The Irrawaddy

In Dawei, ITD Projects Suspended, Not Terminated: Minister

A construction site for the Dawei deep-sea port project in southern Burma. (Photo: The Irrawaddy)

Rangoon — The Italian-Thai Development Pcl (ITD) will continue to oversee projects it launched before Burma and Thailand seized control of the multi-billion dollar Dawei Special Economic Zone (SEZ) last month, but foreign investors will be invited to bid for future development work, Burma ministry officials say.

Burma Labor Minister Aye Myint, who chairs the Dawei SEZ working committee, has denied that ITD was completely pulled from development of the strategically located complex, which is expected to operate as a deep-sea port, petrochemical and heavy industry hub in southeastern Burma.

“They can keep working if they want, but they will have to compete with other international investors,” he told reporters at a press conference on Monday.

“Many people said they were concerned that Thai businesses would exert too much influence over the SEZ, and that Burma would be a loser,” he added. “But they are wrong. The management committee by the Burma government is the most powerful.”

In mid-November, Set Aung, deputy governor of Burma’s Central Bank, reportedly told Thai and Burmese officials in Bangkok that ITD, Thailand’s largest construction group, had lost its 75-year concession to lead the Dawei SEZ.

Set Aung said during the meeting that an international firm would carry out due diligence on work that ITD had already started, according to Reuters. He reportedly said the goal was to allow other foreign investors to come on board.

ITD has been blamed in the past for failing to secure enough private investment for Dawei.

“The project is quite extensive, and ITD could not invest everything,” Han Sein, Burma’s deputy minister of transport and chairman of the Dawei SEZ management committee, told reporters Monday. “In this economic zone, there needs to be a lot of investors.”

He said ITD had been required to temporarily halt activities during a due diligence assessment by international auditors, to ensure that the projects adhere to international standards.

The assessment is expected to be completed before April 2014.

Officials on Monday said Burma would seek Japanese and Thai investment “as quickly as possible” for the revised plan for the first stage of the Dawei zone, which includes construction of small ports and access roads, a water supply system and a small gas-fired power plant.

On Nov. 21, the Burma and Thai governments formed a joint high-level committee to reach out to potential international investors, Han Sein said. He said both governments were organizing two public companies to sell shares in the Thai market and eventually in a Burmese market.

International auditing companies Ernst & Young, PricewaterhouseCoopers (PWC) and Deloitte have been asked to submit proposals to conduct the due diligence assessment, Set Aung said, adding that the Thai and Burma governments would select one firm for the job.

“The auditing firms will assess how much ITD spent in this SEZ,” he added.

Last month ITD reportedly said it had invested around 6 billion baht (US$189 million) in Dawei and expected full reimbursement plus interest.

The special economic zone was originally slated to cover about 205 square kilometers but has since been reduced to 196 kilometers. In the revised plan, six villages will be relocated for the project, as opposed to 16 villages in the original plan.

Residents who have lost over 6,000 acres of land around the zone have already received compensation worth 33 billion kyats (US$33 million), according to Phone Swe, deputy minister for social welfare, relief and resettlement.

“We will need to provide 340 billion kyats in compensation to villagers, as we expected, and at this point about 33 billion kyats has already been paid by ITD,” he said.

He added that amid the suspension of ITD projects in Dawei, Thai workers had been sent back to Thailand and Burmese workers had also found themselves without employment.

“Some sub-companies in the SEZ have already quit, so Burmese workers are facing job problems now. I’m talking with the Tanintharyi Region [Tenasserim Division] government to see how we can help them,” he said.