News / Asia

Burma Turns to Japan, Thailand to Kick-start Stalled Dawei Project

FILE - Dawei Development Company's Managing Director Somjet Thinaphong discusses a model of the economic zone.
FILE - Dawei Development Company's Managing Director Somjet Thinaphong discusses a model of the economic zone.
TEXT SIZE - +
Reuters
— Burma is set to wrest control of its Dawei industrial complex from a Thai company, Italian Thai Development (ITD), over its failure to attract investors to a strategically located, multi-billion dollar project tipped as a game-changer for regional trade.
 
According to two sources involved in the Dawei Special Economic Zone (SEZ), plans have been overhauled to inject foreign capital and expertise to revive what is arguably Southeast Asia's most ambitious industrial zone - a 100 sq mile deep-sea port, petrochemical and heavy industry hub on the slim peninsula separating the Pacific and Indian Oceans.
 
The project's leader, ITD, and firms it had made contracts with, have been told to cease activities at Dawei to undergo due diligence by international auditors to create “better modality”, according to a senior Burmese government official.
 
The review of a project that was for years stuck in a quagmire could be a significant boost to swelling Japanese industrial interests in the region, which include numerous deals with Burma's pro-business, quasi-civilian government and long established automobile and high-tech manufacturing plants in neighboring Thailand, where firms like Honda, Toyota, Canon and Toshiba operate.
 
The planned complex, which will include a steel mill, a refinery and a power plant, will be linked by highway to Bangkok and Thailand's eastern seaboard industrial zone.
 
That will mean Dawei could serve as an industry and trade gateway to Southeast Asia's markets, bypassing the Malacca Straits, the world's busiest shipping lane.
 
Burma would ask for Japanese and Thai government support to appoint companies to carry out a revised plan for the first stage of Dawei. This stage would include the development of a small port and access roads and setting up a water supply system and small gas-fired power plant “as quickly as possible”, the government source said, adding that it had yet to be agreed which firms would be involved.
 
The second stage would involve international tenders for the bigger projects, including the deep-sea port, and the building of a bigger power plant, which could be coal-fired.
 
Junta’s Deal Ditched?
 
It had also yet to be determined what role ITD, Thailand's biggest construction company, would play in a project for which it was granted a 75-year concession under a deal struck in the 1990s with Burma's then military government, which ceded power in 2011.
 
“We're trying to figure out a different model where ITD is going to be involved as well as other investors. We're talking about billions of dollars, how can one company be able to develop all these projects?”, the source asked.
 
A Burmese delegation was due to meet Thai and Japanese government officials in Bangkok starting on Wednesday. Thailand's commerce minister said the gathering would see ITD relieved of its lead role and reimbursed for costs incurred.
 
“The meeting's agenda also includes termination of ITD's contract in terms of the company's role as Dawei project manager,” the minister, Niwatthamrong Boonsongpaisan, told reporters.
 
“[Burma] wants to open up this project to other parties and involve international companies and governments in the other phases of Dawei's construction and wants to ensure the project's transparency,” Niwatthamrong continued.
 
Burma's move on Dawei comes amid a series of liberal economic reforms to attract jobs and investment to one of Asia's poorest states. One year ago, the country asked for Thai support for the project and the government pledged financing from Thai banks, including Bangkok Bank and Siam Commercial Bank.
 
Investors have expressed reluctance to commit to Dawei because of reservations regarding the leadership of ITD, which was dealt a blow last year when Max Myanmar, a company owned by local construction and banking tycoon Zaw Zaw, announced it would divest its 20 percent stake. Burma's government has until now had a hands-off approach to Dawei, but ITD has struggled to find private investors.
 
Despite being hailed by ITD as “the new global gateway of Indochina”, with an estimated $50 billion value within the next decade, the project has been fraught with difficulties from the outset, including issues finding a power source amid concerns about pollution from a proposed 4,000 megawatt coal-fired plant, which Burma's government rejected.
 
A finance industry source in Bangkok with close knowledge of the deal said ITD would most likely back out of the broader Dawei plan due to a lack of funds, but would be likely to stay on as the main contractor for infrastructure. ITD officials did not respond to requests for information.
 
Burma's decision to overhaul the plan follows rapid progress on its 5,900-acre Thilawa economic zone, near the biggest city, Rangoon, which is to be run by a Burma-Japan joint venture involving Mitsubishi, Marubeni and Sumitomo, plus support from the Japanese government.
 
Edwin Vanderbruggen, a Rangoon-based business lawyer with the law firm of VDB Loi, said the new approach to Dawei would be more efficient and financially secure as big players would be involved, especially those from Japan.
 
“It's too large to be a single-purpose, Thailand-oriented project. This is on a Southeast Asia scale, so its better to broaden the base,” he said.
 
“There's been a lot of progress made. The regulatory framework has changed, the perception of the country has changed. It has improved. Maybe that's why they want to reboot it,” Vanderbruggen continued.

You May Like

Abuja Blast Impacts Lives, Livelihoods

Officials say they are looking at ways to help bombing victims and boosting security More

Cambodia Technology Adviser Criticizes Cybercrime Draft Law

Phu Leewood says current criminal code can be used to prosecute offenders and that there is no need for a separate law More

Photogallery A Year Later, Boston Remembers Deadly Marathon Bombings

City pauses to honor victims and salute emergency workers who came to their assistance in frantic moments after blasts More

Featured Videos

Your JavaScript is turned off or you have an old version of Adobe's Flash Player. Get the latest Flash player.
Google Buys Drone Companyi
|| 0:00:00
...
 
🔇
X
George Putic
April 15, 2014
In its latest purchase of high-tech companies, Google has acquired a manufacturer of solar-powered drones that can stay in the air almost indefinitely, relaying broadband Internet connection to remote areas. It is seen as yet another step in the U.S. based Web giant’s bid to bring Internet to the whole world. VOA’s George Putic reports.
Video

Video Google Buys Drone Company

In its latest purchase of high-tech companies, Google has acquired a manufacturer of solar-powered drones that can stay in the air almost indefinitely, relaying broadband Internet connection to remote areas. It is seen as yet another step in the U.S. based Web giant’s bid to bring Internet to the whole world. VOA’s George Putic reports.
Video

Video Ray Bonneville Sings the Blues and More on New CD

Singer/songwriter Ray Bonneville has released a new CD called “Easy Gone” with music that reflects his musical and personal journey from French-speaking Canada to his current home in Austin,Texas. The eclectic artist’s fan base extends from Texas to various parts of North America and Europe. VOA’s Greg Flakus reports from Austin.
Video

Video Millions Labor in Pakistan's Informal Economy

The World Bank says that in Pakistan, roughly 70 percent work in the so-called informal sector, a part of the economy that is unregulated and untaxed. VOA's Sharon Behn reports from Islamabad on how the informal sector impact's the Pakistani economy.
Video

Video Passover Celebrates Liberation from Bondage

Jewish people around the world are celebrating Passover, a commemoration of their liberation from slavery in Egypt more than 3,300 years ago. According to scripture, God helped the Jews, led by Moses, escape bondage in Egypt and cross the Red Sea into the desert. Zlatica Hoke reports that the story of the Jewish Exodus resonates with other people trying to escape slave-like conditions.
Video

Video Police Pursue Hate Crime Charges Against Kansas Shooting Suspect

Prosecutors are sifting through the evidence in the wake of Sunday’s shootings in a suburb of Kansas City, Missouri that left three people dead. A suspect in the shootings taken into custody is a white supremacist. As VOA’s Kane Farabaugh reports, he was well-known to law enforcement agencies and human rights groups alike.
Video

Video In Eastern Ukraine, Pro-unity Activists Emerge from Shadows

Amid the pro-Russian uprisings in eastern Ukraine, there is a large body of activists who support Ukrainian unity and reject Russian intervention. Their activities have remained largely underground, but they are preparing to take on their pro-Moscow opponents, as Henry Ridgwell reports from the eastern city of Donetsk.
Video

Video Basket Maker’s Skills Have World Reach

A prestigious craft show in the U.S. capital offers one-of-a-kind creations by more than 120 artists working in a variety of media. As VOA’s Julie Taboh reports from Washington, one artist lucky enough to be selected says sharing her skills with women overseas is just as significant.
Video

Video UN Report Urges Speedier Action to Avoid Climate Disaster

A new United Nations report says the world must switch from fossil fuels to cleaner energy sources to control the effects of climate change. The Intergovernmental Panel on Climate Change released the report (Sunday) following a meeting of scientists and government representatives in Berlin. The comprehensive review follows two recent IPCC reports that detail the certainty of climate change, its impacts and in this most recent report what to do about it. VOA’s Rosanne Skirble has the details.
AppleAndroid