Finance, infrastructure, urban planning highlight future China-Myanmar cooperation under BRI: expert

China and Myanmar have the potential to promote future cooperation in sectors such as finance, infrastructure and urban planning under the Belt and Road Initiative (BRI), said a Chinese expert.

The comment came after Chinese State Councilor and Foreign Minister Wang Yi said on Monday during his visit to Myanmar that China will provide the country with COVID-19 vaccines and continue to support it in its fight against the pandemic.

“In addition to vaccines, Myanmar also needs a healthy financial market to recover from the pandemic,” said Liang Haiming, Dean of Hainan University Belt and Road Research Institute, noting that China-Myanmar financial cooperation should focus on both the currency and stock exchange.

Promoting the use of the yuan in Myanmar can mitigate the possible impact of currency devaluation thanks to China’s huge foreign exchange reserve and the currency’s stable exchange rate, said Liang.

Myanmar’s Kyat is relatively unstable and suffers severe devaluations from time to time, while international currencies including the US dollar (USD) have also experienced recent devaluations.

“In 2020, the USD index dropped around 6.7 percent, while the yuan has strengthened against the USD by 7 percent,” said Liang. He said that with incoming president Joe Biden’s new economic policies and the Federal Reserve’s liquidity injecting measures, it is possible that the USD index will continue to drop by 6 percent to 7 percent in 2021.

“By using the yuan, Myanmar will potentially motivate other countries from the Association of Southeast Asian Nations to do the same, thereby increasing China’s financial connection with other Asian countries,” Liang said, adding that with more Asian countries using the yuan, the cost of using the currency in international trade, transactions and as a reserve currency will go down accordingly.

China and Myanmar are also expected to carry out financial cooperation through their stock exchanges, Liang noted. Myanmar gave approval for foreign investors to buy stocks on the Yangon Stock Exchange in March 20, 2020, and more than 54,200 shares from four of Myanmar's six listed companies had been sold by October 2020.

“In the future, Chinese enterprises investing in Myanmar should be encouraged to not only buy stocks from the Yangon Stock Exchange, but also get listed on the Exchange,” Liang said, “When the time is right, it is also possible to establish a Shanghai-Yangon Stock Connect and Shenzhen-Yangon Stock Connect by promoting cooperation between the stock exchanges in China and Myanmar.”

Through such cooperation, the Myanmar capital market will be energized by China's working capital, technology, experience and products, Liang added, saying that this will also serve as preparation for Myanmar’s future launch of various financial derivatives to enrich its financial market.

Another point of emphasis in China-Myanmar cooperation lies in infrastructure.

“Myanmar has tried to attract investment in infrastructure from the US, the EU and Japan. Several commitments were made, but none of them were realized, which is why Myanmar is now somewhat disappointed with the West,” Liang said.

Liang said that it is not accurate to say that the US, EU and Japan have failed to invest in Myanmar. “Rather, they have been restricted from going in for the past few years. The US has been trying to bring manufacturing back home, which means there is little chance to expand the scale of foreign investment. For the EU, whose economy has not fully recovered, it is hard to further carry out foreign investment when there is so much to deal with among themselves. In the case of Japan, even though the intention is there to invest in Southeast Asian countries, Myanmar is not Japan’s first choice.”

In 2019, Chinese companies signed new project contracts worth $6.31 billion  in Myanmar, an increase of 128 percent year-on-year. “But there have been hardly any large-scale, well-planned infrastructure investment projects, which is exactly what should be emphasized in the future,” said Liang.

Chinese enterprises investing in Myanmar should consider collaborating with European, American and Japanese companies, as joint investments can have the advantage of spreading investment and political risks, and reduce confrontation between Chinese and Western companies. It can also increase spaces for hedging and cooperation, Liang said.

In addition to traditional infrastructure, new infrastructure deserves mentioning as well. Myanmar has been learning from Chinese experience in developing smart cities and is more than willing to introduce the best technology, products and talents from China, which gives Chinese companies an open opportunity, Liang said.

“This leads to another field of future cooperation between China and Myanmar,” Liang said, “Urban planning cooperation creates yet another win-win opportunity for both sides.”

Many cities, especially large cities in Myanmar, see Chinese urban development as promising and worth studying, Liang said, “Actually, Myanmar has already emulated several Chinese cities’ development experience, for example, the ongoing New Yangon City project uses Pudong as a reference to a great extent.”

“This indicates great opportunities for Chinese companies,” Liang noted, “Many Chinese technologies and products are facing fierce competition in the domestic market. If they manage to bring their business to Myanmar and localize their products to meet local needs, there is a good chance these Chinese enterprises will grow rapidly in Myanmar.”