Myitsone's moment of truth

Seven years after it was suspended, the Chinese developer of the Myitsone Dam is ramping up efforts to lobby residents amid a strengthening of China-Myanmar relations.


MUNG RA stands on stage, looking out over the thousands of anti-dam protesters who have come to the confluence where the Ayeyarwady River originates on October 1 to celebrate the seventh anniversary of the suspension of the Myitsone Dam.

At the edge of the crowd are English signs with the words “No Dam” and “Free Streaming the Ayeyarwady”. Many people in the audience have pinned badges to their clothing with anti-dam messages.

Mung Ra waves a book: Answering Questions on the Extraction of Hydroelectricity from the Ayeyarwady Myitsone, Upper Reaches and River Valley.

Published by the dam’s investor, China’s State Power Investment Corporation, it includes a wide range of information on the series of dams the company wants to build on the Ayeyarwady and its tributaries, the N’mai and the Mali rivers, including the structure and potential environmental impact of these dams, and the financial and other benefits for Myanmar. It also explains the company’s investment in the project to date, including the support it has provided to communities displaced by the 6,000 megawatt Myitsone dam project.

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“The book mentions our resettlement and the health and livelihood assistance [the company gave] but it’s just full of fake information. We never received this [assistance] in the past and we are not receiving it now,” Mung Ra tells the crowd.

Mung Ra should know. Originally a resident of Daung Bum, a village located near Myitsone, in 2009 he was forced to move with his family to Maliyang, one of two model villages build by SPIC (then known as China Power Investment Corporation) to house people displaced to make room for the mega-dam, which would flood an area the size of Singapore.

A participant at the October 1 ceremony to celebrate the seventh anniversary of the suspension of the Myitsone Dam. (Hein Ko Soe | Frontier)

A participant at the October 1 ceremony to celebrate the seventh anniversary of the suspension of the Myitsone Dam. (Hein Ko Soe | Frontier)

Suspended in September 2011, the future of the dam remains unclear. But the book represents the latest attempt by SPIC to convince locals of the dam’s benefits, and was distributed to everyone who has been displaced by the project, including students in state schools at the model villages of Maliyang and Aung Nanthar. The company invited them all to take part in a quiz about the book’s contents, and handed out prizes – including a motorbike, refrigerator and mobile phones – to those who could best recall the key facts.

Some sections seem to be straining to sell the benefits, however. At one point, it argues that the dam will bring significant benefits because of new tourism opportunities. “There are many places around the world where the views from hydroelectric dams … [have turned them into] world famous destinations,” it says. “In some places, the profit of tourism is greater than that of hydroelectricity extracted.”

Mung Ra said he refused to participate in the competition on principle, but acknowledged that other residents had taken part. He said he was confident that the company’s lobbying efforts were futile. “Just because people accept the prizes, it doesn’t mean they agree with the dam project at Myitsone,” he said.

The winner of the competition, Hung Ann, told Frontier that he competed simply because he wanted the prize. “I will never agree with or support the Myitsone Dam,” said Hung Ann, who lives in Maliyang.

Although the company has promised to hand over the motorbike in November, he’s still waiting to get it, he said. “I’m not sure why there’s been a delay.”

Uncertain future

The Myitsone dam project began in 2006 when a senior member of the ruling military junta, General Thiha Thura Tin Aung Myint Oo, who was a vice president in U Thein Sein’s government from March 2011 to July 2012, visited China and sought assistance for hydropower development.

The project originally envisaged a series of seven hydroelectric dams, including the main dam at the confluence of the N’mai and the Mali rivers, with another on the Mali and five on the N’Mai Rivers. The company estimated the seven dams would have a total installed generation capacity of 21,600 megawatts, or about four times the nation’s current capacity of 5,200 MW.

Under the terms of the initial agreement, SPIC had an 80 percent share in the project and the government held 15 percent. The diversified Myanmar conglomerate Asia World held the remaining 5 percent. Myanmar was to receive 10 percent of the power, cost free, and the rest was to be exported to China. However, Myanmar was given the option of buying another 20 percent of the output and China was reported to also be interested in supplying power to India and Bangladesh.

In September 2011, President U Thein Sein responded to a growing national protest movement by suspending the Myitsone Dam for at least the duration of his term in office, which ended in March 2016.

In August 2016, the new National League for Democracy government established an Investigation Commission for the Ayeyarwady-Myitsone Upstream River Basin Hydropower Projects just a week before State Counsellor Daw Aung San Suu Kyi made her first state visit to China.

China's President Mr Xi Jinping shakes hands with State Counsellor Daw Aung San Suu Kyi at the welcome ceremony for the Belt and Road Forum in Beijing on May 15, 2017. (AFP)

China’s President Mr Xi Jinping shakes hands with State Counsellor Daw Aung San Suu Kyi at the welcome ceremony for the Belt and Road Forum in Beijing on May 15, 2017. (AFP)

The 20-member commission, led by Pyithu Hluttaw Speaker U T Khun Myat, submitted its final report to the President’s Office in November of that year, but it has never been made public and the government’s intentions remain unclear.

Meanwhile, earlier this year the Myanmar government and the International Finance Corporation – a member of the World Bank Group – released a Strategic Environmental Assessment of the Hydropower Sector in Myanmar that was drafted with support from Western donors.

The key recommendation of the SEA is to restrict development on five mainstems, including the Ayeyarwady, Chindwin and Thanlwin (Salween), Mekong and the lower Sittaung. The report warned that proceeding with five large planned dams on mainstems, ranging in size from 1,200MW to 7,000MW, would “completely alter the river system’s hydrologic, sediment transport, and geomorphic functioning …  These projects would break river connectivity, trap sediment, and alter the flow regime at a basin scale.”

At a press conference in September, government spokesman U Zaw Htay told reporters that the future of the Myitsone Dam would be decided based on the commission’s report. Contacted by Frontier, he refused to answer further questions about the project.

Even commission members said they are in the dark about when the President’s Office will publicly reveal their recommendations, or even whether the NLD will tackle the issue at all during its five-year term.

“We’re not sure what the government will decide to do,” said commission member Mi Kun Chan, who is also a member of the Pyithu Hluttaw (NLD, Paung). “But even if the NLD can’t begin implementing our recommendations, they could still be taken up by the next government or any future administration.”

But Mung Ra said he doubted the NLD government would pay much attention to the commission’s recommendations.

“The commission is just for show, for when the state counsellor visited China,” he said. “It meant that if China raised the issue of the suspension of Myitsone, she could show that her government was actually doing something about it.”

Another speaker at the October 1 event, Lu Ra, who had been displaced from Tang Phae village to Maliyang, told the crowd that SPIC had recently told residents that the Myitsone project would resume by 2020.

“They said that it’s almost certain the project will restart, and they keep telling us how important Myitsone is for Myanmar,” she said.

Increased lobbying

Since the middle of this year, SPIC – and possibly the Chinese government – has been lobbying more aggressively for the project to be restarted. In June, the state-run Global Times newspaper published an article that suggested restarting the Myitsone project would help boost investor confidence.

“Its long suspension is likely to drive down investor confidence amid concerns over the uncertainty of Myanmar’s economic policy,” the article said.

Acknowledging the “complicated public opinion” regarding Myitsone, the article said that China would “keep talking to Myanmar over the stalled dam and try to find a practical way to resume the project based on mutually beneficial cooperation”.

SPIC has also increased engagement with Myitsone residents, with The Irrawaddy reporting that company officials held meetings in the area in August and September.

Hein Ko Soe | Frontier

Hein Ko Soe | Frontier

Asked for comment and for contact information for SPIC, the Chinese embassy referred Frontier instead to Dr Li Chenyang, professor and director of the Institute of Myanmar Studies at Yunnan University.

In an email response to questions, Li said the suspension had “caused heavy loss to investment enterprises, and adversely affected Myanmar’s international image as well as its electric power development”.

He rejected the suggestion that the project was unpopular in Myanmar and claimed that it was in fact gaining support. “[W]e note that many people of Myanmar have known the experience of international hydropower development and the actual situation of the project, gradually recognised the benefits of the project, and expressed their understanding and support for the project.”

Asked about the company’s latest outreach efforts, Li said that it was less an attempt to change the minds of opponents of the project than a response to Myitsone residents’ desire “to know more about the advantages and disadvantages of hydropower development and about the project”.

“Local people affected by the project thought that such open and systematic communication was necessary and could help them to have a better understanding of the actual situation,” he said.

U Khet Htein Nan, a former Amyotha Hluttaw representative for Kachin State, said he believed China was adopting a more aggressive position on Myitsone because the suspension had dragged on for so long and because Myanmar was now more dependent on China for political support.

“When the Thein Sein government started the democratisation process in Myanmar, most countries welcomed the reforms so China avoided putting pressure on Thein Sein … it wanted to create a more positive image to the citizens of Myanmar,” he said.

“But the NLD government has come under pressure from the West because of the Rakhine crisis and China has stayed by its side. It can use this to pressure Myanmar to allow more Chinese investment.”

A vote-losing issue?

At one point during the October 1 ceremony, Kachin ethnic singer Marang Seng Naw stood on the stage and asked the crowd to raise their hands if they did not want any dams halting the free flow of the Ayeyarwady River or its tributaries.

The crowd raised their hands as one – including Gum Grawng Awng Hkam, who was running for the Amyotha Hluttaw seat of Kachin 2 in by-elections held on November 3.

Gum Grawng Awng Hkam is a member of the Kachin Democratic Party who contested the Pyithu Hluttaw seat of Sumprabum in Kachin State in the 2015 election. He was chosen to run in the by-elections by four ethnic Kachin parties, including the KDP, that agreed earlier this year to join forces but had not formalised their merger by the time the by-elections were called.

The agreement meant he did not have to compete with other ethnic Kachin parties, and instead fought it out with candidates from the NLD and the Union Solidarity and Development Party, as well as two other parties and an independent.

Prior to the vote, Gum Grawng Awng Hkam told Frontier he was not confident of victory because ethnic Kachin were a minority in the constituency, which encompasses the state capital Myitkyina. During the campaign, the Myitsone dam was one of four key issues that he used to appeal to voters, along with peace, self-determination and narcotics.

The seat was always going to be difficult to predict; the NLD had won it with 46.7 percent of the vote in 2015, but the USDP had deferred to its ethnic ally, the Unity and Democracy Party of Kachin State, and not fielded a candidate. With the UDPKS backing Gum Grawng Awng Hkam as part of its merger deal, the USDP put a candidate up for the 2018 by-election.

Gum Grawng Awng Hkam (left) says Myitsone is a national issue. (Hein Ko Soe | Frontier)

Gum Grawng Awng Hkam (left) says Myitsone is a national issue. (Hein Ko Soe | Frontier)

In the end it was a three-way race, with the USDP emerging the winner. Gum Grawng Awng Hkam ran a reasonably close second, just ahead of Daw Yan Khawn from the NLD.

Gum Grawng Awng Hkam said the Myitsone dam issue had encouraged some people who voted for the NLD in 2015 to switch to the KDP. “It’s a national issue – not just Kachin people but even Bamar and ethnic minorities voted for KDP in the election because of Myitsone,” he said.

“During my campaign, voters told me the key issue for them was peace and then Myitsone,” he told Frontier. “It’s a big issue for the people here and the current representative in Kachin State haven’t done anything about it. People are annoyed at their representatives and I’ve promised to always oppose the Myitsone Dam. I will never support it.”

During the October 1 ceremony at Myitsone, Frontier met two women from Myitkyina who earlier that day had travelled the 45km to join the event. After talking about the politics of the dam for some time, one of them said, “If the Myanmar government cannot cancel the project, we will all go and destroy the SPIC compound beside the dam construction site. We will bring people from central Myanmar by train to Myitkyina and we will go together and kick out the Chinese.”

This extreme response may not be typical, but there is a sense of disappointment at the NLD. The party though can’t be accused of reneging on a promise to stop the project. On the campaign trail in Kachin State in 2015, Aung San Suu Kyi reportedly promised to publicise details of the contract between the government and SPIC if she formed a government, but stopped short of pledging to cancel the dam.

According to the Myanmar Times, she said it would be “irresponsible to make promises [to revoke it] without knowing the details of the contract. I promise to do what I can, but I’m not going to promise what I cannot deliver. That would be cheating.” Asked in April 2016 about the contract following her meeting with China’s foreign minister in Nay Pyi Taw, Aung San Suu Kyi responded that she had not yet read it.

Weighing up the costs

The NLD will have to weigh the cost of proceeding with that of cancellation – which could, financially at least, be steep.

In June 2016, an SPIC executive said Myanmar would incur interest of US$50 million each year the project was suspended, and would be liable to pay $800 million in compensation if it cancelled the Myitsone dam. The executive said a third option was to continue with the project and unlock $500 million in annual revenues.

Some commentators have suggested a fourth option: cancelling the Myitsone dam, but proceeding with other mutually agreed bilateral projects instead. As Mr Joern Kristensen, executive director of the Yangon-based Myanmar Institute for Integrated Development (MIID), noted in Frontier in July 2016, Yunnan Province no longer needs the power that Myitsone was designed to provide. He also made the argument that this could be a public relations victory for both Myanmar and China.

But Dr Enze Han, an associate professor in the Department of Politics and Public Administration at the University of Hong Kong, said this was unlikely to be a straightforward process. Although many of the investors in such projects are state-run entities, it was simplistic to look at Chinese investment as monolithic.

“It just doesn’t work that way. Even if they are all owned by the state, it doesn’t mean that the loss at one company can be compensated to a different company,” Han said. “Their balance sheets are independent of each other … This particular company has already invested so much money.”

Further, many Chinese state enterprises use an incentive system whereby staff in a particular company are rewarded based on that company’s profitability. This system, if practised at SPIC, would encourage its managers to pursue the resumption of the project or compensation, even if that appeared counter to the interests of bilateral relations. “I think ideally the investor wants the project to start again,” Han said.

Known as Myitsone, the confluence of the N'mai and Mali rivers in Kachin State holds great cultural significance. (Hein Ko Soe | Frontier)

Known as Myitsone, the confluence of the N’mai and Mali rivers in Kachin State holds great cultural significance. (Hein Ko Soe | Frontier)

The Chinese government, too, seems to be more aggressively supporting the project – or, at least, backing the need for a settlement. Several sources said that Myitsone was at the top of the list of priority projects that had been put forward by the Chinese government under its multi-billion dollar Belt and Road Initiative.

The message, essentially, was that other BRI projects will only move forward after Myitsone. Media reports have also suggested that Chinese President Mr Xi Jinping will only pay a state visit to Myanmar – one had been rumoured for November – when the dam’s future is clarified. At the same time, Beijing does not seem to have publicly linked the Myitsone Dam to BRI – acknowledgement, perhaps, that the project remains deeply unpopular and could potentially tarnish the image of BRI.

Just as Chinese investment is not monolithic – at least from the perspective of China – there is evidence to suggest the Myanmar public doesn’t view all Chinese investment in the same way. 

A survey published in March by the International Growth Centre, a British research institute, found that while there is an implicit bias against Chinese investment relative to investment from Japanese companies, the choice of partner and level of engagement with communities could negate that bias.

Those that have a partner perceived as close to the military – like Asia World, in the case of SPIC – and failed to engage with communities were likely to be negatively perceived. The policy brief also noted that in ethnic states like Kachin, foreign companies needed to be particularly careful when investing in natural resources projects that have a strategic component and may trigger opposition.

SPIC’s outreach efforts may be too little, too late. At the October 1 gathering at Myitsone, it was clear that resumption of the project or the development of other dams on the Ayeyarwady and its major tributaries would be met by fierce resistance from displaced families, residents of Myitkyina, and environmental and political activists.   

U Mya Aye, a senior member of the 88 Generation Peace and Open Society activist group who attended the rally, urged residents to increase their demand to stop all dams on the rivers and enable them to return to their original homes.

“My desire is to see the Ayeyarwady left untouched, not only for Kachin State but also for the rest of Myanmar,” he said.

Lung Ra said Myitsone was “part of our heritage” and should not be touched by “any dam”.

“We have to defend Myitsone and the Ayeyarwady River – we will never agree to build any dam here and we want to live in our original homes.”

She said residents were constantly appealing to the NLD to cancel the project, but were unsure what negotiations it was undertaking with China.

“We support the civilian government and want to give it strength to fight against China,” she said. “So please take our strength, reject the project and fulfill your citizens’ wishes.”

TOP PHOTO: Attendees at an October 1 ceremony to celebrate the seventh anniversary of the suspension of the Myitsone Dam. (Hein Ko Soe | Frontier)

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