Chinese Government provides loan for GSM System Expansion Project

On July 16, 2004, U Tha Oo, the General Manager of Myanmar Posts and Telecommunication (MPT) — a state-owned enterprise in Myanmar — signed a $12.5 million commercial contract with ZTE Corporation President Mr Hou Weigui. The Chinese Government and MPT also signed a loan agreement in 2004 for the GSM System Expansion Project, and the proceeds of this loan were to be used to finance the commercial contract between MPT and ZTE Corporation. The reported borrowing terms are as follows: 10 year maturity, 2 year grace period, and 3% interest rate. The face value of the loan is unknown. The purpose of the project was to install 100,000 cellular phone (GSM) connections in the city of Yangon and 100,00 cellular phone (GSM) connections in the city of Mandalay. A wealthy Burmese tycoon and arms broker named Te Za eventually assumed responsibility for the commercial contract with ZTE Corporation in 2005. At the time, Te Za was very close to the family of the military government’s top leader Snr-Gen Than Shwe. He was reportedly awarded the mobile phone contract in return for his involvement in building the controversial Nanmyint Tower at the Pagan World Heritage Site. At the time, the official price of a GSM phone was 1 million kyat (about $1,100), but on the black market it fetched more than $2,000. The GSM System Expansion Project reportedly reached implementation, but its precise implementation start and end dates are unknown.

Additional details

1. The Chinese project title is 缅甸邮电公司GSM 网络扩容项目. 2. Given that the loan was denominated in USD and issued to a foreign buyer for the purchase of goods and services from a Chinese supplier, this may have been an export buyer's credit loan. The loan may have also been issued as a subsidiary loan from a broader loan agreement (see Project ID#34116). However, these issues requires further investigation.

Number of official sources

1

Number of total sources

8