Myanmar reviews $9bn China-backed port project on cost concerns www.asia.nikkei.com

YANGON (Financial Times) -- Myanmar’s government is reviewing a $9bn deepwater port project backed by China over concerns it is too expensive and could ultimately fall under Beijing’s control if Myanmar were to default on its debt.

Two people with direct knowledge of the discussions within Aung San Suu Kyi’s government said that economic officials were looking for ways to negotiate down costs for the planned port at Kyaukpyu in Myanmar’s western Rakhine state.

The port is set to give China’s south-west a direct trading corridor to the Indian Ocean via Myanmar, allowing companies to avoid the Malacca Straits if needed. As such, it is part of Beijing’s $1tn push to shore up transport and energy supply routes across Eurasia under its so-called Belt and Road Initiative. The port at Kyaukpyu will be one of the biggest infrastructure projects in Myanmar’s history.

The project “should be welcomed as a useful addition to the country’s stock of infrastructure,” said Sean Turnell, an Australian academic who advises Myanmar’s government on economic policy, However, he added: “It would seem at first glance also to be a project that comes at excessive financial cost and, with this, poses grave risks for Myanmar it may require the country to take on to participate.”

The current estimated costs of the port, which sits at the terminus of recently built oil and gas pipelines that run to southern China’s Yunnan province, are about $7.5bn, with another $2bn envisaged for an adjoining economic zone.

The project is due to be built by a consortium led by Citic Group, one of China’s largest and most powerful state-backed conglomerates. Citic won a tender in 2015, with the Chinese side taking 70 per cent and Myanmar’s government and local companies taking 30 per cent.

“A port of [that] scale that could be usefully employed by Myanmar, under any plausible scenario, should cost just a fraction of this,” said Mr Turnell, an economics adviser who is on secondment from Australia’s Macquarie University as a close adviser to Myanmar’s government. He noted that his comments were his “personal assessment” but also confirmed that officials were looking at ways to negotiate the project’s cost down.

A second foreign official in Myanmar briefed on the discussions inside the government was blunter, saying the project was giving policymakers “nightmares”, amid fears the port could come under Chinese control if Myanmar failed to service its debt.

“If the project doesn’t do well, there is the risk of defaulting and becoming a Chinese-owned port,” said the official, who asked not to be quoted by name because of the sensitivity of the project.

Similar problems have already arisen elsewhere in Asia. Sri Lanka last year handed control of its port at Hambantota to China on a 99-year lease after failing to pay the project’s debts.

Mr Turnell estimated that the amount of debt Myanmar would need to take on for its share of the project would be about $2bn, or about 3 per cent of GDP, representing what he called “a substantial addition to the country’s debt stock”.

Citic Construction did not respond to an emailed request for comment, and Myanmar’s government did not respond to requests for comment.

Myanmar’s review of the project comes at a delicate time for the country, as it faces condemnation from western countries over its recent military crackdown on Rohingya Muslims, which some analysts believe could push the country into China’s orbit.

The country’s previous government angered China in 2011 by suspending the $1.5bn Myitsone dam project in northern Myanmar, which it shelved because of its environmental and social impact.

Stock exchange weekly report /May 28- May 31/ www.mse.mn

Ulaanbaatar /MONTSAME/ During the week spanning May 28 to May 31, 2018, MNT8,691,937,112 worth of securities were traded through 4 trading sessions on the MSE. The daily average MNT volume was MNT2.2 billion.
1. STOCK TRADING:
Primary market trading:
16.9 million shares worth MNT6.4 billion of 'Mongol Basalt' JSC were traded.
date Securities Name Symbol Price per share Volume Amount
18.05.28 Mongol Basalt MBW 380.00 16,925,100 6,431,538,000.00
Total 16,925,100 6,431,538,000 A total of 40 companies’ 9,302,662 shares worth MNT2,104,228,160 were traded.
Most actively traded stocks:
№ Symbol Securities Name Volume Amount
1 MBW Mongol Basalt 3,777,486 1,571,389,909
2 LEND LendMN 5,288,936 274,960,296
3 GTL Gutal 3,532 77,703,900
4 SUL Juulchin Duty Free 441 41,670,320
5 APU APU 62,987 39,590,941Most active brokerage firms:
№ Symbol Company Name Volume Amount
1 GAUL Gauli 2,743,374 1,112,212,578
2 BUMB Bumbat-Altai 1,551,619 605,050,386
3 BDSC BDSec 1,090,217 402,606,227
4 BZIN Mirae Asset Securities Mongol 6,625,602 391,705,5872. GOVERNMENT SECURITIES TRADING:
Most active brokerage firms for Government securities secondary market trading:
№ Symbol Company Name Volume Amount
1 BDSC BDSec 2,000 203,600,000.00
3 GAUL Gauli 192 19,200,000.00 
3. CORPORATE BONDS TRADING:
№ Symbol Company Name Volume Amount
As of May 31, 2018, total market capitalization of MSE is MNT2,487,830,865,858 The TOP-20 index increased by 0.44% to stand at 20,024.7 units.

Over 500 non-banking financial institutions active in Mongolia www.news.mn

As of the first quarter of 2018, over 500 non-banking financial institutions (NBFI) and their 177 branches are reported to be active in Mongolia across the 21 provinces. According to the Mongolian Financial Regulatory Commission, over 2500 people are working in such institutions.

MBD business delegates are heading to London www.mongolianbusinessdatabase.com

MBD business delegates on mining, education, transportation, foreign trade and tourism are heading to London UK tomorrow for Frontier's "Invest Mongolia London Forum" and "International Festival for Business 2018" in Liverpool.

Mongolia launches hotline for foreign tourists www.xinhuanet.com

ULAN BATOR, June 3 (Xinhua) -- Mongolia launched a hotline service Sunday for foreign visitors to the country that will provide tourist information and help in emergencies.

S. Korea, China agree to double-track key Incheon-Mongolia air corridor www.english.yonhapnews.co.kr

SEOUL, June 3 (Yonhap) -- South Korea and China agreed to double-track a key air corridor between Incheon and Mongolia with the aim of greatly reducing flight delays in order to benefit travelers, the government said Sunday.

Mongolia listing boosts investors confidence in Erdene Resource www.mining.com

Shares in Canada’s Erdene Resource (TSX:ERD), one of the very few companies that has successfully navigated Mongolia’s ever-changing policies on foreign mining investment, were off to the races on Thursday after the miner announced it had received approval for a secondary listing on the Mongolian Stock Exchange (MSE).

Mongolia bans civil servants from using social network sites at work www.xinhuanet.com

A Mongolian ban targeting civil servants on the use of social network sites including Facebook, Twitter and Youtube while at work has come into force, according to the government on Wednesday.

Vegetable storage complex to be constructed in Ulaanbaatar www.news.mn

The Mongolian Cabinet has decided to continue the ‘Cultivation Campaign III’ programme in its 2016-2020 action plan. As a part of the campaign, the Ministry of Food, Agriculture and Light Industries is working to construct a vegetable storage complex which is much needed in the city, where summer temperatures can rise to above 30deg C and keeping produce fresh is difficult.

Mongolian Parliament holds secret session on SCO status www.news.mn

The Mongolian Parliament has held an irregular meeting regarding the nation's status in the Shanghai Cooperation Organisation (SCO). The meeting took place behind closed doors on Wednesday 30 May. President Kh.Battulga and Prime Minister U.Khurelsukh both participated in the session.