Japan invests in Dawei

Economy December 15, 2015 01:00

By Erich Parpart

The Nation

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The multibillion-dollar Dawei special economic zone (SEZ) and related projects will go ahead at full scale after Japan yesterday agreed to take a one-third equity stake in the associated special purpose vehicle (SPV) jointly set up by Myanmar and Thailand



 

The deal was struck at the fifth Myanmar-Thailand Joint High-Level Committee Meeting that was attended by top officials from all three countries.

Japan’s equity holding will be equal to Myanmar’s and Thailand’s.

The SPV currently has maximum registered capital of Bt100 million.

Thai Deputy Prime Minister Somkid Jatusripitak said the Myanmar government had given top priority to the Dawei project since it would not only help Myanmar’s economic expansion but also contribute to the prosperity of many other countries in the region, including Thailand.

Thailand is currently developing land-transport connectivity along the East-West Economic Corridors linking the country’s Eastern Seaboard with the Dawei deep-sea port and industrial estates.

Previously, Myanmar was not sure if Japan would join the Dawei SEZ, so initial projects were small, such as a two-lane road, a power plant and an industrial park.

"With today’s inclusion of Japan in the SPV, the Dawei projects will go ahead in full scale," Somkid said.

Construction of the first phase of the project will cost an estimated US$1.7 billion (Bt55 billion) and involve a 27-square-kilometre industrial estate and a 138km two-lane road between the SEZ in Myanmar’s Tanintharyi region and the Phunumron checkpoint in Kanchanaburi.

The first phase includes a township for workers, a liquefied-natural-gas terminal, a telecom landline, a power plant, a small port and a reservoir.

Construction is expected to begin in the first quarter of 2016.

The environmental impact assessment, land expropriation, and the third-party inspection processes are on schedule, said Porametee Vimolsiri, secretary-general of Thailand’s National Economic and Social Development Board.

Italian-Thai Development, which got the initial concession for the first phase of the project, is required to finish construction within five years.

ITD’s consultants said there were 78 Thai and foreign companies interested in investing in Dawei.

The full-scale Dawei SEZ will feature a 196-square-kilometre industrial estate, a four-lane road, a railway to the special economic zone, large power plants and a deep-sea port that will be built at an estimated total cost of Bt350 billion to Bt400 billion, said Transport Minister Arkhom Termpittayapaisith.

The Transport Ministry has given top priority to the construction of the 96km Bang Yai-Kanchanaburi motorway, with the four-to-six-lane road budgeted to cost Bt55.6 billion.

Construction is slated to start next year to coincide with the commencement of the Dawei project and the connection of the Eastern Economic Corridor to the Western Corridor.

Japanese representatives have provided recommendations for the Dawei master plan, including the size and routing of the four-lane road.

Further discussions will be held at the next Joint High-Level Committee Meeting in February.

Railroad connectivity will be included in the master plan.

Meanwhile, the Thilawa Special Economic Zone, which is being jointly implemented by Myanmar and Japan, is expected to create about 200,000 jobs when in full operation, according Eleven Myanmar newspaper, citing Myanmar-Japan Thilawa Development Ltd.

Myint Zaw, general manager of Myanmar-Japan Thilawa Development, said: "Zone A of the SEZ is under implementation and can create about 40,000 jobs. The project can create about 200,000 jobs when the 2,400-hectare SEZ project is completed. Zone A employs between 3,000 and 5,000 workers.

"One phase of zone A includes residential and commercial areas. Labourers can stay there. Basic infrastructure for residents will include worker accommodation," he added.

Thilawa is being implemented with a 51-per-cent stake by Myanmar and a 49-per-cent stake from Japan.

A trial run by a radiator company from Japan and the world’s second-largest garment company from China has begun in phase A. A total of 51 companies from 13 countries have invested in the SEZ.