AA governs 50 out of 54 village tracts outside Kyaukpyu township, possesses military strength to overtake entire township: AOW

Narinjara News, April 23, 2025 

The military council persists as Chinese initiatives in Rakhine are producing more than $575 million each year, based on a report released by Arakan Oil Watch in April 2025. 

The report was released by Arakan Oil Watch, titled“ Conflictre-Ignites in Kyaukpyu: China's Investment Projects and strategic Gateway to  the Indian Ocean under threat in Myanmar.”  

The report indicates that “Kyaukpyu is among three townships in Rakhine State where military forces remain, and Kyaukpyu holds an important economic and political position, both in the aftermath of the internal conflict in Rakhine and in the broader economy.” 

The deep-sea port on Ma Day Island in Kyaukpyu Township sends oil and natural gas to China via pipelines valued at approximately $7 billion each year. 

The military council has managed to maintain itself by generating over $575 million in foreign exchange each year. 

Losing authority over the project areas could jeopardize current revenue sources and seriously weaken the military council's political reputation in overseeing other initiatives in Kyaukpyu Township, such as the Shwe Natural Gas Project with South Korean and Indian firms. 

Despite Myanmar’s oil and natural gas imports making up only around 2 percent of China’s total global crude oil and natural gas imports, Kyaukpyu is vital to China’s Belt and Road Initiative (BRI), serving as a gateway to the Indian Ocean, the report noted. 

Myanmar and China have finalized agreements to enhance the BRI, featuring the $28 billion Kyaukpyu Special Economic Zone, which will comprise two deep-sea ports, an industrial zone, and a railway linking Kyaukpyu to China. 

Since the launch of the Arakan Army (AA) offensive in November 2023, the AA has gained complete control of 14 out of the 17 townships in Rakhine State. The junta maintains control only over the capital Sittwe, Man Aung island, and a minor section of Kyaukpyu township. 

The AA entered Kyaukpyu township in early 2024 and swiftly seized control of 50 out of the 54 village tracts located outside Kyaukpyu township, as the junta withdrew to its four military bases and naval command near the township. 

Local military experts also think that the AA possesses the military power to fully capture the project zones and all of Kyaukphyu Township if it decides to launch an offensive. 

Local sources report that junta troops and AA forces are still engaged in combat outside of Kyauk Phyu, but it is not an offensive move for AA to seize Kyauk Phyu. It is merely a ruse by AA to junta troops before the offensive on Kyauk Phyu. 

The report is structured with sub-headings that encompass -- Summary, Current Conflict Situation in Kyaukphyu, Current Socio-Economic Situation in Kyaukphyu, Overview of Kyaukphyu Investment, Ongoing Investment Projects in Kyaukphyu (Chinese Oil Terminal and Oil Storage and Transport Facility on Ma Day Island), Shwe Gas Initiative, Kyaukphyu Natural Gas Power Station, China’s Plans for the Kyaukphyu Special Economic Zone, Kyaukphyu SEZ Industrial Park, Kyaukphyu SEZ Deep Sea Ports, China-Myanmar Railway Initiative, Security Threats from China’s Oil and Gas Pipeline in Central Myanmar, China-Myanmar Security Firm, and Conclusion.