Business

Ahead of Elections, Thilawa Pitched as Jobs Booster

By Simon Roughneen 26 November 2013

RANGOON — Officials hope that the soon-to-start “Special Economic Zone” at Thilawa near Burma’s commercial capital Rangoon will underpin a jobs boom in time for the country’s 2015 elections.

Building work at the 6,000-acre Thilawa SEZ will begin soon, according to Set Aung, deputy governor of Burma’s Central Bank. Set Aung told The Irrawaddy that “we hope that construction will be finished by 2015 and that commercial operations at Thilawa will have commenced by then.”

If so, there could be jobs for voters in time for the 2015 elections, which will likely take place in late 2015 and will see the ruling Union Solidarity and Development Party (USDP) face-off against the now-unshackled National League for Democracy (NLD), the party led by former dissident Aung San Suu Kyi.

Win Aung, president of the Union of Myanmar Federation of Chambers of Commerce and Industry (UMFCCI), predicts that the first phase of the Thilawa SEZ will see garment, furniture and car manufacturing factories established—bringing tens of thousands of new jobs for some of Burma’s estimated 37 percent unemployed.

“These will be part of the first of three phases of development at Thilawa,” he told a group of Japanese business representatives in Rangoon last week.

Job creation, say officials, is now a key aspect of the government’s economic policy, after decades of military rule that saw labor-light and often exploitative investment in Burma’s natural resources, such as oil and gas, while job-heavy sectors such as garment-making were hobbled by Western sanctions.

Khin San Yee, deputy minister of national planning and economic development, said that Burma “is focusing on the promotion of labor-intensive investment and industry.”

With jobs said to be the key first-up economic priority for the government, a longer-term industrial development plan is being nailed down, it seems, following on from the government’s publication of a Framework for Economic and Social Reforms (FESR), a long-term policy document, in early 2013.

“After that we will focus on value-added industries and, looking forward to 2030, more heavy industry and hi-tech,” the deputy minister said.

But given Thilawa’s proximity to Rangoon, where around 10 percent of Burma’s population lives, investments in heavy industry are unlikely to get the go-ahead. “Due to the nature and location of the project, so close to Yangon [Rangoon], we are not expecting petrochemicals or heavy industry there,” Set Aung told The Irrawaddy.

Foreign investment into Burma increased from US$1.9 billion in 2011-12 to $2.7 billion in 2012-13, according to the World Bank, which predicts economic growth of 6.8 percent for the current fiscal year ending March 2014.

But building on that momentum will not be easy, officials acknowledge, citing Burma’s poor infrastructure, high costs and low education standards. Thilawa will have its own 50-megawatt power plant, insulating businesses that set up in the SEZ from Burma’s wider electricity shortages. “Thilawa will also benefit from planned upgrades to the existing power plant system in Yangon,” said Set Aung.

Burma has typically been listed near the bottom of most world graft indices, and officials acknowledge that this will have to change if Burma’s economy is to prosper. “We cannot shy away from the problems we have,” said Aung Tun Thet, an advisor to President Thein Sein. “Corruption is a major issue for us,” he conceded.

Another inhibiting factor, said Serge Pun, head of Yoma Strategic Holdings, Burma’s only listed company, is exorbitant, speculation-driven land prices, which deter potential factory builders and in turn mean that there are less jobs available than might otherwise be the case.

“Thilawa intends to solve that problem by providing affordable land to serious investors,” said Pun, who predicted that “this will in turn provide job opportunities.”

The Thilawa SEZ, one of Burma’s three proposed economic zones, has run into controversy, however, with allegations of land grabs and insufficient compensation by farmers in the area. “We have relocated 80 households to a place near the project area,” said Set Aung.

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