Monday, 3 March 2014

Myanmar rejects China's offer for US$2 billion loan to build road project

Myanmar government has been planning to decline the US$2 billion loan from China to build the Myanmar-China Corridor Project, according to some government officials.

During a second joint committee meeting, Myanmar and Chinese authorities agreed to build a trade route that can help commodity flow smoothly from Myanmar’s western coast to mainland China and Chinese authorities made the proposal to loan US$2 billion for the Kyaukphyu-Ruili Road project.

For the first phase of the project, the Ruili to Lashio and the Magway to Kyaukphyu roads will be the priority routes for completion. Chinese authorities have proposed to start the constructing of the priority routes this year.

As China's loans for previous projects in Myanmar usually have a 4.5 percent interest rate, which is higher than the World Bank, IMF, and the ADB, the government's rejection is a good decision for the country, said a source close to the Ministry of Construction.

China has proposed a build-operate-transfer system or a public-private partnership for the construction of the roads.

When China has invested in many projects in Myanmar including the mining and hydroelectricity sectors, they have used build-operate-transfer system or a public-private partnership, but some contracts had to be amended due to inequalities.

The Kyaukphyu-Ruili Road project is still under discussion and both Myanmar and Chinese authorities have not released any detail information including whether it will be constructed or not or which country will benefit more from the project.

source: Eleven Myanmar
Related Posts Plugin for WordPress, Blogger...