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Belt and Road Monitor: June 11

RWR Belt and Road Monitor (Standard): June 11

RWR Advisory Group

Top Developments

CHEC to Become First Foreign Company to Own a Highway in Sri Lanka
On May 27, China Harbor Engineering Company (CHEC) was awarded a 17 km four-lane highway project from the Sri Lankan government with a total investment of about $690 million (although feasibility studies have placed the cost at potentially $1 billion). The project, which will be operated and maintained by the company for 15 years before being turned over to the local government, passes through towns in Colombo, including Kolonnawa, Madinnagoda, Rajagiriya, Kuda Buthgamuwa, Battaramulla, Kottawa, Pothuarawa and Hokandara, and is also connected to the outer ring highway of Athurugiriya. The award came one week after the government conferred tax-free status to Colombo Port City, which was also built and owned (on a 99 year lease) by CHEC. The work content includes the design, construction, financing, operation, maintenance and transfer of the road, and the construction period is three years. CHEC will be the first foreign company to own a highway in Sri Lanka. 

AIIB Open to Lending to Myanmar, Despite International Pressures
On June 2, it was reported that the Asian Infrastructure Investment Bank (AIIB), based in Beijing, remained open to lending to Myanmar’s military junta after AIIB Vice President Joachim von Amsberg stated that the bank would not “take a view on the form of government” when considering new projects in Myanmar. These statements are notable in light of international pressure to cut off the Burmese military junta from outside financing, and the United States and the European Union, as well as Canada and the U.K., have implemented several rounds of sanctions against the new regime. Beijing has been notably cool in its response to the February coup, offering no criticism of the junta and blocking a joint U.N. Security Council statement condemning it. Chinese companies also have continued to launch projects in the country since February. Some observers have speculated that Beijing’s willingness to engage with Myanmar in light of increasing international alienation from the West could increase China’s influence in the country. 

Huawei Launches, Operates Ethiopian ICT Center 
On June 1, Huawei and Addis Ababa University opened a $2.1 million ICT practice center at the Addis Ababa Institute of Technology.  The new center, which will be operated by Huawei for three years before being turned over to Addis Ababa University, aims to train more than 2,000 engineers over the next three years. Huawei also donated $1.9 million-worth of equipment to the center for training and also provided a $30,000 scholarship fund for ten postgraduate students annually over the next three years. Chinese firms have long been involved in Ethiopia’s telecom sector, with Huawei recently launching the mobile payment app, Telebirr, with state-run monopoly company Ethio Telecom in May. (The app is expected to facilitate up to 40-50% of Ethiopia’s entire economic activity.) The Chinese telecom operating company Sharing Mobile Group has also expressed interest in participating in a bid for a 40% stake in Ethio Telecom, which will reportedly be concluded by July 2021.

Hungarian Protests over Planned Fudan University Branch in Budapest
On June 6, thousands of Hungarians protested against the proposed $1.8 billion Fudan University branch in Budapest. Plans for the university, which are to be funded by a $1.5 billion loan from a Chinese bank, were revealed in April.  The government received substantial criticism on the university's cost and location (the space had previously been allocated to affordable student housing). It has been reported that China State Construction Engineering (CSCEC) is slated to be awarded the construction contract in a non-competitive bidding process. Despite the public pushback, the Hungarian government has remained firm in keeping its plans for the university, although the recent protests have reportedly made that decision more tenuous. Budapest Mayor Karácsony Gergely, who also opposed the plan, renamed several streets near the university in protest, explaining at a recent press conference that “We still hope the project won't happen, but if it does then it will have to put up with these names.” Name changes included “Free Hong Kong Road” and “Dalai Lama Street.” 

CHEC to Construct Port Project in Benin
On May 25, China Harbour Engineering Company (CHEC) signed the engineering, procurement and construction contract for the Cotonou Port No. 5 project in Benin with the Cotonou Port Authority. The main construction content includes the formation of a new terminal and rear land area, the demolition of the existing east breakwater, the extension of the west breakwater, and the dredging of the harbor basin. The construction period is 30 months (excluding an eight month preparation period). CHEC had earlier conducted the expansion survey for the project in 2019. The activity through the port contributes to 90% of Benin’s trade and approximately 60% of Benin’s annual GDP as of 2019.

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