Across the river from Myanmar’s colonial-era old capital of Yangon, low-slung shanties dot rice fields that extend into a bucolic rural distance.

But that could soon change if local property developers and their deep-pocketed Chinese backers build the Yangon New City Project, an ultra-modern design with glass tower high rises some here are already referring to as “Chinatown.”

The first phase of the mega-project will reportedly cover 8,000 hectares of land west of the Yangon river and will be led by the New Yangon Development Company Limited (NYDC).

The new company was incorporated in March 2018 as a public-private partnership with Serge Pun, one of Myanmar’s wealthiest tycoons. Pun, a Sino-Myanmar who was born in Yangon and spent the 1960s in China, serves as NYDC’s chief executive.

Pun returned from exile in 1991, the darkest years of military rule, and with the help of high-level connections was able to acquire lands which he developed into housing estates and business zones. His vast wealth stems from investment in real estate development, manufacturing, and banking.

Myanmar businessman Serge Pun in a 2018 file photo. Image: Twitter

In May last year, NYDC signed a US$1.5 billion framework agreement with China’s state-owned China Communications Construction Company (CCCC), which will build infrastructure including bridges, roads, a power station and water treatment plants for the new city.

In return, CCCC has been granted by the Yangon regional government rights to 28 square kilometers in the new city for unspecified purposes.

The lack of transparency and CCCC’s dubious reputation in the region has stirred controversy around a project that, if completed, will dramatically and immutably change Yangon’s old-world look and feel.

The deal is widely seen by observers in Yangon as part of Chinese President Xi Jinping’s ambitious Belt and Road Initiative (BRI). Other BRI projects in Myanmar include a high-speed railroad designed to connect the Chinese border with the western Myanmar port of Kyaukphyu and hydropower projects in Kachin and Shan states.

But if China is trying to put a softer face on BRI, CCCC is an unusual choice to build Yangon’s new city.

“CCCC and its subsidiaries have left a trail of controversy in many of the countries where they operate,” Bloomberg reported in September 2018, noting the company was blacklisted by the World Bank in 2009 for alleged fraudulent bidding practices on a highway contract in the Philippines.

A promotional montage for the state-led China Communications Construction Company, also known as CCCC. Photo: YouTube

Malaysia has halted two BRI-related projects, including rail and pipeline projects, with CCCC involvement amid corruption suspicions.

Another CCCC subsidiary, China Harbor, was awarded a contract to build a port in Hambantota, Sri Lanka, another mega-project where allegations of corruption, including pay-offs to high-ranking government officials, hounded the development.

China Merchants Port Holdings, another Chinese state firm, later took control and in July 2017 acquired a 70% transfer of equity and 99-year lease in exchange for $1.1 billion in debts owed to China. That case sparked widespread criticism that Beijing has so far been slow to blunt that BRI-related projects are thinly veiled debt traps.

What happens next in Yangon’s planned new city is unclear.

The final decision on who will build the new city will be determined by a so-called “Swiss Challenge,” a style of project bidding in which a public authority invites third parties to match or offer a lower price than an initial offered bid.

Financial analysts in Yangon doubt that any local or foreign company will try to outbid CCCC’s $1.5 billion offer. Indeed, the huge sum pledged has raised questions about whether the state-owned company – and the Chinese state behind it – has a hidden agenda with the vast project.

A Myanmar woman walks in the green flood-prone fields where the New Yangon City project is set to be built. Photo: Facebook

In March, the Myanmar news site Irrawaddy quoted Myo Win Thu, a local nongovernmental worker, opining that “if something goes wrong, we won’t have much bargaining power with China” and that the new city could become a “Chinese enclave” if the project’s debts cannot be repaid.

Other China-backed projects such as the $3.6 billion Myitsone hydroelectric project in the country’s north and the deep-sea port and Special Economic Zone in Kyaukphyu in Rakhine State were both apparently intentionally overpriced.

The China Power Investment Corporation, the lead state-owned company in the Myitsone dam, has pressed hard for repayment ever since the project was suspended on environmental concerns by then-president Thein Sein’s government in September 2011.

Four years later, the Chinese company claimed that it had already spent $800 million on the still-stalled project and that the interest on its investment accrued at $50 million per year, an amount it said the Myanmar government owes.

That experience sparked fears that Myanmar could get caught in another debt trap in Kyaukphyu’s development. Negotiations between the China International Trust Investment Corporation (CITIC) and Myanmar government recently saw the project’s initial cost cut from $7.5 billion to $1.3 billion.

Debt trap concerns aside, Yangon residents recall it’s not the first time that a controversial foreign entity has shown interest in building a new city on the open green fields on the opposite side of old Yangon.

In April 1990, a Japanese company called Daichi – not to be confused with the reputable financial conglomerate Dai-ichi – pledged to invest $15 billion to establish a new high-tech, information-age city out of the barren land across the Yangon river.

Colonial era architecture in Yangon city is a reminder of a bygone era. Image: iStock/Getty Images

A new company known as the Myanmar Concord Development Organization (MCDO) was formed and a joint venture contract was signed with the country’s then military government. Myanmar’s then economic czar and finance minister David Abel even congratulated MCDO on the deal in an official statement.

Others were skeptical. The Economist news magazine reported on the project in April 1990 under the headline “Mad in Myanmar”, noting that a group of peculiar-looking MCDO “executives” with unconventional hairstyles were pictured in the then-official Working People’s Daily.

It later emerged that the businessmen were connected with Japan’s yakuza organized crime network, prompting the Japanese government to step in to scrap the project.

CCCC is no MCDO, to be sure, but both cases underscore the inexperience of government decision-makers in dealing with powerful foreign interests and how readily they may be tempted by the lure of millions, if not billions, of dollars.

Doing business with China’s deep-pocketed state-owned enterprises may be more straight-forward than dealing with shadowy Japanese crime groups, and clearly Myanmar officials have learned cautionary lessons from Myitsone and Kyaukphyu.

Now as before, it’s still not clear that the latest vision for a new Yangon city will ever come to fruition, or that everything is necessarily what it seems with the developers and backers of the new-age mega-project.