Conditions Nearly Set for Dawei SEZ Initial Phase to Begin: Govt Committee

By Nan Lwin 23 July 2019

YANGON— The Myanmar government is currently negotiating the conditions precedent (CPs) with the concessionaires for the initial phase of construction work on the Dawei Special Economic Zone (SEZ), a US$8-billion (about 12.16 trillion kyats) project that includes a deep seaport. The strategic project in southern Myanmar’s Tanintharyi Region is set to be Southeast Asia’s largest industrial complex.

According to the concession agreement, both sides need to fulfill all the CPs, or obligations. After they have negotiated the CPs, the government will issue a “notice to proceed”, after which the concessionaires must begin the initial phase of construction.

The Dawei SEZ Management Committee (Dawei SEZ MC) in Naypyitaw told The Irrawaddy, “The last CPs … concern land-lease agreements. We are finalizing them and will send them very soon.”

Under the initial agreement for the long-delayed Dawei SEZ project, Italian-Thai Development PCL (ITD) was granted a 75-year concession to develop and attract investment to the project in 2008. Under that agreement, the project was scheduled for completion in 2015

Financial constraints saw ITD withdraw from the agreement in 2013, but two years later Myanmar and Thailand renegotiated the original agreement to allow ITD and related companies to develop up to 27 square kilometers of the initial phase of infrastructure projects. The concession for the initial phase projects (including an industrial estate and supporting infrastructure such as power plants, a small port, an LNG terminal and other related projects) was officially granted to a consortium led by ITD in August 2015 and March 2016.

A key component of the project is a 196-square-kilometer deep seaport expected be a potential boon for firms currently relying on the transport of goods via the crowded Malacca Strait.

The project includes high-tech industrial zones, information technology zones, export-processing zones, port area zones, transportation zones, service business zones and other infrastructure projects.

The estimated value of the initial phase is over US$1 billion, according to the committee. However, the total estimated cost of the full project is still unknown. The committee did not reveal when the implementation of the initial phase is expected to begin.

The committee said there will be three phases all together. It expects Phase 1 to create about 130,000-290,00 jobs; Phase 2 (expected to be complete by 2040) to create 420,000 jobs; and Phase 3 (expected to be complete by 2050) to create 640,000 jobs.

Japan has an interest in the Dawei SEZ, which lies on its envisioned Southern Economic Corridor, part of Tokyo’s development strategy for the Greater Mekong Subregion. In 2015 Myanmar, Thailand and Japan signed a Memorandum of Incorporation (MOI), which brought Japan into Dawei SEZ Development Company Limited (SPV) as a third shareholder. The shareholders are Thailand’s Neighboring Countries Economic Development Cooperation Agency (NEDA), Myanmar’s Foreign Economic Relations Department (FERD) and the Japan Bank for International Cooperation (JBIC). The main function of the company is to advise the management committee on the comprehensive development of the SEZ.

The committee said the Japan International Cooperation Agency (JICA) was conducting a fact-finding study based on NEDA’s existing master plan to ensure it is in conformity with changing political, economic and social conditions.

The committee said the Myanmar government is still facilitating negotiations between the three countries for the development of the full project.

However, based on NEDA’s master plan and JICA’s study, the Myanmar government will consider the further development of the full SEZ, the committee said.

Last week JICA submitted the full draft of its final report, according to the committee.

On Saturday, Union Commerce Minister U Than Myint told the media that the Myanmar government is making an effort to begin implementation of the project during its current term. But Myanmar has yet to decide on the development strategy for the full SEZ.

Part of the Dawei SEZ project involves upgrading a two-lane highway connecting Dawei with Thailand. The Union Parliament approved in March last year a 4.5-billion-baht (approximately US$137 million or 220.5 billion kyats) low-interest loan from NEDA for the project.

In November, the Construction Ministry inked a Record of Discussion (ROD) agreement, which will allow NEDA to conduct survey and design work in preparation for upgrading the two-lane highway.  The route will connect the border crossing point at Htee Kee to the SEZ via Myittar to assist in the transportation of raw materials needed to complete the Dawei SEZ construction projects.

The Dawei SEZ MC told The Irrawaddy that a technical team has been assigned to review the road’s design, slope and safety from technical, environmental and social perspectives. The review team is expected to take about eight months to complete the report, which is due to be submitted in September.

“After that, there will be loan agreement discussions between the Myanmar government and NEDA. Then, the construction tender process will be launched for road construction,” the committee said.

In its report titled “Nature in Peril: The risk to forests and wildlife from the Dawei-Htee Khee Road”, the World Wildlife Fund last week said the road project could endanger flora and fauna along the stretch running through the vast forests of the Dawna Tenasserim Landscape (DTL), which spans the mountains on the Thai-Myanmar border.

The report said the DTL is one of the most intact natural landscapes in the entire Greater Mekong region and a stronghold for tigers, elephants and other endangered wildlife. It is also home to 168

species of mammal, 568 species of bird, and thousands of reptile, amphibian, insect, fish and plant species. The Ministry of Natural Resources and Environmental Conservation (MNREC) approved the project’s environmental and social impact assessment (ESIA) with some recommendations in May last year, but WWF said the assessment fails to address key challenges, such as the loss of habitat connectivity for threatened species, and an increase in deforestation and illegal hunting.

Nonetheless, Thailand’s consultant teams have already held a public consultation meeting in Dawei, the capital city of Tanintharyi Region, the committee said.

“We will follow the guidelines of the MNREC as well as other international agencies,” the MC said.

Since ITD started planning the project, there has been resistance from local residents due to the feared social and environmental impacts. The SEZ has affected livelihoods in 20-36 villages, in which 22,000 to 43,000 people reside, according to a 2014 report by the Dawei Development Association.

The committee said, “We regularly meet with the local people to explain the progress of the project and to listen to their voices. Now we are proceeding with international standards and practices.”

It added: “Our government’s vision is perfectly clear. We [try to] establish SEZs with the objectives of poverty reduction, job creation and income generation, regional economic development as well as national economic development.”

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