Chinese firms seek part in Dawei SEZ

Economy March 07, 2016 01:00


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ITALIAN-THAI Development (ITD) is forming a consortium with Chinese companies to pour investment into new infrastructure projects in Dawei Special Economic Zone (DSEZ), as land lease in the initial phase kicks off.

According to Somjetn Tinnapong, managing director of Myanmar Industrial Estate (MIE) – an ITD subsidiary responsible for the development of the 27-square kilometre initial phase – the consortium will consist of private and state-owned Chinese companies. Their focus will be on the 132-kilometre, four-lane road, which will require an investment of Bt13.5 billion and three ports that will cost US$400 million (Bt14 billion).
“What was planned earlier has been altered under the new paradigm,” he said, adding that ITD president Premchai Karnasutra led the delegation to Nay Pyi Taw last week to meet the Dawei Special Economic Zone management committee.
He said the Chinese companies include King Trillion and China Railway Engineering Corp (CREC), a key player in China’s ambitious One Belt One Road project.
The four-lane road connecting Thailand’s Kanchanaburi and Dawei is considered a must to materialise the DSEZ, which is 374km from Yangon. Dawei is at one end of the East-West Economic Corridor, linking Myanmar in the West to Vietnam in the East.
Somjetn did admit that this would depend on the political winds in Myanmar. 
U Han Sein, Myanmar’s deputy transport minister, now sits as chairman of DSEZ Committee. The new government takes office on April 1.
It remains uncertain if the consortium would get the green light from the committee, also because this project was supposed to involve only Thailand, Myanmar and Japan. Japan Investment Coopeation Agency’s survey team was in Dawei in September and October to explore the possibility of the four-lane road. It is expected to greatly boost Dawei’s development potential, on top of a two-lane road, which is under construction as part of the special economic zone’s initial phase.
The consortium of ITD, Rojana Industrial Park and LNG Plus was given the green light last August to kick off the development of the initial phase, part of the 204sq km project, after Japan agreed to join hands with the Thailand and Myanmar governments to set up the special purpose vehicle to develop the project.
Somjetn unveiled that the industrial land in the initial phase is now ready for booking. A Thai seafood company belonging to the Aimimjit family is the first to sign the lease contract to buy approximately 10 rai, costing about Bt30 million. The leasing period is 50 years, extendable to 75 years.
“It’s a must that first buyers be Thais. This will help us better understand potential problems. What matters now is Myanmar’s readiness in servicing investors in the industrial estate. Plus, we expect them to draw those in the supply chain.”
A one-stop service centre will be set up soon in the initial phase, to accommodate investors who will be entitled to tax privileges that include a seven-year tax exemption for those exporting over 75 per cent of output. According to Somjetn, MIE stands ready to work with Thai clients to smooth things out, before making next moves to draw investors from other countries.
Somjetn is optimistic about the potential of DSEZ given the abundant resources in Myanmar. As a plus, seafood and textile exports from Myanmar to the European Union are also entitled to the generalised system of privileges (GSP). “We are targeting at least 10 upstream companies within this year,” he said.
Other targets are Japanese companies, which naturally operate with a long value chain, as well as soybean-based vegetable oil companies from Brazil. MIE is also set to approach LPG packaging companies. MIE aims to annually sell 1,500-2,000 rai of the 17,000-rai plot, said Somjetn.
He noted that the site has been visited frequently by potential investors. However, they were avoiding signing contracts now, pending completion of infrastructure as well as a clearer picture of Myanmar’s servicing capacity.
MIE is committed to complete nine infrastructure items in the initial phase by the year-end. The first of nine five-floor workforce apartments is nearing completion. A port, where vessels with maximum capacity of 13,000DWT can dock, is ready. The 15-megawatt power plant is up and running and its capacity can be expanded to 35MW.