CHINA IN MYANMAR(BURMA) FOR ARMS-LOGGING-DAM-COPPER-JADE etcs-PART ONE

Chinese Investments
in Myanmar
A Scoping Study
A “China Going Global” series publication
Global Environmental Institute
Investment Trade and the Environment Program Team

2
Chinese Investments in Myanmar - A Scoping Study
AUTHORS: Christopher Dunn, Lin Ji and Kui Peng
Copyright © 2016
Global Environmental Institute
ADDRESS: Tayuan Diplomatic Office Building,
# 14 Liangmahe South Road; Building 1, Suite 32
Chaoyang District
Beijing 100600, China
TELEPHONE: +86-10-8532-5910
FAX: +86-10-8532-5038
E-MAIL: gei@geichina.org
ACKNOWLEDGMENTS
This report was commissioned by the Wildlife Conservation Society (WCS) with funding support from
Norway’s International Climate and Forest Initiative (Grant No. RAS-2793 QZA-13/0563).
DISCLAIMER
The contents of this publication are the sole responsibility of the authors and can in no way be taken
to reflect the views of the Wildlife Conservation Society or the Norway’s International Climate and
Forest Initiative.

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TABLE OF CONTENTS
FOREWORDS 5
CHINESE INVESTMENT IN MYANMAR 5
SECTORS AND FORMS OF INVESTMENT 7
Mining 9
Hydropower 20
Agriculture 28
Infrastructure 32
Tourism 42
SUMMARY OF FINDINGS, RECOMMENDATIONS & NEXT STEPS 43
SUGGESTIONS ON FUTURE ENGAGEMENT WITH CHINESE COMPANIES 44

5
FOREWORDS
The purpose of this scoping study conducted by the Global Environmental Institute (GEI) is
to provide a better understanding of the presence and operations of Chinese companies
involved in overseas foreign direct investment activities (ODFI) in Myanmar, along with
direct and indirect environmental and social impacts associated with investments in target
jurisdictions.
This report summarizes the findings of stage one of the scoping study, which focussed on
identifying Chinese companies with investment interests in Myanmar and documenting
information relating to these investments in mining, hydropower, agriculture, infrastructure
and tourism sectors.
CHINESE INVESTMENT IN MYANMAR
The Myanmar government liberalized its trade policy to induce foreign investments in 1988.
Since then, China-Myanmar bilateral trade has been growing steadily until the beginning of
the 21st century.
In 2001, Chinese government launched the “Go Global” policy, which encourages outward
investment of domestic enterprises. Then from 2005-2010, the Chinese Foreign Direct
Investment (FDI) in Myanmar increased dramatically. It is illustrated by the amount of FDI
change as shown in Table 1 and Table 2. The drastic growth, however, makes Myanmar an
outstanding case compared to any other members of the Association of South East Asian
Nations (ASEAN). The reason behind the unusual surge of investment is multi-folds. One
primary issue is that, China has rapidly become the world’s largest consumer of imported
resources. Myanmar, rich in its natural resources, thus suddenly becomes more attractive to
China. The lack of competitors due to international sanctions over Myanmar also provides
China an ease of access. Besides the above, Myanmar’s strategic location for China is also
noted as an important reason. By 2011, China had become Myanmar’s biggest trading
partner, while it only held the third place after Thailand and Singapore three years before
then.
The enthusiasm from Chinese investors, however, chilled not after long and the investments
plummeted. In March 2011, the reformist government took office in Myanmar. Political
tensions between the two countries grew as the elite in Myanmar concerns that Myanmar
had become too dependent on China. Human rights groups also expressed concerns over
Chinese investment projects. Following that, two major investment projects from China
encountered serious difficulties – the Myitsone Dam and the Letpadaung Copper Mine.
Investments from Chinese companies dropped drastically to $217.8 million in the fiscal year

6
in 2011, while the number was $875.6 million in the previous year. Although the investment
amount has grown back steadily and China is still the largest investor of Myanmar, some
Chinese companies might still wait and observe the new political development until the
election in the end of 2015.
TABLE 1 CHINA'S OFDI FLOWS TO ASIA AND MYANMAR ALONE (2005-2013)
(Million USD)
Country/Region 2005 2006 2007 2008 2009 2010 2011 2012 2013
TOTAL 12,261 17,634 26,506 55,907 56,529 68,811 74,654 87,800 107,840
Asia 4,484 7,663 16,593 43,548 40,408 44,891 45,495 64,785 75,600
Myanmar 11.5 12.6 92.3 232.5 376.7 875.6 217.8 749.0 475.3
FIGURE 1 CHINA'S OFDI FLOWS TO MYANMAR (2005-2013)
TABLE 2 CHINA'S OFDI STOCK FOR ASIA AND MYANMAR ALONE (2005-2013)
(Million USD)
Country/Region 2005 2006 2007 2008 2009 2010 2011 2012 2013
TOTAL 57,206 75,026 117,911 183,971 245,755 317,211 424,781 531,940 660,480
Asia 40,954 47,978 79,218 131,317 185,547 228,146 303,435 364,410 440,010
Myanmar 23.6 163.1 261.8 499.7 929.9 1,946.8 2,181.5 3,093.7 3,569.7
0
100
200
300
400
500
600
700
800
900
1000
2005 2006 2007 2008 2009 2010 2011 2012 2013
Investment Amount
(Million USD)

7
SECTORS AND FORMS OF INVESTMENT
Chinese investments in Myanmar are mainly focused on the sectors of hydropower, oil and
gas, and mining. According to statistics from the Myanmar Embassy, by 2011, 63% of China’s
investments in Myanmar were in power sector, while investment in oil and gas and mining
sectors occupied 36%. The total of the three makes up 99% of all Chinese investments in
Myanmar. Besides these sectors, recent years have witnessed more investments in other
sectors, such as infrastructure construction, which includes economic zones and
transportation facilities like roads, railways and port facilities. Because of the nature of
these abovementioned sectors, one typical feature of the Chinese companies invested in
these major projects is that most of them are state-owned companies (SOEs).
FIGURE 2 CHINESE INVESTMENTS IN MYANMAR, BY SECTOR (2011)
Chinese investors in the agriculture sector are very much in small portion and diversified.
Those projects under the opium substitution plan along the China-Myanmar border areas
such as Shan State (including Kokang and Wa Special Region) and Kachin State, mainly focus
on sugar cane, rubber and fruit plantation, and are mostly made by private companies from
Yunnan Province, with a couple of Yunnan provincial SOEs involved. Agricultural plantation
demonstration projects, on the contrary, are made largely by both national and provincial
SOEs. No Chinese investment projects in tourism in Myanmar were identified during the
preliminary research.
According to Myanmar’s new Foreign Investment Law, an investment may be carried out in
either of the following two ways: a) as a 100% foreign-owned entity; b) by way of a joint
venture with a Myanmar citizen or the Myanmar Government. Both forms exist for Chinese
investments, with most SOEs establishing joint venture projects with large Myanmar
63%
25%
11%
1%
Power Sector
Oil and Gas
Mining
Manufacturing

8
companies, while private companies usually tend to invest alone or collaborate with
Myanmar local companies, often related to Chinese decedents.
FIGURE 2 NUMBER AND TYPOLOGY OF CHINESE INVESTMENTS IN MYANMAR

9
MINING
Following analysis of the data summarized in Table 3, a total of 7 mining projects with 13
Chinese parent and subsidiary companies are identified with interests in Myanmar’s mining
sector. These companies can be classified into three distinct groups, as follows:
1) SOEs with investments in large-scale mining projects;
2) Specialized SOE subsidiaries providing engineering and other contracting services;
3) Private companies with investments in small-scale projects and conducting
exploration.
Most identified mining projects are medium to large in scale1
and have Chinese SOEs
involved, therefore their information is comparatively easier to acquire; while upon
conversations with the Chinese Chamber of Commerce (CoC) in Myanmar, there are much
more small enterprises or even individual investors from China, mostly Yunnan and Sichuan
provinces, investing in small-scale mining projects in central, north and north-eastern parts
of Myanmar, whose detailed information are hard to collect.
1
Defined by investment amount – projects between US$30 million and US$200 million are considered as
medium scale projects, while those over US$200 million are large scale projects.

10
TABLE 3 CHINESE COMPANIES IDENTIFIED WITH INTERESTS IN MYANMAR'S MINING SECTOR
Company Name Company
Type
Company Role Local Partner Project Name Project Location Project Status
China Nonferrous Metal
Mining (Group) Co., Ltd.
(CNMC)
Central SOE
(CSOE)
Investor Myanmar No. 3
Mining Enterprise
(50% share in the
project)
Tagaung Taung
Nickel Mine
Thabeikkyin
Township,
Mandalay Region
Operational
Taiyuan Iron and Steel
(Group) Co. Ltd. (TISCO)
SOE Investor
China Metallurgical Group
Corporation
SOE N/A
China ENFI (China ENFI
Engineering Co., Ltd. and
China ENFI Engineering
Corporation)
Subsidiary
company
Contractor (design, equipment
supply, construction support
and commissioning)
China North Industries
Corporation (NORINCO)
SOE Parent company N/A N/A N/A N/A
Wanbao Mining Co., Ltd. Subsidiary
company
Investor N/A N/A N/A N/A
Myanmar Wanbao Mining
Copper Limited
Overseas
subsidiary
Local operating company Myanmar No. 1
Mining Enterprise
(51% share in the
project)
Monywa
Letpadaung Copper
Deposits
Sagaing Region Under construction
Myanmar Yang Tse Copper
Limited
Unknown Local operating company Unknown Monywa Sabetaung
and Kyisintaung
Copper Deposits
Sagaing Region Operational
SOE Parent company Myanmar
government (20%
share in the project)
Mwetaung Nickel
Mine
Tiddin Township,
Chin State
Advanced stages of
exploration
(feasibility study
completed)
SOE Parent company N/A N/A N/A N/A

11
company
Investor N/A N/A N/A N/A
Myanmar Wanbao Mining
Copper Limited
Overseas
subsidiary
Local operating company Myanmar No. 1
Mining Enterprise
(51% share in the
project)
Monywa
Letpadaung Copper
Deposits
Sagaing Region Under construction
Myanmar Yang Tse Copper
Limited
Unknown Local operating company Unknown Monywa Sabetaung
and Kyisintaung
Copper Deposits
Sagaing Region Operational
SOE Parent company Myanmar
government (20%
share in the project)
Mwetaung Nickel
Mine
Tiddin Township,
Chin State
Advanced stages of
exploration
(feasibility study
completed)
company
Investor
Zijin Mining Group SOE Parent company
Jinshan (Hong Kong)
International Mining
Company
Subsidiary
company
Investor
China Metallurgical Group
Corporation
SOE Investor Unknown
China ENFI Engineering Co.,
Ltd.
Subsidiary
company
Conducted feasibility study
China National Heavy
Machinery Corporation
SOE Contractor (design, equipment
supply, technical instruction for
erection, commissioning,
technical training)
Project owned by
Shan Yoma Nagar Co.
Ltd
Tigyit coal mine Pinlaung
township,
Southern Shan
State
Operational
China Minghua Group LTD Private Investor Unknown Kalonta tin mine 24km NNE of
Dawei,
Tanintharyi region
Operational
North Mining Investment
Company
SOE Investor Unknown Mway Taung Phar
Ttaung copper
mining project
Chin State Feasibility study
proposal submitted

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SOES WITH INVESTMENTS IN LARGE-SCALE MINING PROJECTS
The SOEs that can be classified in this group are some of China’s, and indeed the world’s,
largest companies. Often through their network of subsidiary companies, many of which are
big players in their own right, they make investments in resource development projects in
China and overseas. Often these investments are to secure access to resources - such as
minerals and metals - which the company and wider industry sector within which it operates
in China will need to sustain its operations over the course of the coming decades. As such,
the resource development projects invested are typically large-scale and underpinned by
support at the highest levels from the Chinese and host country governments.
Four Chinese SOEs were identified with interests in a total of four of Myanmar’s largest and
most high-profile mining projects. China Nonferrous Metal Mining (Group) Co., Ltd. (CNMC)
and Taiyuan Iron and Steel (Group) Co. Ltd. (TISCO) are both investors in the Tagaung Taung
Nickel Mine. Through its subsidiary Wanbao Mining Co., Ltd, China North Industries
Corporation (NORINCO) has invested in developing the Monywa Copper Mine (Letpadaung
and Sabetaung/Kyisintaung Deposits) and the Mwetaung Nickel Mine. Zijin Mining
Group Co., Ltd is also an investor in the Mwetaung Nickel Mine, through its subsidiary
Jinshan (Hong Kong) International Mining Company.
CHINA NONFERROUS METAL MINING (GROUP) CO., LTD. (CNMC)
Tagaung Taung Nickel Mine
Founded in 1983, China Nonferrous Metal Mining (Group) Co., Ltd. (CNMC) is a large scale,
central government SOE under the management of SASAC. According to the company’s
website, CNMC’s major businesses include the development of nonferrous metal mineral
resources, construction engineering, and relevant trade and technological services2
. It has
built and put into production several nonferrous metal mining projects overseas.
In 2004, a joint venture was formed between CNMC and Myanmar’s state-owned Number 3
Mining Enterprise, with a 75-25 distribution in favour of CNMC. In 2008, both parties signed
a production sharing agreement to develop the Taguang Taung nickel mine, whereby CNMC
committed to provide all the capital and the Number 3 Mining Enterprise the mining rights.
In the same year, it became clear that the project’s distribution had been altered to a 50-50
split, with delays attributed to negotiations over the Myanmar government’s stake in the
project3
. In 2010, it was reported that CNMC had signed an agreement with Taiyuan Iron &
Steel Group (TISCO) to jointly develop the mine (see further information on TISCO below).
2
(China Nonferrous Metal Mining (Group) Co., Ltd. (CNMC))
3
(Moran, 2010)

13
The mine is located 200km North of Mandalay in Thabeikkyin Township, Mandalay Region.
Construction was completed by 2012 and the mine is currently in operation, following
investment of over $850m USD. This represents the largest cooperation project in mining
between China and Myanmar, as reported by CNMC in 20144
. According to China ENFI
Engineering Corp. (ENFI) – the Chinese company responsible for design of the mine - it has
an annual output capacity of 25,000 tons of nickel metal5
, and CNMC’s agreement to
operate the mine is understood to be for 20 years.
TAIYUAN IRON & STEEL GROUP (TISCO)
Tagaung Taung Nickel Mine
Established in 1934 in Shanxi Province, Taiyuan Iron & Steel Group (TISCO) is a local
government SOE and one of the world's largest stainless steel producers.
In 2010, TISCO signed an agreement with CNMC to jointly develop the Tagaung Taung nickel
mining project, whereby TISCO would inject capital into CNMC Nickel to acquire an
increased share in the increased capital stock. At the time, a spokesman from the company
was reported as saying that resources from the mine would greatly alleviate China’s nickel
shortage and reduce domestic stainless steel producer’s risks from fluctuations in nickel
prices, and that the company was actively carrying out mining projects in several countries
outside of China6
. In 2014, a spokesman for TISCO reiterated China’s urgent need for nickel
supplies and confirmed that the Tagaung Taung nickel mine would provide 20% of the
company’s annual demand7
.
CHINA NORTH INDUSTRIES CORPORATION (NORINCO)/ WANBAO MINING CO., LTD.
Monywa Copper Mine (Letpadaung and Sabetaung/Kyisintaung Deposits), Mwetaung Nickel
Mine
China North Industries Corporation (NORINCO) is a central government SOE founded in 1980,
with its headquarters in Beijing. Through its various subsidiaries, NORINCO is involved in the
research and development of weapons and defense products and heavy-duty equipment
and vehicles, along with engineering contracting and the development of petroleum and
mineral resources.
Wanbao Mining Co., Ltd., incorporated in 2004 and also based in Beijing, runs the mineral
business of NORINCO. It focuses on investment in overseas nonferrous metal resource
4
(China Nonferrous Metal Mining (Group) Co., Ltd. (CNMC), 2014)
5
(China ENFI Engineering Corp. (ENFI), 2013)
6
(China Mining Association, 2010)
7
(China Daily Asia, 2014)

14
development and conducting mineral and non-ferrous metal trade. Wanbao controls
various subsidiary entities overseas, including two in Myanmar.
The first of these entities is Myanmar Wanbao Mining Copper Limited (MWMCL), founded in
2011 and responsible for operating the Monywa Letpadaung copper mine project in Sagaing
Region. The original contract between China and Myanmar to develop the Letpadaung
copper deposits was signed by then Chinese Premier Wen Jiabao during a visit to the
country in 2010. An amendment to the product sharing contract was subsequently agreed
and signed in 2013, following strong local resistance to the project and political intervention
by Aung San Suu Kyi. Under the terms of this, MWMCL and its business partner Myanmar
Economic Holdings Limited (MEHL, a conglomerate controlled by Myanmar’s military8
)
retains 49% of the benefits (understood to be a 30%:19% split), while the Myanmar Ministry
of Mines represented by No. 1 Mining Enterprise holds 51%. MWMCL carries all the
investment and operational risks of the project 9
.
The Letpadaung mine remains under construction at the time of writing, with Wanbao
hopeful that construction will be completed in 2015 and the mine ready to begin production
in 2016. However, development of the mine has faced local opposition since its inception. In
2012 police were reported to have forcefully dispersed protestors, injuring 100 Buddhist
monks, while as recently as December 2014 police again clashed with protestors with 20
injured and one killed10
.
Once operational the mine is expected to have an annual output of 100,000 tons of copper
cathode, while MWMCL’s investment is expected to be in the region of $1.1 billion USD,
which would surpass other Chinese mining investments in Myanmar.
The other subsidiary entity controlled by Wanbao Mining in Myanmar is Myanmar Yang Tse
Copper Limited (MYTCL). MYTCL owns and operates the Sabetaung and Kyisintaung (S&K)
mine, an open-cut copper ore mine consisting of two primary deposits located in the
Monywa District of Sagaing Region. Wanbao is the latest of a series of international
companies to be involved in development of the S&K mine under several eras of ownership,
having acquired the projects in 2011 with estimated total investment of $487 million USD.
The mine is currently operational and has an annual output of 39,000 tons of copper
cathode11 12
.
Wanbao also has another mining interest in Myanmar, in the form of a 10% stake in a joint
venture with Jinshan (Hong Kong) International Mining Company – a 100% subsidiary of
Chinese SOE Zijin Mining Group - who controls the remaining 90%. The joint venture holds
8
(The Wall Street Journal, 2014)
9
(Myanmar Wanbao Mining Copper Limited, 2015)
10
(Mining.com, 2014)
11
(Myanmar Yang Tse Copper Ltd.)
12
(Wanbao Mining Ltd.)

15
80% interest in the Mwetaung Nickel Mine, with the Myanmar government controlling a 20%
stake. The project is located in Tiddin Township, Chin State, and latest reports suggest the
mine is not yet in operation, but in advanced stages of exploration13
.
ZIJIN MINING GROUP CO., LTD / JINSHAN (HONG KONG) INTERNATIONAL MINING
COMPANY
Mwetaung Nickel Mine
Zijin Mining Group Co. Ltd is a large-scale Chinese state-owned mining group with its
headquarters in Shanghang County, Fujian Province. The company describes itself as the
largest gold producer and second largest copper producer in China, and an important
producer of zinc, tungsten and iron ore. Zijin is listed on the Shanghai and Hong Kong Stock
Exchanges14
.
Jinshan (Hong Kong) International Mining Company is a 100% subsidiary of Zijin Mining
Group. The company controls a 90% stake in a joint venture with Wanbao Mining Ltd, who
owns the remaining 10%. The joint venture holds 80% interest in the Mwetaung Nickel
Mine, with the Myanmar government controlling a 20% stake. The project is located in
Tiddin Township, Chin State, and latest reports suggest the mine is not yet in operation,
rather in advanced stages of exploration15
.
SPECIALIZED SOE SUBSIDIARIES PROVING ENGINEERING AND OTHER CONTRACTING
SERVICES
One trait of Chinese overseas investment projects is a tendency for project developers to
appoint other Chinese companies to carry out contracting work on projects, as GEI has
observed in the course of its research on Chinese OFDI.
Since the beginning of its economic rise, China’s SOEs have been responsible for developing
their respective industries at home, and as a result have developed considerable expertise
through decades of project development experience across all sectors of the economy. At
the top of the SOE hierarchy is the parent or ‘Group’ company, which typically controls
various subsidiary companies performing different functions below it. These functions can
include research and development, project design, engineering and construction services,
along with equipment manufacturing and supply, amongst others.
As these SOEs have begun to carry out projects outside China’s borders over the past
decade, it is common practice for them to contract these types of services from their
subsidiary companies, or the subsidiaries of other SOEs, which they have successfully
13
(Zijin Mining Group Co., Ltd.)
14
(Zijin Mining Group Co., Ltd)
15
(Zijin Mining Group Co., Ltd.)

16
cooperated with in China. Since some of these companies have become genuine experts in
their respective fields, it has also become increasingly common for non-Chinese
organizations to contract these companies for their services.
Two such SOE subsidiaries were identified as being involved as a contractor in mining
development projects in Myanmar. China ENFI has providing contracting services in the
development of two Chinese-backed mines, while China National Heavy Machinery
Corporation (CHMC) provided services to a locally-registered company to develop the Tigyit
coal mine.
CHINA METALLURGICAL GROUP CORPORATION (MCC) / CHINA ENFI
China Metallurgical Group Corporation (MCC) is a central SOE under the direct auspice of
SASAC, with its headquarters in Beijing. Founded in 1994, MCC engages in EPC, natural
resources exploitation, papermaking, equipment fabrication and real estate development.
The China ENFI Engineering Co., Ltd. and China ENFI Engineering Corporation (China ENFI)
was established in 1953 and is now a subsidiary of MCC. China ENFI specializes in
metallurgical and mining engineering, environmental protection, chemical engineering,
architecture and construction, and rare metals and light metals engineering design services.
China ENFI has provided such services to two Chinese-backed mining projects in Myanmar.
At the Tagaung Taung Nickel Mine (invested by CNMC and TISCO), China ENFI was
responsible for overall design of the mine including process design, critical equipment
supply, on-site construction services and commissioning support. The company also
completed the feasibility study report for the Mwetaung Nickel Mine project (invested by
NORINCO and Zijin Mining Group).
CHINA NATIONAL MACHINERY INDUSTRY CORPORATION (SINOMACH) / CHINA NATIONAL
HEAVY MACHINERY CORPORATION (CHMC)
China National Machinery Industry Corporation (SINOMACH) is a central government SOE
established in 1997 and headquartered in Beijing. SINOMACH specializes in machinery
research and development, machinery manufacturing, project contracting, and trade and
service businesses in China and worldwide. The company controls 50 wholly-owned or
holding subsidiaries, 11 listed subsidiaries, and over 180 overseas service organizations16
.
China National Heavy Machinery Corporation (CHMC) is a 100% subsidiary of SINOMACH
and also headquartered in Beijing. CHMC is engaged in engineering contracting and project
management in various sectors including metallurgy and mining.
16
(China National Machinery Industry Corporation (SINOMACH))

17
In Myanmar, CHMC provided design, equipment supply, technical instruction for erection,
commissioning and technical training services for the Tigyit coal mine. The open pit mine is
already operational and located at Pinlaung Township in Southern Shan State. It is owned by
Shan Yoma Nagar Co. Ltd, a locally-registered company.
PRIVATE COMPANIES WITH INVESTMENTS IN SMALL-SCALE PROJECTS AND
CONDUCTING EXPLORATION
Several private companies originating from China were also identified with interests in
Myanmar’s mining sector. A lack of available information presented a challenge when
researching these types of companies and the projects they are involved in.
The information gathered indicates that the private companies identified in the study are
much smaller players compared to their SOE counterparts, and the mining projects invested
are also smaller in scale. While SOEs tend to partner with the Myanmar government in
development projects (via the Ministry of Mines and its Mining Enterprises), there is some
evidence that private Chinese companies seek local partners in the form of other private
companies, including setting up joint ventures with local partners.
CHINA MINGHUA GROUP LTD
China Minghua Group Ltd. is a private company with Chinese origins. Sparse information on
the company’s website (Chinese-English language) includes reference to a company named
China Minghua (Hongkong) Co., which suggests links to Hong Kong and that there is more
than one company operating within the China Minghua Group, although registration details
for these companies could not be located. Contact details are provided for offices in
Thailand (Bangkok) and Myanmar (Yangon) only.
The company states that its President “has devoted himself to the development and
utilization of natural resources in Burma”, and lists several such projects that the company
has engaged in since 2002.
In 2002, the company acquired the mining rights for a tin-tungsten mine in Kalonta, Dawei,
Tanintharyi in Burma. The mine covers an area of 24.6 km2 and has an ore treatment plant
capable of daily processing 500 tons of raw ore. It is not clear from the information available
if the mine is still operational or not.
In 2007, the company submitted an application to the government for mining rights to a
new mine covering 5 km2
in the area of the original mine, the products from which are
mainly exported to Malaysia.
In 2010, the company acquired mining rights over what it describes as “three, large-sized
rocky mountains and high-quality river sand near Salween River in Hpa-an (the capital city of
Kayin State) in the south of Burma”. The gravel and stone produced from the mine are

18
mainly used for the construction of CNPC’s crude oil terminal project in Kyaukpyu and the
construction of public works in Yangon17
.
ASIA PACIFIC MINING LIMITED (APML)
Asia Pacific Mining Ltd. was incorporated as a private company in Hong Kong in 200718
,
although it describes itself as a “Western-led company” on its website19
in reference to the
background of the company’s management team, who it also describes as having
experience completing mining transactions in Myanmar. APMP is advised by Myanmar’s
former Deputy Minister of Mines, U Ko Ko Than.
In 2014 APML was granted approval to explore for silver, lead and zinc on lands surrounding
the existing Bawdwin mine in Shan State, under its 100% owned AP-4 exploration licence
granted by the Myanmar Ministry of Mines which covers a total of 649km2
. Following
significant discoveries of sulphide silver-lead-zinc mineralisation from exploration activity
carried out, latest reports suggest that the area was expected to be ready for drilling in April
201520
.
APML also reports on its website that the company is in the advanced stages of licensing
other mineral prospects in Myanmar, most notably for copper and gold in the Sagaing
Region where 3 separate applications have been lodged with the Ministry of Mines, while
also negotiating with local business groups in districts of Myanmar where there is a history
of mining activity.
17
(China Minghua Group Limited)
18
(Hong Kong Companies Registry, 2015)
19
(Asia Pacific Mining Limited)
20
(PR Newswire, 2015)

19
FIGURE 3 NUMBER AND DISTRIBUTION OF MINIG PROJECTS WITH CHINESE CAPITALS

20
HYDROPOWER
In hydropower sector the most important sections are power (generation and transmission)
and construction (mainly specialized civil and electro-mechanical construction, as well as
associated equipment manufacturing). There is some overlap, as some of the power
companies have construction activities, and some of the construction companies are
specialized in the power sector. The Chinese hydropower industry, including those
organizations relevant for international activities, is predominantly owned and controlled by
China’s central government and firmly rooted in the home market, as all these key sections
of interest for Chinese hydropower investments are among those considered to be of
national interest.
The current structure of the Chinese hydropower sector, which is now the largest in the
world since 2010 when China’s power consumption surpassed that of the US, is the result of
a major reform in 2002 that separated generation, transmission and distribution, and
ancillary industries.
TABLE 4 SOES RESULTING FROM THE BREAK-UP OF STATE POWER CORPORATION IN
2002
Generation “Big Five”
(Regulated competitive market)
Transmission and Distribution
(Regulated regional
monopolies)
Support Companies
(Competitive market)
China Huaneng Group Co. State Grid Corporation China Electric Power
Engineering Consulting Group
Co. Ltd
China Huadian Group Co. China Southern Power Grid Co.
Ltd
HYDROCHINA (now a subsidiary
of POWERCHINA)
China Guodian Group Co. Sinohydro (now a subsidiary of
POWERCHINA)
China Datang Group Co. China Gezhouba Group
China Power Investment
Company (acquired by State
Nuclear Power Technology
Company recently)

21
Following analysis of the data summarized in Table 5, a total of 44 hydropower projects with
26 Chinese parent and subsidiary companies are identified with interests in Myanmar’s
hydropower sector. Among the 26 identified companies, only 3 are privately owned, while
the rest 23 are all SOEs of different kinds. Most of those identified hydropower projects are
located in upper Myanmar, particularly Kachin State and Shan State in the upstream of
Irrawaddy River and Salween River, where there are huge hydropower potentials and
geographically close to China, with a couple of others in Mandalay Region, Sagaing Region,
Rakhine State, Kayah State and Kayin State.
Similar to the cases in the mining sector, the SOEs that identified with interests in
Myanmar’s hydropower sector are some of the world’s largest hydropower development
companies. In their overseas engagement these enterprises respond to an interconnected
mix of commercial and political/foreign policy objectives or motivations. For example, a
particular project may be suggested by a company that, while state-owned, is being
operated as an essentially autonomous business entity; the commercial driver may be
dominant although the state-owned company will retain some political drivers. The same
project may be planned to receive financing from a Chinese policy bank; the motivation for
the financing may be a mix of commercial and foreign aid policies, which in turn will be
influenced by broader central governmental foreign policy objectives. In some cases in
Myanmar, due to the country’s political importance to China, higher government bodies
may be directing these investments from the view of a combination of foreign policy and
strategic resources/energy security concerns, as the case of CPI’s Myitsone cascade and
Three Gorges Corporation’s Mong Tong project.

22
TABLE 5 CHINESE COMPANIES IDENTIFIED WITH INTERESTS IN MYANMAR’S HYDROPOWER SECTOR
Company Name Company
Type
Company Role Local Partner Project Name Project Location Project
Status
China Datang Corporation CSOE Builder Ministry of
Electric Power No 1
Tapein (240MW) Tarpain River, Kachin
State
In operation
Datang (Yunnan) United
Hydropower Developing Co
Ltd
Subsidiary
company
Developer Ministry of
Electric Power No 1
Tapein (240MW) Tarpain River, Kachin
State
In operation
Developer Tapain-2 (168MW) Tarpain River, Kachin
State
Under
Construction
Developer & builder Ywathit (4000MW) Kayah State Suspended
(?)
China Datang Overseas
Investment
Subsidiary
company
Financier Unknown Htukyan (105MW) Shan state Unknown
Hanna (45MW) Shan state Unknown
Thakya (150MW) Shan state Unknown
Palaung (105MW) Shan state Unknown
Bawlakae (180MW) Kayah State Unknown
Sinedin (76.5MW) Rakhine State Unknown
Laymyo (600MW) Rakhine State Under
Construction
Laymyo-2 (90MW) Rakhine State
Thahtay (111MW) Rakhine State Under
Construction
Sinohydro Corporation CSOE Contractor Ministry of
Electric Power No 1
Tapein (240MW) Tarpain River In operation
Builder Unknown Shweli-1 (600MW) Shweli River, Shan
state
In operation
Financier Unknown Thaphanseik (30MW) Sagaing Region In operation
Developer & builder Ministry of Electric
Power
Yeywa (790MW) Dokhtawady River,
Mandalay Region
In operation
Builder Unknown Zawgyi-1 (18MW) In operation
Contractor Unknown Lower Paunglaung
Dam (280MW)
Sittang River, Shan
state
In operation

23
Contractor Ministry of Electric
Power
Myitsone (6000MW) Ayeyawaddy River,
Kachin State
Suspended
Financier IGE (Myanmar) Naung Pha
(1000MW)
Salween River, Shan
state
Contracts
signed
Financier IGE (Myanmar) Mantaung (200MW) Salween River, Shan
state
Contracts
signed
Builder & contractor IGE (Myanmar) Mong Tong
(7110MW)
Salween River, Kayin
State
Suspended
Financier & builder IGE (Myanmar) Hutgyi (1360MW) Salween River, Kayin
State
Unknown
Huaneng Langcang River
Hydropower Co
SOE subsidiary
company
50% owner of Yunnan United
Power Development
Company
N/A N/A N/A N/A
Yunnan Hexing Investment
and Development Co;
Private 34 % owner of Yunnan United
Power Development
Company
N/A N/A N/A N/A
Yunnan Union Resources &
Engineering Co
Provincial
government
SOE
16% owner of Yunnan United
Power Development
Company
N/A N/A N/A N/A
Yunnan United Power
DDevelopment Company
Development Company
Development Company
Subsidiary
company
Financier Unknown Shweli-1(600MW) Shweli River, Shan
state
In operation
Financier Unknown Shweli-2 (520MW) Shweli River, Shan
state
Under
construction
Huaneng Langcang River
Hydropower Company
CSOE
subsidiary
company
Builder Unknown Shweli-2 (520MW) Shweli River, Shan
state
Under
construction
Yunnan Machinery Export
Import Company
Provincial
government
SOE
Contractor N/A Shweli-1 (600MW) Shweli River, Shan
state
In operation
Contractor N/A Zawgyi-1 (18MW) Unknown In operation
Contractor N/A Zawgyi-2 (12MW) Unknown In operation
Unknown Unknown KengTawng/Kyaing
Tong (54MW)
Pawn River In operation
Developer/Contractor N/A Lower Paunglaung
Dam (280MW)
Sittang River, Shan
state
In operation
Contractor N/A Kaunglangphu
(2700MW)
N'Mai River, Kachin
State
Suspended

24
Contractor Asiaworld (Myanmar) Lasa (1900MW) Mali River, Kachin
State
Suspended
Contractor N/A Shweli-2 (520MW) Shweli River, Shan
state
Under
construction
China International Trust &
Investment Co. (CITIC)
SOE Financier Unknown Thaphanseik (30MW) Sagaing Region In operation
Financier & developer Ministry of Electric
Power
Mandalay Region
In operation
Builder Unknown Yenwe (25 MW) Yenwe Creek, Sittang
river, Kyaukdagah
Township, Shan state
In operation
Developer Unknown Mone Creek (75 MW) Mone Creek
(Sidoktaya
Township)
In operation
China Power Investment
Corporation (CPI)
CSOE Financier Ministry of Electric
Power
Mandalay Region
In operation
Developer & builder Ministry of Electric
Power
Kachin State
Suspended
Financier Asiaworld (Myanmar) Chibwe (3400MW) Chibwe River, Kachin
State
Suspended
Financier Asiaworld (Myanmar) Wutsok (1800MW) Ayeyawaddy River,
Kachin State
Suspended
Financier Asiaworld (Myanmar) Kaunglangphu
(2700MW)
N'Mai River, Kachin
State
Suspended
Financier Asiaworld (Myanmar) Yenam (1200MW) Ayeyawaddy River,
Kachin State
Suspended
Financier Asiaworld (Myanmar) Pisa (2000MW) N'Mai River, Kachin
State
Suspended
Financier Asiaworld (Myanmar) Laiza (1900MW) Mali River, Kachin
State
Suspended
Financier Asiaworld (Myanmar) Chibwengae (99MW) Ayeyawaddy River,
Kachin State
Suspended
China National Heavy
Machinery Corporation
(CHMC)
SOE Contractor (support for
construction of transmission
lines and dam)
Ministry of Electric
Power
Mandalay Region
In operation
State Grid Corporation of
China
CSOE Contractor (support for
Power
Mandalay Region
In operation

25
lines)
Central China Power Grid Co. Subsidiary
company
Contractor (support for
lines)
Power
Mandalay Region
In operation
Yunnan Power Grid
Corporation
Subsidiary
company
Financier Unknown Keng Tong (96MW) Shan state Unknown
Unknown Unknown Wantapeng (25MW) Shan state Unknown
Unknown Unknown Solu (165MW) Shan state Unknown
Unknown Unknown Mongwa (50MW) Shan state Unknown
Unknown Unknown Keng Yan (28MW) Shan state Unknown
Unknown Unknown Heku (88MW) Shan state Unknown
Unknown Unknown Nankha (200MW) Shan state Unknown
China Gezhouba Group
Corporation
SOE Contractor Ministry of Electric
Power
Mandalay Region
In operation
Contractor (supply and
installation of machinery &
equipment)
N/A Kyauk Naga Dam
(75MW)
Shwegyin river,
Shwegyin Township,
Bago region
In operation
Contractor Ministry of Electric
Power
Kachin State
Suspended
Builder Asiaworld (Myanmar) Chibwe (3400MW) Chibwe River, Kachin
State
Suspended
China National Electric
Equipment Co. (CNEEC)
SOE Contractor Ministry of Electric
Power
Mandalay Region
In operation
Builder N/A Yenwe (25 MW) Yenwe Creek, Sittang
river, Kyaukdagah
Township, Shan state
In operation
Builder N/A KengTawng/Kyaing
Tong (54MW)
Hunan Savoo Oversea Water
& Electric Engineering Co
Private Contractor Ministry of Electric
Power
Mandalay Region
In operation
Zhejiang Orient Holdings Co.,
Ltd.
Provincial
government
SOE
Builder Unknown KengTawng/Kyaing
Tong (54MW)
Ningbo Huyong Electric Power
Material Co., Ltd
Provincial
government
SOE
Developer Unknown Lower Paunglaung
Dam (280MW)
Sittang River, Shan
State
In operation
HydroChina Kunming SOE subsidiary Developer Unknown Lower Paunglaung Sittang River, Shan In operation

26
Engineering Corporation Dam (280MW) State
YPIC International Energy
Cooperation & Development
Co Ltd
Provincial
government
SOE
Financier IGE (Myanmar) Gawlan (100MW) Nawchankha River Contracts
signed
Financier IGE (Myanmar) Wxhonghgze
(60MW)
Nawchankha River Cancelled
Financier IGE (Myanmar) Hkankwan (140MW) Nawchankha River Contracts
signed
Financier IGE (Myanmar) Tonxinqiao (320MW) Nawchankha River Contracts
signed
Financier IGE (Myanmar) Lawngdin (435MW) Nawchankha River Contracts
signed
Hanergy Private Financier Hydropower
Implementation
Department,
Asiaworld
Kunlong (1400MW) Salween River, Shan
state
Under
construction
China Southern Power Grid CSOE Builder & contractor IGE (Myanmar) Mong Tong
(7110MW)
State
Suspended
China Guodian Corporation CSOE Financier Unknown Natabat (200MW) Kachin state Unknown
Unknown Unknown Mawlight (520MW) Sagaing Region Unknown
Unknown Unknown Natabat (180MW) Kayah State Unknown
China Three Gorges
Corporation
CSOE Financier, builder &
contractor
IGE (Myanmar) Mong Tong
(7110MW)
State
Suspended

27
FIGURE 4 NUMBER AND DISTRIBUTION OF HYDROPOWER PROJECTS WITH CHINESE
CAPITALS

28
AGRICULTURE
Following analysis of the data summarized in table 6, the 10 Chinese parent and subsidiary
companies identified with interests in Myanmar’s agriculture sector can be classified into
four groups, as follows:
1) SOEs with investments in large-scale agricultural projects;
2) SOEs with investments in strategic/technical demonstration projects in collaboration
with Myanmar government;
3) Private companies with investments in small and medium-scale plantation of fruits
and crops to sell back to China;
4) Private companies from Yunnan Province and Yunnan provincial SOEs with
investments often in rubber and fruits plantation along the China-Myanmar border
as opium substitution projects.
Although the number of identified Chinese companies and projects in the agriculture sector
is very limited, these companies are very typical in their categories.
SOES WITH INVESTMENTS IN LARGE-SCALE AGRICULTURAL PROJECTS
The investments of Beidahuang in both agricultural plantation and meat cattle projects
serve as overseas bases of the company as part of its market expansion in the world. Often
the productions from these bases will either be exported back to China or exported to
international markets directly. Such investments typically have support from both the
Chinese and Burmese government, and set to be comprehensive projects including all
related facilities. It is also very likely that they have financial support from policy banks.
SOES WITH INVESTMENTS IN STRATEGIC/TECHNICAL DEMONSTRATION PROJECTS IN
COLLABORATION WITH MYANMAR GOVERNMENT
Demonstration projects are driven either by the Chinese government or by the needs of the
SOE itself, i.e. as a pilot to diversify the company’s business. In the identified two
demonstration projects, the COFCO one is the former and the Yunnan Provincial Overseas
Co. Ltd one the later. Government-driven demonstration projects are directed and funded
by government aid programs and are undertaken by SOEs or government-owned research
institutions; while in company-driven cases it is more of the SOE’s own willingness to carry
out such projects.
PRIVATE COMPANIES WITH INVESTMENTS IN SMALL AND MEDIUM-SCALE
PLANTATION OF FRUITS AND CROPS TO EXPORT BACK TO CHINA
Such companies are usually medium-scale trading companies, mostly from Yunnan Province
in the case of Myanmar, that specializes in border trade, particularly agricultural products.

29
They start their businesses from doing border trade, and as the business grows, some of
them begin to think about securing their own sources of production by investing in
agricultural plantation in Myanmar, where land and labor costs are much lower than in
China. Products from such investments are aimed to be exported back to China.
PRIVATE COMPANIES FROM YUNNAN PROVINCE AND YUNNAN PROVINCIAL SOES
WITH INVESTMENTS OFTEN IN RUBBER AND FRUITS PLANTATION ALONG THE
CHINA-MYANMAR BORDER AS OPIUM SUBSTITUTION PROJECTS
Companies involved in opium substitution projects are mostly small-scale private companies
from Yunnan Province, especially those prefectures along the China-Myanmar border, with
a couple of Yunnan provincial SOEs and local county-level implementation entities of
provincial SOEs. Most of the opium substitution projects are in Wa State, Shan State Special
Region 4 and Kokang. Companies sign contracts with local government at Myanmar side, do
plantation and export products back to China as required. According to statistics, there are
198 Chinese companies with interests in the opium substitution projects.

30
TABLE 6 CHINESE COMPANIES IDENTIFIED WITH INTERESTS IN MYANMAR'S AGRICULTURAL SECTOR
Company name Company
type
Role Local partner Project Location Status
Yibin Beidahuang Food Processing Co.
Ltd (jointly established by
Heilongjiang Nongken Beidahuang
Business Trade Co. Ltd, an SOE
subsidiary, and Sichuan Hejiu
Agriculture Group Co., a private
company)
Partially hold
by SOE
subsidiary
Investor Shwe Sapar International
Trading Co. Ltd
Agricultural
plantation base
(rice, corn, etc.)
and processing and
storage center
Mandalay Region Agreement
reached in
December 2014
Shwe Ying Trading
International Co. Ltd
Meat cattle
breeding,
processing and
storage
Naypyitaw Agreement
reached in
December 2014
Yunnan Provincial Overseas
Investment Co. Ltd.
Provincial SOE Investor Ayeyawady local agricultural
department
High yield rice
species cultivation
demonstration
Ayeyawady Region Operational
China National Cereals, Oils and
Foodstuffs Corporation (COFCO)
Central SOE Investor Ministry of Agriculture and
Irrigation
Cassava plantation
demonstration
Yangon suburban
areas
Operational
China CAMC Engineering Co. Ltd Central SOE
subsidiary
Investor Unknown Farm (fruits
plantation)
Yangon suburban
areas
Operational
Baoshan Kangfeng Sugar Group Private Investor Unknown Cassava and sweet
potato plantation
Kachin State, Kokang
and Muse
Operational
Lincang Jingying Sugar Industry Co.
Ltd
Private Investor Unknown Cassava and sweet
potato plantation
Kokang, Shan State Operational
Wanting Changhe Trading Co. Ltd Private Investor Unknown Watermelon
plantation
Mandalay Region Operational
Menglian Farm (of Yunnan State
Farm)
Provincial SOE Investor Unknown Rubber plantation Wa State (Shan State
Special Region 2)
Operational
Dongfeng Farm (of Yunnan State
Farm)
Provincial SOE Investor Unknown Rubber plantation Shan State Special
Region 4
Operational
Yunnan Jinchen Investment Co. Ltd Private Investor Salween River Development
Company of Wa State
Rubber plantation Wa State (Shan State
Special Region 2)
Operational

31
FIGURE 5 NUMBER AND DISTRIBUTION OF AGRICUTLTURAL PROJECTS WITH CHINESE
CAPITALS

32
INFRASTRUCTURE
Much has been written about China’s interest in developing large-scale infrastructure
projects in Myanmar and the various strategic motivations behind this interest. This study
does not seek to delve into the reasons behind decisions made by the Chinese government
and its companies to invest in such projects, but rather summarize the investments that
have already been made and introduce those which may yet occur.
Following analysis of the data summarized in table 7, the 9 Chinese parent and subsidiary
companies identified with interests in Myanmar’s infrastructure sector can be classified into
two groups, as follows:
1) SOEs with investments in large-scale, strategic regional infrastructure projects
2) Specialized SOE subsidiaries proving engineering and other contracting services

33
TABLE 7 CHINESE COMPANIES IDENTIFIED WITH INTERESTS IN MYANMAR'S INFRASTRUCTURE SECTOR
Company name Company
type
Role Local partner Project Location Status
China National
Petroleum
Corporation (CNPC)
Central SOE Investor (51% ownership) and
contracted to design, construct,
operate and maintain both
pipelines.
State-owned Myanmar
Oil and Gas Enterprise
(8% share)
Myanmar-China
Gas Pipeline
Kyaukryu Port
(Myanmar) to Guizhou
(China)
Operational
State-owned Myanmar
Oil and Gas Enterprise
(49% share)
Myanmar-China
Oil Pipeline
Kyaukryu Port
(Myanmar) to
Kunming (China)
Operational
Investor Ministry of Energy Kyaukpyu deep-
sea port
Maday Island Operational
CITIC Group Central SOE Prospective developer (subject
to tender process)
Unknown Kyaukpyu
Economic and
Technology Zone
Kyaukpyu, Rakhine
State
Tender process
ongoing
CITIC Construction
Company Ltd
Subsidiary of
CITIC Group
Prospective developer (subject
to tender process)
Unknown Kyaukpyu
Economic and
Technology Zone
Kyaukpyu, Rakhine
State
Tender process
ongoing
China Railway
Engineering
Corporation
Central SOE Build, operate, transfer Ministry of Rail
Transportation
Myanmar-China
railway
Kyaukpyu (Myanmar)
to Kunming (China)
MOU signed 2011.
Project reportedly
cancelled 2014
Zhuhai Zhenrong
Corporation
Central SOE Joint owner of Guangdong
Zhenrong Energy Co., Ltd
N/A N/A N/A N/A
Guangdong
Zhenrong Energy
Co., Ltd
Partially
owned by
CSOE
Developer Myanmar Economic
Holdings Ltd & HTOO
Group (JV partners)
Oil refinery Dawei, Tanintharyi
Region
Approved by China
NDRC. Awaiting
approval from
Myanmar
authorities.
Yunnan Provincial EPC contractor Yuzana Group Myitkyina-Tanai- Linking Myitkyina in Under construction

34
Construction
Engineering Group
SOE Pangsau Pass
section of the
Stilwell Road
Kachin State to
Pangsau Pass on the
Arunachal Pradesh
border
China National
Machinery Industry
Corporation
(SINOMACH)
Central SOE Parent company N/A N/A N/A N/A
China National
Heavy Machinery
Corporation
(CHMC)
Subsidiary of
SINOMACH
EPC contractor N/A Tigyit coal-fired
power station
Pinlaung township in
southern Shan State
Operational
China CAMC
Engineering Co.,
Ltd.
Subsidiary of
SINOMACH
Investor Established Myanmar
Rice Mill Co Ltd (MRMC)
in joint venture with
Myanmar Millers
Association
Rice mill Sarr Ma Lauk village in
Nyaung Toun
township,
Ayeyarwaddy delta
region
Expected to be
operational by 2017
EPC, responsible for design,
supply of equipment,
installation, technical
supervision and training
N/A Thilawa shipyard 25 kilometres south of
Yangon
Completed in 2002
EPC, responsible for design,
manufacturing and supply of
steel structure and major
equipment, construction
management plan and
supervision
N/A Ayeyawady bridge
(Yadanabon)
Ayeyawady river,
connecting Mandalay
and Sagaing
Completed in 2008
Unknown Unknown Myitkyina bridge Unknown Unknown
EPC - design, supply of steel
truss, accessories and
equipment and supervision of
truss erection
N/A Ayeyawady bridge
(Pakokku)
Ayeyawady River,
connecting Magway
and Mandalay
Completed 2012
Unknown Unknown Magwe-Minbu
bridge
Ayeyarwady River,
from Minbu to
Magway
Completed
Unknown Unknown Kyaukse cement Kyaukse Town Completed 2002

35
plant
Unknown Unknown Dedaya bridge Unknown Completed
Unknown Unknown Nyaungdon (Bo
Myat Tun) bridge
Ayeyarwady River Completed 1999
Unknown Unknown Yone Seik cane
sugar mill
Unknown Completed
EPC - design, equipment supply,
technical guidance, training,
construction supervision
N/A Sarlingyi textile
factory
Sarlingyi Completed

36
SOES WITH INVESTMENTS IN LARGE-SCALE, STRATEGIC REGIONAL INFRASTRUCTURE
PROJECTS
Kyaukpyu Port in Rakhine State has been and remains a target for developers from China
and other countries. This study identified three Chinese central SOEs who, along with their
subsidiary companies, are involved in large-scale infrastructure projects relating to
Kyaukpyu.
The first is China National Petroleum Corporation’s (CNPC), who’s China-Myanmar oil and
gas pipeline project is already operational. Both pipelines begin at Kyaukpyu and run across
Myanmar to China. CNPC also developed a deep-sea port at Kyaukpyu as part of the pipeline
project.
The second is CITIC Group and its subsidiary CITIC Construction Company Ltd, which has
expressed an interest in developing the Kyaukpyu Economic and Technology Zone. At the
time of writing, the decision of a Government tender process to select a developer had not
been made.
The third is China Railway Engineering Corporation (CREC), who signed an MOU in 2011 to
develop the China-Myanmar railway which was expected to follow the same route through
Myanmar to China as the oil and gas pipelines. The current status of the project is unclear
since the MOU lapsed in 2014 and there have been conflicting reports about whether the
project has been cancelled or not.
CHINA NATIONAL PETROLEUM CORPORATION (CNPC)
China National Petroleum Corporation (CNPC) is a central SOE founded in 1955 and
headquartered in Beijing. CNPC is an integrated energy company and China’s largest oil and
gas producer and supplier21
. The company engages in both onshore and offshore
hydrocarbon exploration and production operations worldwide, and owns and operates
extensive networks of pipelines and storage systems. CNPC also markets and trades in crude
oil, petroleum and a variety of other materials and products, provides contracting services in
engineering construction, and is involved in financial and asset management activities22
.
CNPC has been present in Myanmar since 2001 and currently operates two onshore oil and
gas development and production projects, one deep-water exploration and development
project, while also providing oilfield services and construction of chemicals facilities. In
addition, CNPC recently completed the construction of the China-Myanmar oil and gas
pipelines and is now responsible for their operation and maintenance.
21
(China National Petroleum Corporation (CNPC))
22
(Bloomberg Business, 2015)

37
MYANMAR-CHINA OIL AND GAS PIPELINES
Construction of the Myanmar-China Oil and Gas Pipelines was first proposed in 2004. In
2008, CNPC signed a 30-year agreement with South Korean conglomerate Daewoo
International to import natural gas from offshore blocks A-1 and A-3 in Myanmar.
Subsequent agreements made in 2009-10 specified that CNPC’s subsidiary Southeast Asia
Pipeline Ltd was responsible for designing, constructing, operating and maintaining the oil
and gas pipelines.
A US$2.54 billion investment gave CNPC a 51% share in the ownership of both pipelines.
Myanmar Oil and Gas Enterprise (MOGE) controls the remaining 49% share in the oil
pipeline, while the following companies share ownership of the gas pipeline: Daewoo
International (25%), Oil and Natural Gas Corporation Videsh (India, 8%), Myanmar Oil and
Gas Enterprise (Myanmar, 8%) Korean Gas Corporation (South Korea, 4%).
Construction of the pipelines began in 2010, with the gas pipeline becoming operational at
the end of 2014 and the oil pipeline operational as of early 2015. Both pipelines follow the
same course through Myanmar, starting on the west coast at Kyaukryu and entering China
at Ruili in Yunnan Province. The oil pipeline is designed to transport 22 million tons of oil per
year, while the gas pipeline is designed to transport 10-13 billion cubic meters of gas per
year.
KYAUKPYU DEEP SEA PORT
As part of the Myanmar-China Oil and Gas Pipelines project, CNPC also financed
construction of a deep-sea port on Maday Island, off Kyaukryu. The port and accompanying
infrastructure, which includes storage facilities, is designed to allow 300,000 tonne tankers
to dock and unload oil for transportation through the pipeline. Construction of the port was
completed in 2014 and it was officially opened in 2015, with the first tanker unloading crude
oil shipped from the Middle East23
.
Specific information about development of the port could not be located, including the total
cost and other parties involved, although one report suggests the port was developed in a
joint venture between CNPC and the Ministry of Energy24
.
CITIC GROUP CORPORATION
CITIC Group Corporation is a central government SOE based in Beijing. Together with its
subsidiaries, CITIC operates across six segments: Finance, Real Estate and Infrastructure,
Engineering Contracting, Resources and Energy, Manufacturing, and Other Services25
.
23
(China National Petroleum Corporation (CNPC), 2015)
24
(Consult-Myanmar, 2013)

38
CITIC Construction Company Ltd. is one such subsidiary. Also based in Beijing, it operates as
a construction and contracting company26
.
KYAUKPYU ECONOMIC AND TECHNOLOGY ZONE
In Myanmar, CITIC Group has expressed strong interest in developing the Kyaukpyu
Economic and Technology Zone. The SEZ on Ramree Island is where CNPC has constructed a
deep sea port and is the start point for the Burma-China oil and gas pipelines.
CITIC Group has proposed a conceptual plan which consists of a petrochemical industrial
zone, rail-road complex, logistics centre, export processing industries, multi-purpose
terminals and residential areas covering 120 Km² of land and 70 Km² of waterways27
.
According to a feasibility study by CITIC Construction Company, the zone will require an
initial investment of US$ 8.3 billion and a total US$ 89.2 billion over 35 years28
.
In 2009, Xi Jinping, the vice-president of China at the time, signed the agreement on
cooperation between Myanmar’s Ministry of National Planning and Economic Development
and CITIC Group for development of the Kyaukpyu Economic and Technological
Development Zone29
. It is also reported that its subsidiary CITIC Construction Company
Limited has made agreements to cooperate on the project with the Htoo Company, which is
owned by military crony Tay Za30
.
At the time of writing it remains unclear as to whether CITIC Group and its subsidiary
companies will be awarded the contract to develop the area. The Myanmar Government has
not yet announced which companies will be awarded the contract for constructing the SEZ,
a decision that has already been delayed by several months31
.
CHINA RAILWAY ENGINEERING CORPORATION (CREC)
China Railway Engineering Corporation (CREC) is a central government state-owned
enterprise under the direct supervision of SASAC and headquartered in Beijing. It operates
as a holding company and through its various subsidiaries provides services including
surveying, construction, design solutions, installation, manufacturing, R&D, technical
consulting, capital management, international trade, property management, and railway
development in China and worldwide32
.
25
26
27
(Bangkok Post, 2013)
28
( Arakan Oil Watch, December 2012)
29
(Bangkok Post, 2013)
30
( Arakan Oil Watch, December 2012)
31
(Myanmar Property Insider.com, 2015)
32

39
MYANMAR-CHINA RAILWAY
An MOU was signed between CREC and the Myanmar Railway Ministry in April 2011 to
construct a 1,200km railway connecting China’s Yunnan province with Myanmar’s Rakhine
Western coast, following the same route as the China-Myanmar oil and gas pipelines and
costing US$20 billion. The agreement was for a build-operate-transfer (BOT) with a period
up to 50 years. The MOU was subject to further feasibility studies being completed and
agreements on specific terms, and stipulated that construction should begin on the project
within three years.
In July 2014, conflicting reports quoted the Director of Myanmar's Ministry of Rail
Transportation as saying that the project had been "cancelled" after over three years of
inaction on the 2011 agreement, while China's Ambassador to Myanmar and state
mouthpiece the China Daily said China had not abandoned the project33
.
At the time of writing, the status of the project remained unclear and no statement from
CREC could be identified.
SPECIALIZED SOE SUBSIDIARIES PROVING ENGINEERING AND OTHER CONTRACTING
SERVICES
As with other sectors, several SOEs and their subsidiary companies were identified as having
engaged in providing contracting services to other developers as part of infrastructure
projects in Myanmar.
China National Heavy Machinery Corporation (CHMC) and China CAMC Engineering Co., Ltd.
(CAMCE) are both subsidiaries of central SOE China National Machinery Industry
Corporation (SINOMACH). Between them, the companies have been involved as EPC
contractors in a range of infrastructure projects in Myanmar since 1999.
In addition, provincial SOE Yunnan Construction Engineering Group (YCEG) signed an MOU
with a local company in 2010 to provide EPC contracting services as part of a road
reconstruction project.
YUNNAN CONSTRUCTION ENGINEERING GROUP (YCEG)
Yunnan Construction Engineering Group Co. Ltd. (YCEG) is a provincial government SOE
headquartered in Kunming, Yunnan province.
The company provides construction services for infrastructure projects including roads,
bridges, municipal buildings, hydropower plants, railways, airports, ports, and others. It also
33
(Asia Times, 2014)

40
provides services such as research and design, and the supply of construction labour and
building materials34
.
In October 2010, YCEG and Myanmar’s Yuzana Group Company signed an MOU to
reconstruct the 312km Myitkyina–Pangsaung section of the Stilwell Road, linking Myitkyina
in Kachin State to the Pangsau Pass on the Arunachal Pradesh border. YCEG’s role in the
project is an EPC contractor and the total cost of the project is reported to be CNY3.3
billion35
. An Asian Development Bank Institute report from December 2014 indicates that
little progress has been made since the MOU was signed, due to funding constraints and
political instability in the Kachin state which are hampering the construction process36
.
SINOMACH, CHMC AND CAMCE
Central government SOE SINOMACH and its subsidiary CHMC were introduced in the mining
section of this report, along with CHMC’s involvement as an EPC contract in development of
the Tigyit coal mine. Tigyit coal-fired power station neighbours the mine and was the first
coal-fired power station in Myanmar with an installed capacity of 2x60MW. As general EPC
contractor, CHMC was responsible for design & engineering, equipment supply, inspection
on civil works, installation & erection instruction37
.
China CAMC Engineering Co., Ltd. (CAMCE) is another subsidiary of SINOMACH. The
company was established in 2001 and is based in Beijing38
. CAMCE is engaged in contracting
EPC projects in the industrial, agriculture, water, power, communication and engineering
sectors globally39
.
In Myanmar, CAMCE completed several EPC projects between 1999 and 2012 including the
construction of bridges, a shipyard, cement plant, sugar mill and a textile factory in various
locations. The company is currently involved in a project to build a rice mill in Nyaung Toun
township in the Ayeyarwaddy delta region. In February 2015 it was reported that CAMCE
had established the Myanmar Rice Milling Company (MRMC) in a joint venture with the
Myanmar Millers Association. The cost of the project is estimated between $5 and $7
million and the mill is expected to begin operations in early 2017, at which point it will have
a capacity to produce 200 tonnes of high-quality rice per day. A spokesman from MRMC was
also quoted as saying that negotiations are underway to build additional mills in Letpantan
and Zeegon townships in Bago region40
.
34
35
(AidData)
36
(Asian Development Bank Institute, December 2014)
37
(China National Heavy Machinery Corporation)
38
(China CAMC Engineering Co., Ltd)
39
40
(Consult-Myanmar, 2015)

41
FIGURE 6 NUMBER AND DISTRIBUTION OF INFRASTRUCTURE PROJECTS WITH CHINESE
CAPITALS

42
TOURISM
None tourism development projects are identified during the research. During the visit, we
learned some information about a few hotel investments, mainly in Yangon city and Ngapali
beach, but more detailed information requires further digging-in. It is also unclear whether
these investments are under the cover of Myanmar local companies.

43
SUMMARY OF FINDINGS, RECOMMENDATIONS & NEXT STEPS
As Myanmar and Laos are neighbouring countries both sharing borders with China’s Yunnan
Province, the general Chinese investment pattern in Myanmar is very similar to what we
found in Laos in a previous scoping study. Large-scale hydropower and infrastructure
projects are dominated by big SOEs, with a few provincial SOEs and private companies
contracted to provide equipment and services, which is actually reflection of the dynamics
of the two sectors within China. Sectoral patterns of mining and agriculture are that large
SOEs invest limited number of large-scale projects while small and medium-scale private
companies invest much more small projects that are hard to identify and trace.
Tailored potential next steps could be developed based on the characteristics of different
sectors and findings from conversations with Chinese enterprises during the Myanmar visit.
Specific suggestions are as follows,
 A majority of Chinese SOEs investing in Myanmar are very much aware of the
importance of environmental and social safeguarding conducts during their
investment, but they lack effective approaches and capacities as to how to carry out
related works on the ground. In-depth case studies on good practices of
environmental and social conducts by their international counterparts in similar
sectors to share with Chinese SOEs, experience-sharing dialogues between Chinese
and foreign enterprises on related topics, and practice manuals and capacity
buildings for SOEs through the platform of Chinese Embassy in Myanmar and/or
Chinese CoC in Myanmar, are possible future steps to consider;
 Private companies are difficult to trace, therefore engagement through relevant
CoCs, such as Yunnan Association of Small and Medium Enterprises (SMEs) and
Yunnan Service Center for SMEs, will be an effective choice. Also, some private
companies mention that when it comes to environmental and social compliance,
they usually rely on their local partner companies as to knowledge and responses, so
perhaps more engagement with Myanmar domestic companies, as well as provision
of relevant information to Chinese private companies, can also be an approach;
 Chinese policy banks are a major driver of Chinese investments in Myanmar,
especially large-scale development projects. Although there are foreign/strategic
policy considerations behind loan decisions, efforts can still be made in terms of
promoting the incorporation of better environmental and social safeguarding
policies during the loan approval process, such as by learning experiences from
international counterparts, quantifying environmental and social risks of candidate
projects, etc.

44
SUGGESTIONS ON FUTURE ENGAGEMENT WITH CHINESE COMPANIES
From the scoping study we found Chinese companies in Myanmar are generally more
cautious than those in Laos regarding the idea of working with NGOs. The different is very
likely caused by the complexity and sensitivity of Myanmar’s political situation and the
constant anti-Chinese investment mind-set among the general public since the Myitsone
Dam suspension. Worrying about the unfavourable political context, plus the scepticism and
distrust of NGOs stemming from ideologies in China, Chinese companies in Myanmar,
particularly SOEs, are still in very early stage of interaction with NGOs. However, we have
seen some breakthroughs recently, such as Wanbao and CPI’s openness and willingness to
meet with NGOs, CNPC’s intention to meet with Myanmar NGOs and their dialogue
initiatives with the Myanmar Centre for Responsible Business (MCRB) and Earth Rights
International (ERI), as well as CITIC’s integration of GEI’s community development
approaches into their bidding proposal of Kyaukpyu SEZ.
With increasing awareness among Chinese companies on the importance of sound
environmental and social practices when investing overseas, the key issue had been shifted
from making companies and governments aware of the issue, to providing practical
solutions/examples of how to achieve environmental and social friendly investment
behaviours. In this stage, there are undoubtedly lots of potential needs and hence a large
gap in terms of corporate-NGO collaborations. During our discussions with a couple of
Chinese companies during field visit to Yangon, we learned the following major obstacles
that prevent them from potential collaborations with NGOs,
i) Trust
Chinese companies are not familiar with the NGO sector in general, not to mention the
NGO sector in Myanmar, such as who is doing what, what is the theory of change of
each organization, how good they are and their backgrounds. Therefore they have no
idea of who may be suitable to collaborate and also feel insecure about the possibilities
of been undermined by some NGOs who turns out to have certain political pursuits;
ii) Funding
 Willingness to pay. Some companies concern that NGOs have overhead and operating
costs that would need to be charged from their corporate social responsibility (CSR)
program budget, while for companies if they do CSR by their own, their staffing costs
can be paid directly through staff salaries instead of occupying the CSR budget, which
the company believes could have more actual budget utilized for on-the-ground work.
Overall we think this concern is more related to doubts about what valuable inputs
NGOs could offer to companies;
 Policy constraint. We also learned that China’s State Assets Supervision and
Administration Commission of the State Council (SASAC), which is the governing body of
CSOEs and SOEs, has a regulation that limits the utilization of company’s CSR funding of

45
¥50,000 (about US$7,600) – expenses over this amount will need to be submitted to
SASAC for approval.
Based on the identified obstacles, our proposed suggestions of start-up activities as an
approach to initiate potential collaboration with Chinese companies include,
i) Develop a handbook/directory on NGOs in Myanmar tailored for interested private
sector companies. The handbook/directory should include international and local
NGOs in Myanmar particular working in environmental and social related fields, such
as environment, conservation, livelihoods development, health and education at
community level, as a guidebook and reference for companies to be more familiar
with the sector and NGO “who’s who” in Myanmar, hence improve understanding;
ii) Study on international best practices in terms of how to ensure environmental and
social friendly overseas investments, summarize findings into practical suggestions
tailored for Chinese companies, and hold knowledge/experience sharing activities to
introduce these practices and suggestions;
iii) Pilot cooperative/co-fund projects, which mean that NGO(s) sponsor their own
salaries and travel costs while the company sponsor its own. The pilots aim to gain
trusts and explore/solicit further collaborations and can range from improving
companies’ internal environmental and social safeguarding systems and capacities,
to community-based conservation and livelihoods development projects.

ORGANISED CHAOS
The illicit overland timber trade
between Myanmar and China

INTRODUCTION
STATE OF MYANMAR’S FORESTS
BRIEF HISTORY OF THE MYANMAR-CHINA
OVERLAND TIMBER TRADE
EIA INVESTIGATIONS
CHINA’S ROLE
3
4
6
8
20
CONTENTSACKNOWLEDGEMENTS
This report was written and edited by the
Environmental Investigation Agency UK Ltd. This
document has been produced with the financial
assistance of UKaid, the European Union and the
Norwegian Agency for Development Cooperation
(NORAD). The contents of this publication are the
sole responsibility of EIA.
EIA expresses its gratitude to the individuals who
contributed to the production of this report and who
for safety reasons must remain anonymous.
Designed by:
www.designsolutions.me.uk
Printed on recycled paper
September 2015
All images © EIA unless otherwise stated
COVER IMAGE:
Log trucks in Kachin waiting to cross the
border into China, April 2015
ENVIRONMENTAL INVESTIGATION AGENCY (EIA)
62/63 Upper Street, London N1 0NY, UK
Tel: +44 (0) 20 7354 7960
Fax: +44 (0) 20 7354 7961
email: ukinfo@eia-international.org
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LOCATOR MAP:
MYITKYINA
Waingmaw
Tengchong
Ruili
Wanding
Jiageo
Muse
Nong Dao
Ban Ling
N’Bapa
Lwegel Zhanfeng
Pian Ma
Houqiao
Kambaiti

3
The sweep led to the arrest of 155 Chinese nationals who
had been recruited from neighbouring Yunnan Province
to cross the border to cut trees and transport timber.
The case caused diplomatic tensions between Myanmar
and China when the Chinese labourers were given life
sentences in July. Just a few days later, all were freed
under a general presidential pardon.
The saga has shone a light on the murky and clandestine
trade in illicit timber occurring across the common border
between Myanmar and China. For at least two decades,
timber extracted from Myanmar’s precious frontier forests
in highly destructive logging operations has been flowing
into China unhindered. It is an illicit business worth hundreds
of millions of dollars a year, making it one of the single
largest bilateral flows of illegal timber in the world.
From the outside looking in, the cross-border trade
appears chaotic and complex. Most of the timber entering
Yunnan is either cut or transported through Kachin State,
a zone of conflict between ethnic political groups and the
Myanmar Government and its military. Here, all sides to
varying degrees profit from the logging and timber trade,
from the award of rights to Chinese businesses to log
whole mountains, often paid in gold bars, to levying fees
at multiple checkpoints to allow trucks carrying logs to
pass. While Kachin and Yunnan lie at the heart of trade,
it reaches far wider. Logs shipped across the border are
increasingly sourced from further inside Myanmar, such
as Sagaing Division, and end up supplying factories in
south and east China.
Yet field research conducted by the Environmental
Investigation Agency (EIA) reveals that beneath the
apparent chaos lies an intricate and structured supply
chain within which different players have a defined function
and collude to ensure the logs keep flowing. Key nodes in
the chain involve well-connected intermediaries who secure
logging rights for resale, cooperative groups of business
people who monopolise the trade at certain crossing points,
and logistics companies on the China side of the border
which effectively legalise the timber by clearing it through
customs and paying tax.
The peak year for the illicit trade was 2005, when one
million cubic metres (m3
) of logs crossed the border.
A brief hiatus occurred for a few years afterwards when
Chinese authorities clamped down on the trade. But it
proved to be short-lived and the scale of the business is
once again approaching the peak levels. This trade is illegal
under Myanmar law, which mandates that all wood should
exit the country via Yangon port, and contravenes the
country’s log export ban. It also goes against the stated
policy of the Chinese Government to respect the forestry
laws of other countries and oppose illegal logging.
It is time for both countries to take urgent effective action
against the massive illicit timber trade across their joint
border. The 155 Chinese loggers have now returned home,
but without action to end the trade others will take their
place and further conflict, violence and forest destruction
will occur.
Environmental Investigation Agency
September 2015
INTRODUCTION
In January 2015, the Myanmar army raided an illegal
logging operation in a remote mountainous region in the
country’s Kachin State.

4
The Greater Mekong Sub-region
(Myanmar, Laos, Vietnam, Thailand,
Cambodia and south China) has some of
the largest expanses of natural forest in
the world and is widely recognised as a
global priority for environmental
conservation.1
Yet the region is in the
midst of an environmental crisis.
Projected forest loss by 2030 is predicted
to reach 30 million hectares, with the
region labelled as one of 10 global
“deforestation fronts”.2
Major causes of
forest loss are the expansion of agri-
businesses, illegal logging and unregulated
infrastructure development. In many
cases these threats are being driven by
weak governance, absence of rule of law
and corruption within government agencies
mandated to protect the forests.3
Myanmar has some of the most
ecologically intact forest remaining in
the region. Large globally significant
tracts of forest exist in Tanintharyi in
the south and in the northern states of
Kachin, Shan and Sagaing Division.
Approximately 50 per cent of the country
is covered in natural forest, with 10 per
cent of this being primary forest.4
Myanmar’s forests are in the midst of
rapid decline and are increasingly
degraded, with natural forest cover
declining by two per cent every year.5
The country lost a total of 1.7 million
hectares of forest cover from 2001 to
2013. Forest loss has accelerated in
recent years, doubling from 97,000
hectares a year pre-2009 to an average
of 185,000 hectares a year since.6
Myanmar’s deforestation rates are
among some of the highest in the
entire region.
The rapid expansion of agri-business
plantations for various commercial
crops, including rubber, sugarcane
and oil palm in the south, is the main
threat to existing forests.7
Illegal
logging is also a significant driver of
deforestation and Myanmar’s forests
have been heavily impacted by
commercial logging.8
This wave of deforestation is being
largely driven by demand from the wood
processing industries and plantation
sectors in China, Vietnam and Thailand.
All three of these countries have strict
logging controls in natural forests and
have turned to forest-rich countries in
the region, especially Myanmar and
Laos, for raw material supplies.
Myanmar is one of the main targets due
to its stock of valuable species, notably
its prized teak (Tectona grandis) and
rosewoods (Dalbergia spp.). It also
shares a long land border of 2,129km
with China, the biggest importer of
illegal timber in the world.9
On April 1, 2014 Myanmar enacted a
log export ban in an effort to slow the
rate of forest loss. Yet EIA investigations
reveal that the cross-border trade
continues, providing raw materials to
China’s huge wood processing industry.
Aside from blatant illegality symbolised
by logs flowing across its land border
to China, the Myanmar Government’s
forest management system has led to
systematic over-exploitation with the
official annual allowable quota
regularly exceeded. This was especially
pronounced in the lead up to the log
export ban. For example, in the Katha
Forest Management Unit in Sagaing
Division during the 2013-14 logging
season, 60,000 teak trees were felled
although the annual allowable cut
was just 12,000.10
ABOVE:
Myanmar Timber Enterprise log
depot, Sagaing Division.
STATE OF MYANMAR’S FORESTS

5
As all land in Myanmar is state owned,
regardless of classification – reserved
forest, protected public forests and
protected area systems – all forests
are deemed to be state property.11
Management of forests in Myanmar
falls under the authority of the Ministry
of Environmental Conservation and
Forestry (MOECAF) and its two
subsidiary bodies, the Forests
Department (FD) and Myanmar
Timber Enterprise (MTE).
The Forests Department’s role is to
implement the country’s Forests Law
and it is responsible for conserving and
managing the forests. Under the law,
the MTE is the only authority permitted
to extract and trade timber, and it is a
more powerful institution than the FD.
MTE functions as a monopoly with the
main purpose of maximising revenue
from forest exploitation. Methods of
over-harvesting include felling a greater
number of logs of a particular tree
species and extracting logs smaller in
diameter than recommended. As such,
the legal forest sector practices in
Myanmar are a significant contributor
to deforestation and forest degradation.
Although MTE holds the rights to
harvesting, logging is usually
subcontracted to approximately 100
enterprises, many of which have close
connections to the Government. These
conduct felling operations that act as
service providers, typically performing
activities related to timber felling
and haulage.12
MTE is also in charge of a detailed
hammer marking stamp system applied
to both logs and stems of trees. In
theory, this system provides traceability
in the supply chain. Yet as MTE does
not differentiate logs at depots between
the types of forests from which they
are derived, there is the significant risk
that timber from various supply streams
can be mixed together.13
With relative
ease, timber can be inserted into a
supply chain with all the official
documentation yet without the required
steps to demonstrate a legitimate,
traceable system.14
While in theory both the legal
framework and traceability system
seem robust, in practice widespread
infringement occurs due to the political
context in Myanmar. MTE’s priority is
to generate revenue for the Government
and the logging contractors allied to it.
Corruption in the forest sector is also
widespread. In 2014, Transparency
International ranked Myanmar 156th
out of 175 countries surveyed in terms
of corruption.15
In May 2014, the FD
announced that 700 of its employees
were facing charges of corruption.16
Due to Myanmar’s complex history and
ethnic diversity, large swathes of the
country lie outside the direct control
of the Government. These areas, such
as Chin State and Kachin State, often
contain significant tracts of forest and
lie in strategically important border
areas. In some ceasefire areas, such
as Karen State on the border with
Thailand, a system known as
“modified procedures” occurs, where
MTE-authorised logging takes place
with a low level of legal compliance.
But generally, logging in areas of
ethnic conflict is deemed illegal
under Myanmar’s forestry laws,
with the timber from those areas
effectively criminalised.
As well as overseeing the logging
operations, MTE also controls the
timber trade. To be deemed legal,
all timber must bear the hammer
mark of MTE and be shipped via
Myanmar’s main port in Yangon.17
The bulk of logs cut under the
MTE system are sold through
non-transparent auctions.
According to official trade data prior
to the log export ban, India was the
largest importer of timber from
Myanmar, followed by China. Prior to
the beginning of political reform in
Myanmar in 2010, both the United
States and European Union imposed
sanctions on direct imports of wood
from the country. These measures
have now been lifted, with teak
especially sought after in those
markets. In August 2014, the US
Treasury Department granted a
temporary waiver on sanctions
against the MTE, allowing US
companies to trade directly with it.18
Myanmar has embarked on
discussions with the EU over a
Voluntary Partnership Agreement
on timber trade between the two sides.
Against a backdrop of weak forest
governance, large quantities of timber
are being seized by the Myanmar
authorities, especially the high value
species of teak and tamalan. Most of the
seized wood is passed on to MTE to be
sold at auction. Between April and
December 2013, the Government seized
35,000 tonnes of illegal timber, including
5,000 tonnes of teak.19
In the three
months after the log export ban came
into force on April 1, 2014 more than
20,000 tonnes of timber was seized in
the country, including 5,000 tonnes of
tamalan. Commenting on the figures,
an unnamed forestry official said:
“The smuggling of timber in this year
is worse than last year. Smuggling to
China is more than any other countries”.20
A major seizure in Kachin State in
January 2014 caused a diplomatic incident
when 155 Chinese labourers were arrested
at the logging site, subsequently
sentenced to life imprisonment but then
pardoned by the president of Myanmar.21
BELOW:
Tamalan tree, Sagaing Division.
©EIA

The illicit cross-border timber trade
from Myanmar to China has persisted
for more than 25 years. It has proven
to be resilient in the face of conflict,
ceasefires, recessions, Government
policy changes, temporary clampdowns
and nascent political reform in Myanmar.
After steady growth throughout the
1990s, the scale of the trade peaked in
2005. The upward trend was disturbed
for a few years after adverse publicity
led to policy changes in 2006 but by
2013 it had returned to peak levels.
The geographical nexus of the trade is
Kachin State in Myanmar and the three
prefectures in China’s Yunnan province
abutting the border; Nujiang, Baoshan
and Dehong. Timber, overwhelmingly in
the form of raw logs, flows through
scores of crossing points along the
1,000km border, ranging from formal
international channels to clandestine
dirt roads.
In Nujiang, the main crossing point is
Pianma, classified as a provincial level
open port, where wood species logged in
the mountainous region of northern
Kachin, such as Chinese hemlock, birch
and maple, enter China. In Baoshan,
lower value species termed zamu, such
as kanyin, logged in Kachin are imported
via several crossing such as Houqiao,
designated as a border economic
cooperation zone by China’s State Council.
In Dehong, the bulk of the timber moves
via the Jiegao special export processing
zone in Ruili city. The trade here is
dominated by higher value species,
notably tamalan, padauk and teak which
are logged in Myanmar’s Sagaing
Division, northern Shan State, and
southern Kachin. Once over the border,
the illicit timber is sold onto traders,
either as unprocessed logs or semi-
processed sawn timber, with the more
valuable species transported to China’s
main wood processing centres such as
Guangzhou, a three-day drive away.
On the Myanmar side of the border,
territorial control is complex and fluid.
The Myanmar Government and its
military controls about 60 per cent of
Kachin state, with the remainder divided
between ethnic political groups and
militias, principally the Kachin
Independence Organisation (KIO) and
its militia the Kachin Independence
Army, and the New Democratic Army
Kachin (NADK). From the logging site,
illicit timber en route to China via
Kachin often passes through territory
controlled by different groups and the
Government, with each levying informal
‘taxes’ at a series of checkpoints.
An entangled array of operatives collude
and compete to secure logging sites and
transportation routes to the border in a
modus vivendi arrangement driven by
profit. These include local government
and military officials in Kachin, ethnic
political groups, Kachin and Chinese
businessmen, and intermediaries who
play a vital role as a link between the
other parties. A common example is the
practice of buying a ‘mountain’ in areas
of Kachin State. Local ethnic groups
such as the NDAK grant logging rights
to a specified area for a defined period,
generally a year. The rights are usually
bought by a group of Chinese businessmen
in Yunnan through an intermediary who
has connections to the various factions
on the ground, both at the logging site
and also along the route to the border.
Once the deal is agreed, the Chinese
businessmen sub-contract the logging
and transportation to smaller companies
which employ local labour in Yunnan to
6
BRIEF HISTORY OF THE
MYANMAR-CHINA OVERLAND TIMBER TRADE
ABOVE:
Timber traders inspecting logs
from Myanmar, Pianma,
Yunnan, 2012.

7
cross into Myanmar to cut the trees and
transport the timber across the border.
The illicit cross-border timber trade is
entirely driven by demand for
comparatively low-cost raw materials in
China, and abetted by local and national
trade policies in China and corruption,
conflict and weak rule of law in Kachin.
This blend of demand for raw materials
in a country adjoining a zone of instability
rich in natural resources with a porous
border is disastrous for the forests of
Kachin, Shan and Sagaing, and for the
local communities reliant on them for
livelihoods and ecological security.
The chronology of events leading to the
current massive illegal wood trade can
be broken down into three phases. The
first phase began in the late 1980s when
a series of bilateral trade agreements
between the governments of China and
Myanmar and ceasefire deals with ethnic
resistance groups led to the gradual
opening up of an area which was formerly
a closed hinterland. In 1988, the two
governments signed a cross-border trade
agreement, followed by a series of deals
between Myanmar and the Yunnan
provincial government in 1989, including
one on forestry. The same year the NDAK
signed a ceasefire, opening up a large area
of northern Kachin to intensive logging.
At the start of this period, logging and
trade was small-scale, using mules to
transport relatively small quantities of
wood for local use. A decade later,
intact frontier forest in Kachin was being
opened up for exploitation. Satellite
analysis shows that forest clearing
in Kachin more than tripled between
the periods 1978-89 and 1989-96,
with logging responsible for half of
the deforestation.23
During the second phase, cross-border
timber smuggling escalated rapidly from
the late 1990s to 2005. In 1997, the
total volume of forest products trade
between Myanmar and China was
300,000 m3
; by 2005 it had reached
1.6 million m3
.24
Out of this total, one
million m3
of illegal logs were transported
across the border into Yunnan.25
A major contributory factor was the
imposition of a logging ban in Yunnan in
1996, followed by a national ban in
China in 1998. Overnight, the wood
industry in Yunnan faced collapse and
turned increasingly to Kachin for raw
material supplies. A ceasefire deal
between the KIO and Myanmar military
government in 1994 also opened up
large swathes of forests to logging.
The third phase began in 2006 when
reports by non-governmental organisations
and media turned a spotlight on the
booming illegal logging and trade taking
place in northern Myanmar. The central
Government realised substantial
amounts of income were evading its
preferred channels via the MTE-system
and its business allies. In January 2006,
the country’s forest minister publicly
admitted that huge volumes of timber
were being traded unofficially across its
border. A few months later, the Chinese
authorities responded to its then allies’
concerns and took action to stem the
flow of wood. In March, the Yunnan
government announced a suspension of
timber imports across the border and
banned Chinese nationals from crossing
the border to conduct logging.26
In May 2006, the Yunnan government
issued a new regulation aimed at
managing the timber trade between
Myanmar and Yunnan.27
This sought to
formalise the trade by requiring advance
approval for timber “cooperation projects”,
registration requirements for timber
importers with a target of five per
prefecture, and endorsement from the
central Government of Myanmar. By late
2006, it was reported that some parts of
the border trade had reopened for timber
trade under a quota system for chosen
companies.28
Chinese customs data indicated
that the measures suppressed the trade
for a few years, with only 270,000m3
of
logs crossing the border in 2008.
Yet this reduction was not to last. By
2013, trade in timber products between
Myanmar and China reached a record
level of 1.7 million m3
(of which 938,000
m3
were logs), worth $621 million. Of
this total, 94 per cent was registered
entering China via the Kunming customs
office in Yunnan.29
The wood had been
transported overland across the border
in contravention of Myanmar’s forest
regulations and against the intent of the
policy changes announced by the
Yunnan government in 2006. The illegal
cross-border timber trade has rebounded
and is now back in full flow.30
“The illicit cross-
border timber trade
is entirely driven
by demand for
comparatively
low-cost raw
materials in China”
MYANMAR ROSEWOOD UNDER THREAT
Extremely rapid growth in Chinese imports of
‘redwood’, ‘rosewoods’ or ‘Hongmu’ timbers from
Myanmar in the past two years is directly driving
increased illegal and unsustainable logging.
EIA research shows that, based on current trends, the two most
targeted Hongmu species in Myanmar – tamalan (Dalbergia oliveri /
bariensis) and padauk (Pterocarpus macrocarpus) – could be logged
to commercial extinction in as little as three years.
Listed as a “reserved” species, only MOECAF has the legal right to
harvest and trade in tamalan yet, through a vast illegal trade, it
has become one of the most traded timber species over the China-
Myanmar border. Data shows that $52 million worth of rosewood
logs were transported across the border in the month after
Myanmar’s log export ban came into effect.22

8
Since 2012, EIA has conducted a series of
investigations into the illegal cross-border
timber trade between Myanmar and China,
covering areas of Kachin State and Sagaing
Division, the prefectures of Nujiang, Baoshan
and Dehong in Yunnan, as well as the wood
trade hubs of Kunming and Guangzhou in
southern Guangdong Province.
EIA’s findings confirm a resurgent trade after the temporary
clampdown in 2006, the scale of which is approaching the peak
years leading up to 2005 when the volume of logs flowing across
the border reached one million m3
a year. The only evidence of
lingering impacts of the 2006 measures is a requirement for
official papers on the China side of the border. These include
proof that the timber has been designated as legal by the
central Government of Myanmar. Given Myanmar’s forest product
regulations stating that only wood under the control of the
Myanmar Timber Enterprise and shipped via Yangon is deemed
to be legal, and the imposition of a log export ban from April
2014, such documents cannot be genuine. Many traders EIA met
stated that so long as the required taxes are paid on the China
side of the border, the shipments are deemed legal, irrespective
of whether the wood came from illegal logging operations.
Along the Kachin-Yunnan border, EIA found shifting trade routes
with different crossing points being used according to local
circumstances such as conflict flaring up and proximity to active
logging areas. In June 2011, hostilities resumed between the
Myanmar military and KIO, impacting smuggling routes and
crossing points but not the scale of the trade.
During undercover meetings with EIA investigators, Chinese
traders revealed how logging operations now take place further
inside Kachin as commercial timber supplies near the border are
exhausted by intensive logging operations. Also, increasing
amounts of illicit timber originate outside Kachin, especially high
value species such as tamalan from Sagaing Division and teak
from north Shan State. A huge surge in smuggling of rosewood
logs across the border occurred in 2013, reaching 220,000 m3
worth about $300 million.31
Through its investigations, EIA has built up a unique picture of
the cross-border trade, identifying the key components of the
illicit supply chain and the main culprits. While the state of
logging on the Myanmar side of the border and the timber flows
into China appears chaotic and complex at first sight, it is in fact
highly structured and well-orchestrated, with different factions
colluding to profit at the expense of Myanmar’s precious forests.
2012 INVESTIGATIONS:
NUJIANG AND BAOSHAN
In April 2012, EIA investigators visited the main crossing points
for timber entering Yunnan’s Nujiang and Baoshan prefectures,
and tracked down wood traders and processing companies based
in Kunming and Guangzhou reliant on overland imports from
Myanmar for raw material supplies.
In Pianma, Nujiang, EIA witnessed large stocks of raw logs held
in storage areas along the main road. Pianma has historically
been the main entry point for logs entering Nujiang due to its
status as a provincial level open port. In 2002, Nujiang imported
308,000 m3
of logs from Myanmar, compared with just 36,000m3
in 1997, with 95 per cent entering via Pianma.32
The Kachin side
of the border is under the control of the NDAK, as are concessions
to log the adjacent mountainous terrain in north Kachin.
Traders said that most of the timber stored in Pianma was
owned by the Yuandong company, which was carrying out
logging in neighbouring Kachin under a hydropower dam
development scheme. Sporadic conflict had disrupted the trade,
with reports of an important bridge being blown up temporarily
affecting supplies. One logger encountered by EIA told how he
and 29 colleagues were recruited for RMB1000 ($15) a day to
hike over 100km into Kachin to log. After cutting down trees for
a week the group was attacked by soldiers and fled. He was the
only one to make it back to Pianma.33
In Baoshan prefecture the busiest crossing point was Zizhi,
where EIA observed trucks using a shallow river to ferry timber
to a succession of well-stocked log storage areas. Buyers were
seen visiting some of the yards to source timber species such as
hemlock and laurel. The trade through Zizhi appeared to have
EIA INVESTIGATIONS

9
grown due to the construction of roads built by Chinese
mining companies in neighbouring Kachin. The nearby Diantan
crossing, which used to be the busiest in the area, was
deserted due to higher charges being levied by the NDAK
on the Kachin side of the border and the severe depletion of
forest close to the border.
From the border area, EIA investigators travelled to Kunming,
the provincial capital of Yunnan and an important hub for
timber brought overland from Myanmar en route to wood
processing hubs in southern China. At the Xinan wholesale
timber market, EIA observed a decline in the amount of
Myanmar timber on sale. Sellers said it was due to logging
operations having to go deeper into Kachin to find commercial
logging areas and the impact of renewed conflict. One trader
described the logging situation in Kachin: “It’s all stolen and
logged illegally. Over there, the environmental destruction is
very bad. The mountains are completely mined out. It’s
actually quite horrific.”
In Guangzhou, EIA undercover investigators met with officials
from the Munian Wood Company. The family-run company was
formed in 1987 to trade logs from Myanmar and had grown to
become one of the biggest processors of Burmese teak in
China, mostly for flooring. All of its supplies of teak from
Mongmit, in north Shan State, are imported via Ruili, where
the company has large factory, and it is purchased outside of
the Myanmar Government system. As the owner of the
company, Wen Shuinian, said: “We don’t care what channels
the materials come from, so long as they bring it over to
China and declare the taxes.”
Meetings with other companies dealing in wood from
Myanmar, in both Kunming and Guangzhou, confirmed key
aspects of the trade; logging operations going further into
Myanmar as accessible forests are depleted , the importance
of paying tax on the China side of the border to ‘legalise’
the timber and the intricate relationships along the supply
chain. Even major buyers do not have direct access to the
wood source in Myanmar, with most deals being done once
the material has moved near to the border. The trade is
only made possible by the involvement of well-connected
intermediaries.
OPPOSITE PAGE:
Log stockpile in Zizhi, Yunnan, on the
Myanmar-China border, 2012.
ABOVE LEFT:
Truck carrying logs across the river
border, Zizhi, Yunnan, 2012.
ABOVE RIGHT:
Pianma town, the main entry point for
logs from Myanmar into Nujiang
Prefecture, Yunnan.

CHINA IN MYANMAR(BURMA) FOR ARMS-LOGGING-DAM-COPPER-JADE etcs-PART ONE

CHINA IN MYANMAR(BURMA) FOR ARMS-LOGGING-DAM-COPPER-JADE etcs-PART ONE

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CHINA IN MYANMAR(BURMA) FOR ARMS-LOGGING-DAM-COPPER-JADE etcs-PART ONE