Japan Awakes to Revamped Dawei
By Simon Roughneen 25 November 2013
RANGOON — After last week’s takeover of the proposed Dawei port and economic zone project by the Burma and Thai governments, Japan’s government and private sector are taking a renewed interest in the project after previously appearing lukewarm to the proposition.
“Dawei Special Economic Zone [SEZ] is a very important project for the region,” said Tadashi Maeda, managing executive officer of Japan Bank for International Co-operation (JBIC), a state-owned bank, speaking at a Rangoon business seminar staged by Japanese media company Nikkei.
Bangkok-based Italian-Thai Development (ITD) signed a deal in November 2010 to develop the Dawei SEZ, but in the years since has not managed to convince investors to back the building work needed to realize the port and adjacent facilities—a failure that prompted last week’s bilateral takeover by Bangkok and Naypyidaw.
To date, Japan’s government and business giants have shown greater interest in another of Burma’s work-in-progress economic zones. Thilawa, a half-hour drive southeast of Rangoon, was visited by Japan’s Prime Minister Shinzo Abe in May and more recently a Japanese-Burmese joint venture was signed to develop the 6,000-acre project.
But now Japanese attitudes to the two SEZs could well be merging. Speaking on Friday, JBIC’s Maeda acknowledged that Dawei, which if completed will feature a 100-square-mile industrial zone, “is a much bigger project than Thilawa,” and described the development as potentially key to the proposed Asean Economic Community (AEC). That regional trade grouping is scheduled to be set up in 2015, the year after Burma chairs Asean, or the Association of Southeast Asian Nations, for the first time.
Backdropped by big-screen PowerPoints showing future infrastructure and trade links cutting through Burma, Thailand, southwest China and across to Vietnam, Maeda said “Myanmar is the chair of Asean for 2014 and we expect that the Thein Sein government will keep this momentum,” discussing the proposed AEC.
Dawei’s proposed US$8 billion port and adjoining industrial zone will, if realized, be linked by a new highway running through Burma’s south to Bangkok, where the Thai government hopes to build pricy high-speed rail links connecting the Thai capital to China and Malaysia. If all goes according to plan, the SEZ would allow maritime trade to bypass the Malacca Strait, the world’s busiest shipping lane.
In tune with the Tokyo government, Japan’s business community is taking note of the revived Dawei project, it seems.
As well as winning a tender to upgrade the airport in Mandalay, Burma’s old capital and second biggest city, Mitsubishi is one of three Japanese corporate giants that recently formed a partnership with nine Burmese public companies to develop the smaller industrial zone at Thilawa.
But on Friday, one day after the Burmese and Thai governments made official their anticipated sidelining of ITD, Mitsubishi announced that it would team up with the Electricity Generating Authority of Thailand, the main state power body in Burma’s neighbor, to build a new, mainly fossil-fueled power station at Dawei.
The power plant project will involve ITD and will be operational by 2015, Mitsubishi hopes, and will eventually generate 7 million kilowatts of power, 30 percent of which will be exported to Thailand. Questions over ITD’s management of the Dawei concession emerged when a previous plan to build a power plant for the SEZ was dumped by the Burma government, apparently over environmental concerns.
Mitsubishi’s Asia and Oceania CEO Toru Moriyama said the Dawei project could boost commerce and trade links in mainland Southeast Asia, where Japanese companies have long had operations.
“If greater connectivity can be developed in the Mekong sub-region, Myanmar’s comparative advantage can be enhanced,” Moriyama said, discussing Dawei.
Investors will be key, however, to funding construction of Dawei. The likes of Max Myanmar, run by sanctioned tycoon Zaw Zaw and a regular grantee of big construction projects in Burma, such as the stadia for the upcoming Southeast Asian Games, pulled out of the ITD-run Dawei venture.
In the past, the Burma government is said to have paid for construction work by awarding business licenses and import concessions to “crony” companies—with the building of the now eight-year-old capital Naypyidaw rumored to have been paid for this way.
And while the post-2011 government is civilian-run, and there are hopes that Burma’s economy can quadruple in size by 2030, cash for big building projects is unlikely to come from the government anytime soon, meaning overseas backers will be needed.
“Projects such as SEZs require investments,” said Khin San Yee, Burma’s deputy minister for National Planning and Economic Development.
Win Aung, president of Burma’s main business lobby, the Union of Myanmar Federation of Chambers of Commerce and Industry (UMFCCI), talked up the resuscitated Dawei, describing it as “a very strategic location on the southern economic corridor.”
While legislative antiquities such as the 1914 Companies Law remain on the statute books in Burma, Win Aung said that replacement laws are on the way, and that codes relevant to Dawei and Thilawa are imminent. “The new SEZ law will be promulgated in the near future,” he said.
