The Dawei Special Economic Zone is set to steam ahead.
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.