Printed from:
http://www.ft.com/cms/s/0/bccaef18-ece7-11e0-be97-00144feab49a.html
Print a single copy of this article for personal use. Contact us
if you wish to print more to distribute to others.
THE FINANCIAL TIMES LTD 2011 FT and Financial Times are
trademarks of The Financial Times Ltd.
October 2, 2011 3:02 pm
Burma dam disruption concerns ChinaBy Kathrin Hille in
Beijing
Beijing has called on Burma to protect the rights of Chinese
companies after construction was halted on the $3.6bn Myitsone dam,
in a
rare example of public disagreement between the two neighbours
and close allies.
[China] demands its companies to strictly follow the law of the
countries they operate in but also calls on the respective
governments
to protect Chinese companies legal rights and interests, said
Hong Lei, a spokesman for Chinas foreign ministry.
[The] China-Burma joint investment project ... has undergone
scientific evaluation and strict examination by both sides, Mr
Hong
added. Issues during its implementation should be handled
properly through friendly negotiations.
On Friday Thein Sein, Burmas president, ordered a halt to work
on the project. The Burmese government had previously insisted
that
construction would proceed despite protests.
The Myitsone projects main contractors are China Power
Investment Corporation, one of the countrys big power producers,
and Asia
World Company, a Burmese group.
Sinohydro, a China Power subsidiary and one of the worlds
largest dam contractors, and another Chinese state-owned dam
construction company, Gezhouba, are the primary
subcontractors.
The dam, the largest of seven planned along the Irrawaddy river,
is located in Kachin state, an area which was long under the
control
of guerillas fighting for independence in the region. The
planned relocation of thousands of people and controversy over
the
environmental impact assessment commissioned by China Power have
sparked frequent protests.
The disruption could add momentum to a re-examination of Chinese
state-owned groups push into infrastructure and power projects
in often high-risk developing countries.
About $8,000bn in infrastructure investments are expected to be
committed between 2011 and 2020, according to the Asian
Development Bank and consultancy group McKinsey. China has made
prioritised foreign infrastructure participation in its 12th
five-
year plan, allocating about $15bn for infrastructure projects in
Burma and other member countries in the Association of
Southeast
Asian Nations (Asean).
As it becomes more difficult to obtain export finance from Japan
and South Korea, construction and power companies are asking
Chinese firms to join their invesment consortiums in order to
qualify for financing from Chinese state banks, which typically
apply less
scrutiny than other lenders. But Beijing has started taking a
closer look at potential political risk following wars in Sudan and
Libya
two countries in which Chinese companies had been very
active.
When Chinese undertake a large project domestically, the
developers, contractors, manufacturers, suppliers, lenders and
off-takers
are often state-owned and are pursuing a project that has been
identified as part of a wider domestic priority, said
Christopher
Stephens, a partner at Orrick, Herrington & Sutcliffe, the
law firm.
They have to deal with unfamiliar labour, environmental, tax,
and other laws, local subcontractors and suppliers, and less
friendly
courts and regulators. Its quite a different set of risk
analyses.
Page 1 of 1Burma dam disruption concerns China - FT.com
2011/10/02http://www.ft.com/intl/cms/s/0/bccaef18-ece7-11e0-be97-00144feab49a.html
