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.
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

Multimedia Obama Defends Immigration Action

Obama says with his executive action on immigration, enforcement resources will be focused on 'felons, not families; criminals, not children' More

US-Led Airstrikes in Syria Kill Over 900: Monitoring Group

British-based Syrian Observatory for Human Rights says the toll includes more than 50 civilians, five of them women and eight of them children More

Report: Obama Broadens US Combat Role in Afghanistan

The New York Times says resident Barack Obama has signed a classified order extending the role of US troops in Afghanistan for another year More

Featured Videos

Your JavaScript is turned off or you have an old version of Adobe's Flash Player. Get the latest Flash player.
New Skateboard Defies Gravityi
X
November 21, 2014 5:07 AM
A futuristic dream only a couple of decades ago, the hoverboard – a skateboard that floats above the ground - has finally been made possible. While still not ready for mass production, it promises to become a cool mode of transport... at least over some surfaces. VOA’s George Putic reports.
Video

Video New Skateboard Defies Gravity

A futuristic dream only a couple of decades ago, the hoverboard – a skateboard that floats above the ground - has finally been made possible. While still not ready for mass production, it promises to become a cool mode of transport... at least over some surfaces. VOA’s George Putic reports.
Video

Video Falling Gas Prices Impact US Oil Extraction

With the price of oil now less than $80 a barrel, motorists throughout the United States are benefiting from gas prices below $3 a gallon. But as VOA’s Kane Farabaugh reports, the decreasing price of petroleum has a downside for the hydraulic fracturing industry in the United States.
Video

Video Tensions Build on Korean Peninsula Amid Military Drills

It has been another tense week on the Korean peninsula as Pyongyang threatened to again test nuclear weapons while the U.S. and South Korean forces held joint military exercises in a show of force. VOA’s Brian Padden reports from the Kunsan Air Base in South Korea.
Video

Video Mama Sarah Obama Honored at UN Women’s Entrepreneurship Day

President Barack Obama's step-grandmother is in the United States to raise money to build a $12 million school and hospital center in Kogelo, Kenya, the birthplace of the president's father, Barack Obama, Sr. She was honored for her decades of work to aid poor Kenyans at a Women's Entrepreneurship Day at the United Nations.
Video

Video Gay Evangelicals Argue That Bible Does Not Condemn Homosexuality

More than 30 U.S. states now recognize same-sex marriages, and an increasing number of mainline American churches are blessing them. But evangelical church members- which account for around 30 percent of the U.S. adult population - believe the Bible unequivocally condemns homosexuality. VOA's Jerome Socolovsky reports that gay, lesbian, bisexual and transgender evangelicals are coming out. Backed by a prominent evangelical scholar, they argue that the traditional reading of the bible is wrong.
Video

Video Ebola Economic Toll Stirs W. Africa Food Security Concerns

The World Bank said Wednesday that it expects the economic impact of the Ebola outbreak on the sub-Saharan economy to cost somewhere betweenf $3 billion to $4 billion - well below a previously-outlined worst-case scenario of $32 billion. Some economists, however, paint a gloomier picture - warning that the disruption to regional markets and trading is considerable. Henry Ridgwell reports from London.
Video

Video Mexico Protests Escalate Over Disappearances

Protests in Mexico over 43 students missing since September continue to escalate, reflecting growing anger among Mexicans about a political system they view as corrupt, and increasingly tainted by the drug trade. Mounting outrage over the disappearances is now focused on the government of President Enrique Pena Nieto, accused of not doing enough to end insecurity in the country. More from VOA's Victoria Macchi.
Video

Video US Senate Votes Down Controversial Oil Pipeline - For Now

The U.S. Senate has rejected construction of a controversial pipeline to transport Canadian oil to American refineries. The $5 billion project still could be approved next year, but it faces a possible veto by President Barack Obama. As VOA’s Michael Bowman reports, the pipeline has exposed deep divisions in Congress about America’s energy future.
Video

Video Can Minsk Cease-fire Agreement Hold?

Growing tensions between government troops and separatists in eastern Ukraine further threaten a cease-fire agreement reached two months ago in the Belarusian capital of Minsk. Critics of U.S. policy in Ukraine say it is time the Obama administration gives up on that much-violated cease-fire and moves toward a new deal with Russia. VOA's Scott Stearns has more.
Video

Video Chaos, Abuse Defy Solution in Libya

The political and security crisis in Libya is deepening, with competing governments and, according to Amnesty International, widespread human rights violations committed with impunity. VOA’s Al Pessin reports from London.
Video

Video US Hosts Record 866,000 Foreign Students

Close to 900,000 international students are studying at American universities and colleges, more than ever before. About half of them come from Asia, mostly China. The United States hosts more foreign students than any other country in the world, and its foreign student population is steadily growing. Zlatica Hoke reports.
Video

Video Ferguson Church Grapples with Race Relations

Many white residents of Ferguson, Missouri, say they chose to live there because of the American Midwest community's diversity. So, they were shocked when a white police officer killed an unarmed black teenager in August – and shaken by the resulting protests and violence. Some local churches are leading conversations on how to go forward. VOA’s Ayesha Tanzeem reports.

All About America

AppleAndroid