A Chinese Special Economic Zone is deepening conflict in Myanmar’s Rakhine State

Photo Credit: UK Department for International Development/Wikimedia Commons

The Chinese-backed Kyaukphyu Special Economic Zone is shaping Myanmar’s conflict with the Arakan Army. Rakhine communities will benefit little from the project while bearing many of the costs, and it ignores their calls for control over the area’s natural resources.

By Skylar Lindsay

Resource-rich Ramree Island, on the coast of Myanmar’s Rakhine State, has remained on the sidelines of recent violence as fighting between the Myanmar military and the Arakan Army (AA) continues to intensify. But the Myanmar government’s relations with the AA are now increasingly shaped by pressure from Beijing to advance the Kyaukphyu Special Economic Zone (SEZ), a US$1.3 billion Chinese-backed development project based on Ramree.

The Myanmar government and Chinese state-owned CITIC Group are pushing the Kyaukphyu SEZ ahead despite public opposition. There has been limited transparency and inadequate public consultation with communities affected by the project.

The movement for Rakhine autonomy and federalism calls for local control of natural resources as a key tenet. If the National League for Democracy (NLD) government moves ahead with the Kyaukphyu projects without addressing these issues, it risks prolonging the conflict with the AA, making repatriation for the Rohingya increasingly risky and unlikely.

“The communities hope to have their own laws, their own management, their own regulation of natural resources and government – that’s why the Rakhine people support the AA, because they want their rights,” Tun Kyi, a spokesperson for the community-based organisation the Kyaukphyu Rural Development Association, told ASEAN Today.

Local communities will bear the costs of the SEZ but see few benefits

The Kyaukphyu SEZ falls under the China-Myanmar Economic Corridor, a key part of China Belt and Road Initiative (BRI). The SEZ will cover over 4,000 acres and current plans include two deep sea ports – one on Ramree Island and one on Maday Island.


Rakhine State, Myanmar.
Photo Credit: Mrauk U/Wikimedia Commons

Under the latest agreement from November 2018, CITIC will hold a 70% stake in the project and the rest will be held by Myanmar’s Kyaukphyu SEZ Public Holding Company Ltd. (MKSH), a consortium of 17 companies. CITIC’s share is also divided among a consortium of six companies that includes Charoen Pokphand (CP), the largest private company in Thailand.

Beijing wants to see Myanmar’s central government and military (also known as the Tatmadaw) secure stability in Rakhine. While Myanmar faces increasing international pressure for the Rohingya genocide, China offers unconditional support.

In late April, the commander-in-chief of the Myanmar military Senior General Min Aung Hlaing visited Beijing and told Chinese President Xi Jinping that the military was prepared to help implement the BRI in Myanmar. The general also thanked the Chinese president for “standing against the international community over the Rakhine State issue.”

Chinese officials also asked that Snr-Gen. Min Aung Hlaing extend the current ceasefire with non-signatories of the National Ceasefire Agreement (NCA). Soon after, the military announced that the ceasefire would be extended for two months. But as China supports peace talks with other ethnic armed groups and sponsors the United Wa State Army (UWSA), the AA remains one of the only groups in the country excluded from the ceasefire.

The intensifying conflict between the AA and the Tatmadaw hasn’t changed plans for the SEZ

As long as Beijing doesn’t see war with the AA as a reason to suspend the SEZ, the NLD government is more than happy to push the project along. Violence over the past five months in Rakhine has displaced as many as 30,000 people.

The AA is not officially against Chinese-backed projects, according to AA commander Major General Twan Mrat Naing – its issue is that the projects are not meeting the needs of the Arakan people.


A burnt down house in a Rohingya village in northern Rakhine State, a result of sectarian violence in August, 2017.
Photo Credit: Moe Zaw (VOA)/Wikimedia Commons

“Everything is controlled by the central government, and for a really huge project like this there is no law to protect ethnic minority people,” Tun Kyi told ASEAN Today. “The project will not bring profit to the Rakhine community and the Kyaukphyu community. The community will lose their rights.”

Many in local communities around Kyaukphyu are demanding the right to control their region’s natural resources, led by the Arakan Natural Resources and Environmental Network (ANREN) and specifically targeting the SEZ.

Communities in the Kyaukphyu area have already seen Chinese development implemented to their detriment. The US$2.5 billion Shwe gas pipeline is the largest extractive development project in Myanmar and consists of 1,200 kilometres of pipeline between Kyaukphyu and Yunan, China.

Since the project began in 2008, local residents have rallied around groups like the Shwe Gas Movement to oppose the pipeline. Communities in the area have faced forced displacement, forced labor, and the destruction of their natural resources. Recent studies of a river in the area found very high levels of lead and phenol pollution. People in Rakhine have also seen few benefits and proceeds from the pipeline, which are controlled by China’s national oil company.

“Right now there are many kinds of conflict in Rakhine, and for the Chinese government, because they are planning projects in Rakhine, they must look at how they can help Rakhine communities and the development of Rakhine communities,” Tun Kyi told ASEAN Today.

“The Chinese government has had no contact with local people in Kyaukphyu around the SEZ, apart from some meetings with pipeline project-affected people by the Chinese embassy,” Soe Shwe, a steering committee member for the civil society group Kyaukphyu SEZ Watch, told ASEAN Today.

The Myanmar government’s decision to prioritize Chinese-backed mega-projects will only worsen the inequality and marginalization that drive the conflict in Rakhine.

According to community-based organisations in Kyaukphyu, the violent conflict will continue to spread as long as the national government refuses to give Rakhine people control of their natural resources – especially when the government instead cedes that control to Beijing.

By pushing the SEZ and ignoring the voices of people in Kyaukphyu, the Myanmar government is allowing pressure from Beijing to shape the future of the conflict in Rakhine. As long as the government maintains its current policy towards the AA, it’s impossible to lay the groundwork for the Rohingya to safely return.