Karen State, 283 kilometers southeast of Yangon, has been devastated by years of fighting between ethnic Karen armed groups and the government army. Peace was restored to the region in 2012. The state is home to more than 1.5 million people and relies mainly on border trade with neighboring Thailand. But only two foreign companies, employing about 880 people, have started up since the end of the Thein Sein administration in 2010.
The National League for Democracy (NLD) government has been in power for almost two years, but economic growth in the state remains slow. To attract foreign investment, the state government is attempting to address power shortages by building a coal-fired power plant. The Irrawaddy interviewed Nan Khin Htwe Myint, chief minister of Karen State, at her office over the weekend about her commitment to economic reform. “Don’t even think about development without electricity,” she said.
The NLD government has been in power for two years. What significant improvements have there been since you took office?
We have precise policies for the transportation, electricity and agriculture sectors. To deal with our state’s electricity requirements pragmatically, we want a coal-fired plant to provide power quickly and are still contacting [companies] to set up hydropower projects as a long-term solution for electrification. Some interested investors have also come to observe the situation on the ground.
I think the state government can implement [the project] in early 2018 because we have completed 90 percent of the paperwork and are just awaiting a final decision from the Union government.
When will you start work on your first project?
The coal-fired plant will start in early 2018.
Will the plant be able to power the entire state?
It can supply the whole state, all seven townships.
Which sector provides the state with the most revenue, for example agriculture or trade?
At the moment we basically export about $80,000 [worth of goods] to Thailand and import nearly $2 million every day. We have only three, maximum five, types of products for export to Thailand, but the traders import about 45 to 50 [types of] products.
If I am not wrong, we earned 300 million kyats [about $220,000] in revenue last year. The agriculture sector is not very satisfied with us, so I can say border trade is the main source of income for the state.
Do you have any plans for the state’s economic reform?
I think we can transform seven townships if we really have electricity in the coming years. For example, the Myawaddy, Kwakareik and Hpa-An regions could be designated economic zones. Thandaung and some regions of Hpapun are dominated by agriculture. So we want to improve the agriculture sector, for example by cultivating coffee that grows like a tree and bamboo plantation as well. We can lease land to interested companies in the forest and on vacant land.
I do believe that if we can overcome the region’s power shortage then factories and industrial zones will arrive automatically, and I hope they can offer lots of jobs to locals, especially those who are working abroad. But the Kyain Seik Gyi region still needs to remove landmine if we are keen to expend the agriculture sector there.
What are the main challenges facing your state government at the moment?
One of the major challenges is simply manipulation of uneducated people. For instance, most locals have no idea about coal-fired plants. They would agree with the government’s plans to carry it out, but a group of people is purportedly undermining our ambitions, probably for political reasons and business interest, probably companies from the neighboring country who sell electricity to our state, and also maybe some political parties that want to disrupt our success. It has become a big obstacle for us at the moment.
What type of coal is the plant going to burn? Will it be lignite or something else?
I don’t know about technical issues as I mainly focus on policy guidelines. I think the relevant ministries can explain the specifics. As far as I know, our state possesses lignite coal.
Where is that coal located?
There are at least three coal-rich sites in our state. We can get coal in the Kyauk Khet region of Myawaddy Township, Hpa Pun and Kyain Seik Gye. But the rest of them are not legally approved for mining projects as the regions were [restricted] for years. Peace has been restored to those regions now, so we can legally allow mining projects. The explosive power of Karen State’s coal is much higher than that of Shan coal. Certainly there is sufficient lignite for the company in the state, but the company will import from abroad, maybe from Indonesia.
Does that mean the government would allow coal mining in those regions?
Of course we must allow it because we have coal resource in the state. It will be very helpful for Karen State. If the price and quality of imported coal and domestic coal are the same, then we prefer to use the local product.
Have experts told you about the advantages and disadvantages of generating electricity from coal?
We studied [coal plants] ourselves instead of consulting with experts because we observed them with our own eyes [referring a visit to the Tijit coal plant]. We must have a business perspective if we want economic growth. It’s impossible to have economic development without electricity.
Coal is a quick path to bringing economic growth to the state if we can sell the electricity to others. And we can get a share of the revenue from it when our state becomes a federal state; as you know, ethnic people are demanding democratic federal union.
Has the Toyo Thai Power company explained the potential advantages and disadvantages of the clean coal technology that will be used at the plant?
From what I have learned about clean coal technology, it cannot prevent harm to the environment 100 percent. Any kind of project has negative impacts on our environment. But we have to understand that our country has done worse things before this clean coal project.
Can you give some examples of the worst cases?
For example, the cement factory that currently operates in Karen State; it produces 900 tons of cement but emits a lot of carbon because it uses limestone. A new cement factory — capacitive 4,000 tons — can pollute too, but it’s not much if we compare it with the old one because it uses the latest technology.
We went to see the Tijit coal-fired plant in Shan State and it had been upgraded in recent years. We learned that the situation in Shan is better even though the coal plant is not applying the latest technology. We will try to have a clean-coal plant and have already instructed the company to meet Japan’s standards on clean coal. And we will also allow interested experts to check the quality of the coal plant if there are any accusations about the plant in the future.
The previous government was planning to build the Hatgyi hydropower project on the Salween River but delayed it for several reasons. What is the status of that project now?
That place is located in an area controlled by the Karen National Union Brigade No. 5, and we haven’t reached an agreement regarding the hydro project. It seems they are not willing to do it even though they have signed off on the Nationwide Ceasefire Agreement (NCA) with the government. Because the issue is controversial I don’t want to go into details. We are looking for some areas for hydropower projects that are located in peaceful regions and have found four or five places. They are studying the details. But we can’t get many megawatts from them; they might be 15-20 megawatt mini-hydro projects.
What is the situation of foreign direct investment in Karen State and which country dominates in that sector?
China and Thailand are the main investors here. Mostly they are interested in investing in electrification projects such as hydropower, coal-fired plants, solar panels and wind turbines. But very few companies have come to inquire about wind turbine projects. Solar power projects do not meet our requirements because sunlight is available for only seven months a year. If they distribute electricity in practice, one unit could cost around 400 kyats. So it was canceled. On the other hand, foreign companies are not interested in investing in small-scale megawatt projects, such as 30 or 40 [megawatts]. So we have only a big [coal plant project] with Japan. You know the Japan International Corporation Agency (JICA) and Nippon Foundation helped us a lot with the peace process; they even provided structures for displaced people.
The Hong Kong-owned Fulltex Sweater factory currently operates with 800 employees in our state. That’s the only big foreign company here. Another one, an underwear company, is from Thailand; it has only 80 workers. We have some small businesses like candle and concrete blocks producers. Nothing special here; that’s it.