The Dawei Spe­cial Eco­nomic Zone is set to steam ahead.

Norway-Asia Business Review - - Contents - LARRY JAGAN

A se­ries of meet­ings at the high­est lev­els in the last month or so has led to the Myan­mar govern­ment form­ing a new high-level com­mit­tee in or­der to res­tart and speed up the work on the project.

The lead Thai de­vel­oper -- Ital­ianThai De­vel­op­ment (ITD) Plc -- in­volved in the scheme re­newed their in­ter­est in press­ing ahead with the project af­ter talks with both the Thai and Myan­mar gov­ern­ments. The grandiose plan in­volves build­ing a deep-sea port, creat­ing an in­dus­trial zone and de­vel­op­ing mod­ern rail and roads links be­tween the Dawei Spe­cial Eco­nomic Zone and Thai­land’s Kan­chanaburi prov­ince – and Bangkok. For other for­eign in­vestors the deep-sea port at Dawei and the im­proved trans­port con­nec­tions be­tween Myan­mar’s south­ern re­gion and Thai­land is par­tic­u­larly at­trac­tive.

Both have many po­ten­tial ad­van­tages, and would es­pe­cially ben­e­fit both Thai­land and China. The road and rail link would add to the Greater Mekong Sub-re­gional cor­ri­dors, meant to cre­ate more ef­fi­cient com­mu­ni­ca­tion links be­tween Myan­mar, Thai­land, Cam­bo­dia and Viet­nam. It would also pro­vide an al­ter­na­tive route to the EastWest Eco­nomic Cor­ri­dor (EWEC) link­ing the Myan­mar, Thai­land, Laos and Viet­nam. It also fits the Chi­nese strate­gic vi­sion of ‘one belt, one road’. That would link China to the sea routes in the An­daman Sea – through the two ports of Mawlamyine (for­merly know as Moul­mein) on the EWEC and the pro­posed deep-sea port to the south, at Dawei on the North­ern sub-cor­ri­dor.

China has agreed with the Lao govern­ment to build a fast-train link to Vi­en­tiane – which will be part of the Kun­ming to Sin­ga­pore route pass­ing through Laos, Thai­land and Malaysia. Con­struc­tion on that leg has al­ready be­gun, while the Thai and Chi­nese gov­ern­ments are still dis­cussing the Laos to Thai­land fast-train link, an agree­ment is ex­pected in the very near fu­ture.

This is go­ing to pro­vide a ma­jor boon to China, which wants to con­nect to Eu­rope, and has al­ready launched a rail-freight ser­vice to Lon­don. The coun­tries in the Mekong re­gion could also ben­e­fit from this link when the roads and rail links through Kun­ming are es­tab­lished. It would also give South East Asian coun­tries ac­cess to Cen­tral Asia and Eu­rope. This link would re­duce trans­port costs and time, ac­cord­ing to Thai of­fi­cials. “It could re­duce the pe­riod Thai goods take to get to Cen­tral Asia and the Mid­dle East by 10-15 days, com­pared to sea trans­port,” ac­cord­ing to Suwit Ratanachinda, Di­rec­tor of the Thai In­ter­na­tional Freight For­warders As­so­ci­a­tion.

For Chi­nese and Thai man­u­fac­tur­ers, Dawei would pro­vide even speed­ier ac­cess to the mar­kets of In­dia, the Mid­dle East, and even Eu­rope. It is this, which has given an im­pe­tus to res­tart the Dawei project – es­pe­cially the deep-sea port and the trans­port con­nec­tions be­tween Myan­mar and Thai­land. Work is ex­pected to start soon on the 38-kilo­me­ter road from Dawei’s pro­posed deep-sea port to Ban Phu Nam

Ron in Kan­chanaburi.

In Fe­bru­ary the Myan­mar govern­ment agreed to bor­row the funds from Thai­land needed for the con­struc­tion of the road, at in­cred­i­bly fa­vor­able rates: 4.5 bil­lion baht at 0.1 % in­ter­est, a 10-year grace pe­riod, and re­pay­ment in 20 years. The Thai govern­ment ini­tially of­fered the loan in 2015, and although the Thai Cabi­net had ap­proved the loan, work has not started as the new govern­ment of Aung San Suu Kyi asked to restudy the plan.

Now the loan has been fi­nally agreed by Myan­mar, work will start on the road. This is part of the Myan­mar govern­ment’s re­newed fo­cus on creat­ing the Dawei Spe­cial Eco­nomic Zone. ItalThai (ITD) Plc is the lead de­vel­oper in the con­sor­tium that orig­i­nally signed a con­ces­sion with the Myan­mar govern­ment in 2015. The other con­sor­tium mem­bers in­clude the Ja­panese-Thai joint ven­ture, Ro­jana In­dus­trial Park Plc and LNG Plus In­ter­na­tional Co, also from Thai­land.

The Dai­wei SEZ has been in the works for some­time. Myan­mar and Thai­land orig­i­nally signed a mem­o­ran­dum of un­der­stand­ing to de­velop the area in 2008. Two years later Myan­mar granted a 60-year con­ces­sion to ITD to de­velop the project. ITD then with­drew from the agree­ment in 2013 cit­ing fi­nan­cial dif­fi­cul­ties, be­fore re­sign­ing the con­ces­sion agree­ment in 2015.

The Myan­mar govern­ment’s high­pow­ered com­mit­tee to over­see the project is led by the Vice Pres­i­dent, Henry Van Thio. Sev­eral na­tional govern­ment min­is­ters, in­clud­ing the state min­is­ter for for­eign af­fairs, and the chief min­is­ter for the Taninthayi re­gion – where Dawei is lo­cated – are on the com­mit­tee. The su­per­vis­ing the ac­tual im­ple­men­ta­tion of the project falls to the “task-force on Dawei SEZ con­struc­tion”, chaired by the com­merce and trade min­is­ter, Dr Than Myint.

China and Ja­pan have both backed the project in re­cent months, and are ex­pected to be the source of some of the fi­nance nec­es­sary to com­plete the first stage of the project, ex­pected to cost in the vicin­ity of $ 2 bil­lion. China is par­tic­u­larly in­ter­ested in the port. A Tanintharyi re­gional govern­ment del­e­ga­tion was in Tokyo re­cently for dis­cus­sions on pos­si­ble Ja­panese in­volve­ment in Dawei, in­clud­ing the chief min­is­ter Lae Lae Maw. They were as­sured that Tokyo would sup­port them, but no an­nounce­ment was made about what that might in­volve.

“We can’t an­nounce what was dis­cussed in the meet­ings with the Ja­panese govern­ment as there are still fur­ther dis­cus­sions to take place be­tween the SEZ com­mit­tee and the re­gional govern­ment,” said Phyo Win Tun -Tanintharyi Re­gion fi­nance min­is­ter and vice pres­i­dent of the Dawei SEZ Man­age­ment Com­mit­tee. “But it is very ob­vi­ous that Ja­pan very in­ter­ested in the project.”

In mid-2015 the Ja­panese, Myan­mar and Thai gov­ern­ments signed a mem­o­ran­dum of un­der­stand­ing on tri­par­tite to de­velop the Dawei project dur­ing the Ja­pan-Asean sum­mit in Tokyo. At the time, un­der the Dawei agree­ment the three coun­tries were to have equal shares in the SEZ de­vel­op­ment com­pany. The elec­tion of the Na­tional League for Democ­racy in Novem­ber 2015 changed the rules of the game. But Tokyo has cer­tainly reaf­firmed its com­mit­ment to the project.

Thai­land’s in­ter­est in the project has never been di­min­ished, but progress al­ways de­pended on the Myan­mar govern­ment. Dur­ing the first few months of the new govern­ment’s ad­min­is­tra­tion, other pri­or­i­ties over­shad­owed eco­nomic pol­icy. But since the end of last year, the Myan­mar govern­ment has re­sus­ci­tated the pre­vi­ous govern­ment’s plans to use the es­tab­lish­ment of Spe­cial Eco­nomic Zones as a means of at­tract­ing for­eign in­vest­ment and kick start­ing the growth of man­u­fac­tur­ing.

“The spe­cial eco­nomic zones – Thi­lawa (near Yan­gon), Kyauk Phyu (in Rakhine state in the west) and Dawei (in the south) – are a cen­tral part of the govern­ment’s eco­nomic pol­icy,” Aung Naing Oo, head of DICA, which over­sees for­eign in­vest­ment and joint ven­tures told NABR. They are im­por­tant ve­hi­cles to at­tract for­eign in­vest­ment, he said.

Now the govern­ment that has sorted out the man­age­ment of the spe­cial eco­nomic zones and over­come their ini­tial reser­va­tions, progress will pro­ceed at full-steam ahead. There was some hes­i­ta­tion about Dawei – even un­der the for­mer pres­i­dent Thein Sein – as this was seen as a deal be­tween two for­mer lead­ers: the mil­i­tary ruler Se­nior Gen­eral Than Shwe and Thai­land’s dis­graced prime min­ster Thaksin Shi­nawa­tra. Also ac­tivists and com­mu­nity groups cam­paigned against the project al­leg­ing in­ad­e­quate com­pen­sa­tion was paid to the dis­placed farm­ers whose land was con­fis­cated.

Some se­nior Thai busi­ness­men were also re­luc­tant to back the govern­ment’s com­mit­ment to Dawei, ar­gu­ing that be­cause of the ter­rain and the ab­sence of a last­ing peace pact – the rebel group in the area, the Karen Na­tional Union signed the Na­tional Cease­fire Agree­ment in 2015 – but the peace process re­mains pre­car­i­ously bal­anced, with no guar­an­tee that fresh fight­ing wont erupt in the area.

But for the coun­tries in the re­gion – des­per­ately work­ing on in­ter­re­gional in­ter­con­nec­tiv­ity – the prospect of an­other ser­vice­able deep-sea port along Myan­mar’s western coast­line is very at­trac­tive. They are ea­gerly ey­ing the trans­port ben­e­fits that the ports at Dawei, Mawlamyine, Yan­gon and Kyauk Phyu will of­fer: es­pe­cially China and Thai­land.


The Dawei SEZ is set to steam ahead. Af­ter be­ing stalled, the Thai-Myan­mar project has been re­vived as a re­sult of in­tense dis­cus­sions be­tween the Thai and Myan­mar au­thor­i­ties.


Above left: Thein Bo Sik fish­ing vil­lage is 20 kilo­me­tres from down­town Dawei. Ev­ery day, fish is brought up from boats and taken to the beach for auc­tion from early morn­ing, around 4-7am. This demon­strates the rich­ness of the area’s marine re­sources. Above: Map show­ing Dawei's strate­gic place­ment in re­la­tion to Thai­land and the east-west cor­ri­dor.

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