January 25, 2012
BANGKOK: The clay model of Myanmar’s ambitious Dawei deep-sea port and special economic zone sprawls across a long table on the 43rd floor of the headquarters of Italian-Thai Development Pcl. Glossy posters hail it as the “new global gateway of Indochina”.
But moving ahead with the first phase of the project is proving slow, despite the dramatic reforms sweeping Myanmar and the gradual lifting in Western sanctions as the former British colony emerges from half a century of isolation – a prospect underlined on Monday by plans by the European Union to ease some punitive measures.
In a rare interview, a senior executive at Italian-Thai Development outlined the company’s far-reaching plans for a project that would transform the wild scrubland of southern Myanmar into South-East Asia’s largest industrial complex.
In a country where a third of its 60 million people live on less than one US dollar a day, Dawei is striking in its ambition.
A sign showing the road leading to Thailand is seen near Dawei in southern Myanmar, close to the site of a planned special economic zone and deep-sea port. — Reuters
Super-highways, steel mills, power plants, shipyards, refineries, pulp and paper mills and a petrochemical complex are part of the US$50bil project, as are two golf courses and a holiday resort – all strategically nestled between rising powers India, China and South-East Asia with a port on the Andaman Sea.
The company hopes to secure US$8.5bil by year-end to finance infrastructure and utilities under the first phase of the project, and is confident it will find partners, but it also acknowledges that convincing investors remains tough, particularly given Myanmar’s low level of infrastructure, visa restrictions and urgent need for currency reforms.
Somchet Thinaphong, managing director of Dawei Development Co Ltd, controlled by Italian-Thai Development, told Reuters the first phase of construction – roads, a telecoms network, utilities and a port – would be completed within three-and-a-half years, along with a power plant, but it remains unclear what energy source the plant would use.
Myanmar’s government abruptly halted construction of a 4,000-MW coal-fired power plant on Jan 10, citing environmental concerns.
Somchet said its power plant partner, Ratchaburi Electricity Generating Holding Pcl, would decide on fuel type within three months, including the possibility of using natural gas funnelled to the site on a 50km pipeline from fields within Myanmar.
“We think this project is visionary. It is a door that is opening Myanmar. At the same time, Myanmar has to open this door,” he said.
As Myanmar embarks on its most dramatic political changes since a 1962 military coup in what was then Burma, mega-projects like the 250 sq km Dawei Special Economic Zone hint at a rapid acceleration in both investment and development.
But Somchet also illustrated some of the challenges that vex investors in Myanmar.
While they have completed construction of a road that will link Dawei to Bangkok 250 km to the east, the border is not fully open due to disputes between Myanmar and Thailand over its exact demarcation. Construction of the highway was delayed last year by ethnic Karen rebels who have since signed a preliminary peace deal with the government.
Customs facilities still need to be built.
Somchet is confident all that will be resolved. And while the road on the Myanmar side is not yet paved, he expects that, too, to be completed in about three years, creating a stable route for transport cargo that has been sent to Dawei from the Middle East and Africa for shipping to Bangkok and beyond in South-East Asia, bypassing the lengthy and congested Straits of Malacca.
Italian-Thai Development was looking for partners for the various parts of the project and the main ones were likely to come from China, Japan and South Korea, he said.
Italian-Thai Development hopes Dawei could be a location for Japanese firms to build parts to be used at car manufacturing plants in neighbouring Thailand, among other uses.
An investment roadshow in South Korea is scheduled for late February.
Photo Credit: Reuters