Dawei Special Economic Zone Gets Rolling

The government, through the Dawei Special Economic Zone (SEZ) Management Committee, and a consortium of private developers have signed a concession agreement to develop the initial phase of the long-delayed Dawei SEZ.

The consortium of private developers includes Italian-Thai Development (ITD) Public Co Ltd, Rojana Industrial Park Public Co Ltd and LNG Plus International Co Ltd.

The initial phase of development involves the construction of a small port, power plants, a two-lane road to Thailand, an LNG terminal, an initial township, a telecom landline and an industrial estate focusing on labour-intensive industries.

This marks the beginning of a longer-term plan for the hugely ambitious Dawei SEZ, which has been in quagmire for years as ITD, Thailand’s biggest construction firm, failed to secure the multi-billion-dollar private investment and secure a power source for the complex.

The governments of Thailand and Myanmar seized control of the strategically located complex from ITD in November 2013. In early July, a Memorandum of Intent (MoI) was signed on trilateral collaboration among Myanmar, Thailand and Japan for the development of the project.

U Han Sein, chaiman of Dawei SEZ Management Committee, told Myanmar Business Today, “This agreement is only for the initial phase. Thailand will invest $400 million to build infrastructure in this phase, which doesn’t include factories or the industrial zone. Japan is also set to participate in the project as we kick off the first phase.”

Dawei SEZ is expected to become one of the largest special economic zones in the world, leveraging its strategic position in the centre of Southeast Asia. It also provides access to the Andaman Sea to the west, proximity to Bangkok and Thailand’s Eastern Seaboard and further beyond, to Cambodia and Vietnam.

German strategy consulting firm Roland Berger supported the Myanmar and Thai governments in preparing for the initial phase development, as well as developed the long-term master plan of Dawei SEZ.

While the initial phase will target labour-intensive industries such as textile and garments and food processing, the long-term master plan will attract other industries to Dawei SEZ including automotive, steel, electronics and electric goods, rubber, metals, chemicals, refinery, fertilisers, plastics and pharmaceuticals.

“Eventually, the zone will have a deep seaport as well as a highway to Thailand,” said Damien Dujacquier, partner at Roland Berger. “The aim is to create a regionally-integrated, world-class and export-focused special economic zone.”

He added that Dawei SEZ would be developed in an environmentally and socially sustainable manner, in line with international practices.

“Investors will be attracted by its strategic location, competitive labour costs and import duty exemptions to key export markets such as the European Union. Additionally, an investor-friendly SEZ legal framework, as well as strong growth of the overall Myanmar economy and the abundance of certain local resources will also buoy interest from the business community,” Dujacquier said.

According to Roland Berger, the zone is expected to create hundreds of thousands of jobs in the long-term and contribute up to 5 percent of Myanmar’s GDP by 2045.

However, some local industrialists were sceptical about the project’s success. U Myat Thin Aung, chairman of Hlaing Tharyar Industrial Zone Management Committee, told Myanmar Business Today, “I think local investors will not be interested in Dawei SEZ. The minimum wage in Yangon is K3,600, but Dawei is very close to Thailand so investors will have to pay the labourers according to Thai levels to employ them. The local investors will not be able to afford that. So, the SEZ will depend mostly on foreign investors. Also, the local residents have been protesting against this project for some time. Dawei SEZ project will struggle to reach the height it is billed to reach.”

Last year, a report titled “Voices From the Ground: Concerns Over the Dawei Special Economic Zone and Related Projects” by the Dawei Development Association (DDA), a local civil society network, found that 36 villages with as many as 43,000 residents would be directly affected by the Dawei SEZ and related projects. Seventy-one percent of the households surveyed for the report said they expect to lose all or at least some of their land due to the project.

Source: Myanmar Business Today

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