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Chinese financing for the first phase of a US$7.2 billion deep-water port development project in the southwest Myanmar town of Kyaukphyu has been agreed.

However, it is only after months of negotiating that agreement has been reached between CITIC (China International Trust and Investment Corporation) and the Kyaukphyu Special Economic Zone (SEZ) Management Committee, since Myanmar’s concerns about debt had to be allayed.

In 2015, CITIC initially won the tender to construct the Kyaukphyu SEZ with an 85% stake. It was originally estimated that the entire project would cost $7.2 billion, with the first phase expected to cost $1.6 billion.

Under the new agreement, CITIC will hold a 70% stake in the project and the first phase will be implemented using $1.3 billion of funding.

The Myanmarese government has set a target of generating about $3.2 billion a year once the port and economic zone are complete. To gauge its economic progress, the port will be developed in four phases.

The port is considered to be a strategic point in the maritime part of China’s One Belt, One Road (OBOR) initiative, and it will be connected with China via road and rail corridors.

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