communities."
Addressing the concerns arising from Myanmar's infrastructure developments will require significant effort in strengthening institutions, implementing a strong regulatory framework and ensuring transparency. Not doing enough may result in the inability to optimise the benefits of infrastructure for both stimulating the economy and achieving sustainable and inclusive growth outcomes.
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