On Cusp of FDI Boom, Mon State Still Struggling to Lure Investors: Lawmaker

By Lawi Weng 17 September 2013

Investors are showing interest in Mon State, but concerns about the quality of local governance and the region’s not-so-distant history of ethnic conflict may be holding foreign businesses back, according to a lawmaker from the Mon State Parliament.

Aung Naing Oo told The Irrawaddy that a culture of state-level corruption remains entrenched in Mon State despite the political and economic reforms that have swept Burma in the last two-and-a-half years. That, combined with weak rule of law, has left prospective foreign investors hesitant to commit to the state in southern Burma.

The ethnic Mon lawmaker said many companies’ representatives had visited his state, but concrete investments had yet to materialize.

Though a breakthrough ceasefire was signed between the central government and the Mon National Liberation Army in 2012, a long-term political solution to the ethnic conflict has yet to be reached.

The region’s economic prospects and trade potential are significant. Moulmein, the capital of Mon State, has border links to Thailand through Karen State, and plans have been drawn up for a deep-sea port and special economic zone (SEZ) in Dawei Township.

“We ever welcome foreign investment in our region. This will go toward the development of our area. But I have found that most foreign investors want to see rule of law, peace and security in the region, to have protection for their investment from the government,” Aung Naing Oo said, adding that Mon State’s natural resources endowment was also drawing interest.

Foreign firms considering investments in the region are keen to see connectivity boosted by the planned Dawei deep-sea port, which has struggled to secure investment despite the Thai government’s backing and the port’s potential to serve as a new hub of international trade in Southeast Asia.

Various foreign investors have paid visits to Mon State since the ceasefire was inked, with the Thais and South Koreans showing particular interest. Offers to rebuild a road between the townships of Thanbyuzayat and Dawei, and proposals for golf courses, an airport and other tourism-related infrastructure have all been proffered.

The Nation, a Thai English-language newspaper, reported on Saturday that 10 Thai firms were eyeing investments in Mon State. The report said one of them, Imac Assets, had already put money on the table in Moulmein after winning a 60-year concession from the state to develop property and industrial estates.

The company is seeking to take advantage of incentives offered by the Myanmar Investment Commission to develop industrial zones there. If approved, it will be granted a corporate income tax holiday for five to eight years. Duties on machinery imported to develop industrial zones in two locations will also be waived.

The company expects that it will need to invest at least 4 billion baht (US$126 million) on developing the smaller of the two zones, and is still calculating an estimate for the larger plot.

The state government recently enlisted a private Burmese company to construct a 230-megawatt power plant in the Mon State capital, in a bid to assure a 24-hour electricity supply and in the process make the city more attractive to prospective investors, according to Kaung Sein, managing director at the Moulmein-based Mon Thanakorn Company.

In line with Aung Naing Oo’s observations, Kaung Sein said that despite the many foreign investors visiting the region, few had signed Memoranda of Understanding yet.

“We found here that there are only two companies that have signed MoUs with the state government. More companies have explored the region, but I heard that one Korean company, which proposed building a road from Thanbyuzayat Township to Dawei, they got a concession from Naypyidaw already. They only need to sign an MoU with the state government for the project,” Kaung Sein said.

Meanwhile, Siam Cement Group (SCG) and the Zay Kabar Company have won separate contracts from the Burmese government for cement-producing ventures in Mon State. Zay Kabar has faced allegations of unlawfully confiscating significant tracts of local residents’ lands for its cement project in Kyaikmayaw Township.

SCG, meanwhile, plans to build a cement plant in Moulmein, to be completed in mid-2016. In a statement on its website, the company said it would invest 12.4 billion baht in a facility that will include a 40-megawatt power plant for internal use, supporting port facilities and other infrastructure.

Last month, Thailand’s Emerald Grand Hotel Co signed an MoU with the Ministry of Transport’s Port Authority in Naypyidaw to undertake a feasibility study for another deep-sea port on Kalargote Island, which lies between the Mon townships of Ye and Moulmein.