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‘Success story’ Thilawa SEZ set to launch its second phase

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MORE THAN three years after the start of the Japan-backed Thilawa special economic zone, Myanmar launched the development of its second zone in the presence of dignitaries from both nations including Vice President Henry Van Thio.

Set Aung, deputy governor of the Central Bank and chairman of the Thilawa SEZ Management Committee, said that the existing 405 hectare (2531 rai) of zone A would be supplemented by the first phase of the new zone, expanding 101 hectares to the south.
He believes that the SEZ’s success has led to the expansion, given the arising interest from foreign investors. To date, the total investment in Thilawa SEZ has reached US$1.05 billion (Bt36.6 billion), as 78 firms from 16 nations have opted to locate their factories, production or logistics facilities there. According to Set Aung, 24 of them have started operations, and 77 per cent of the labour employed are from nearby townships (Thanlyin and Kyauk Tan) and had not completed basic education.
He said that nearly half of the production in the SEZ went to domestic consumption, while the remaining products were exported to other countries. 
“Some companies directly export to end markets such as the United States and Japan. Some semi-finish products here and export to the countries where production will be finalised, for example electronic goods,” he said.
“Thilawa’s appeal to investors has already made it the busiest industrial area of its kind in Asean. Zone B will open an exciting new chapter in this great success story of Myanmar,” he added.
Located just 23 kilometres to the southeast of the nation’s commercial hub Yangon, the SEZ offers the best infrastructure, the most efficient government procedures and the highest practices in pollution control. As a result, 95 per cent of zone A has been occupied, according to its developer, Myanmar Japan Thilawa Development Ltd.
Set Aung said that some land of zone B would be available for leasing to investors by late 2017, and the first phase would be fully completed in mid-2018. He did not reveal the projection about paid-up capital to be brought in by investors. 
“We will not measure our success in terms of the total investment value. Instead, we will be proud if we can bring positive impacts to the local community as well as the national economy,” he said.
Set Aung is confident that the SEZ will create approximately 40,000 jobs for locals, once the implementation of zone B is completed.
“In zone B we will prioritise labour-intensive, export-oriented investors and foreign businesses that have a lot of room for cooperation with local ones outside of the SEZ,” he said.
He hinted that manufacturing firms that produce value-added products will be given priority to invest in the new zone. 
“Some companies may be capital-intensive, but some may not. For example, some labour-intensive companies may not bring much paid-up capital but if they can employ a large number of local people in their facilities, we will let them in,” he said.
As in the first, zone B will offer tax exemptions to all investors in two main categories. An investor needs to export at least 75 per cent of what they produce in value to be registered as a free-zone investor eligible to enjoy a seven-year tax holiday. Manufacturers focusing on the domestic market are in the promotion zone and are eligible for a five-year tax holiday. Both free zone and non-free zone investors will get a 50 per cent exemption on corporate tax for 10 years.
In an effort to ensure a commitment for 24-hour electricity, a 50-mega-watts power plant was recently built by Yangon Electricity Supply Corpora-tion. The power demand will be supplied by fuel gas turbines while diesel can also be used in case of an emergency. Pipelines to supply gas to the power plant were completed last year.
“When zone B is fully occupied, the existing power infrastructure will not be enough to supply the whole SEZ. So we are now planning for additional power options to cater to the need of our investors at such time,” said Set Aung.
The zone chief appreciates the role of the local community in the development. Two villages, namely Shwe Pyauk and Aye Mya Thida, need to be relocated once construction of zone B starts. Yet, most of the villagers are happy with the compensation and resettlement plan set by the regional government.
“These villages proactively offered their lands for the zone B project because they wanted to contributed to their motherland’s development,” he said.
He added that the resettlement structures were in line with the standards of the Japan International Cooperation Agency, and the income restoration programme for those who moved to another place was being conducted by the regional government. 
At Friday’s launch event, Masayuki Hyodo, managing executive officer of Sumitomo Corporation, urged to double backers’ efforts, as Myanmar faces severe competition from neighbouring countries in attracting foreign investment. 
He warned that growing protectionist sentiment in Myanmar could bring additional challenges for foreign direct investment inflows.

 

Published : February 26, 2017

By : KHINE KYAW MYANMAR ELEVEN ASIA NEWS NETWORK YANGON

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