China keen to invest in Myanmar’s Dawei Special Economic Zone (SEZ)

Construction News Myanmar
Part of the new road that will connect Dawei to the Thai border in Tanintharyi Region. Photo – WWF

China keen to invest in Myanmar’s Dawei Special Economic Zone (SEZ)

A state-owned Chinese firm has expressed interest to invest in the planned Dawei Special Economic Zone (SEZ) in Tanintharyi Region, U Myint San, vice chair of Dawei SEZ Management Committee, told The Myanmar Times.

The Myanmar government has yet to respond to the Chinese, given that talks to develop the SEZ with Italian-Thai Development Company Ltd (ITD) as well as the Thai and Japanese governments are at advanced stages. However, analysts aren’t ruling out the possibility.

“Dawei SEZ has taken a long time to take shape and isn’t going as planned. As we don’t have the funds to implement it, if the current investors cannot develop the project effectively, then Chinese companies are our only options,” said U Zaw Win Pe, a local analyst and former economic adviser to parliament.

“We’ll complete negotiations with the ITD first. If we cannot agree to the terms of the project, we can cancel the contract when it expires. I think the Chinese have the capacity to develop this project, but we’ll have to wait and see if ITD would be able to do it within the specified period,” U Zaw Win Pe added.

The Chinese are expected to reap strategic benefits if they win Dawei SEZ. “China is already developing the Kyauk Phyu SEZ in Rakhine State. China is building a bullet train route from Kunming, China to Bangkok in Thailand. If they can connect that route to Dawei SEZ, it will be a great achievement for China. If China wins [Dawei SEZ], they will connect this route,” U Myint San said.

Getting impatient

Meanwhile, the Myanmar government will increase pressure on ITD as well as the Japan and Thai governments to kick start development at the Dawei SEZ. After years of delays and negotiations, the Dawei SEZ Management Committee last month said changes have been made to the contractual arrangements with ITD for the development of initial industrial estate. Under the amendments, ITD and other investors must compensate and resettle villagers affected by industrial zone project. It must also adhere to international standards on the environment.

ITD has also been given until March 27 to reply to a final draft Land Lease Agreement prepared by the government.

“As the draft agreement sent to ITD was the final version, we will no longer negotiate the terms. We have given them a period of more than a year to propose suggestions,” said U Myint San, adding that a Notice to Proceed will be issued to the company once a reply has been received.

Subsequently, ITD will be given a period of five years to develop nine projects across 700 hectares of land at the SEZ. Failure to do so will result in permission to develop the land being revoked, U Myint San said. ITD will be monitored for the first two years and if no progress is made at the site, an official report will be submitted to the President and other developers sought.

G2G arrangements

Myanmar has also sought help from the Thai and Japanese governments to develop the connecting infrastructure to the SEZ.

The Thai government has agreed to provide a loan to complete construction of a two-lane highway connecting Dawei SEZ to the Myanmar-Thailand border. Construction on the 138-kilometre road actually began in 2018, after the Ministry of Natural Resources and Environmental Conservation approved the environmental and social impact assessment.

Although Myanmar and Thailand have signed a government level agreement to develop the SEZ, the Japanese, which agreed to participate at the end of last year, have yet to commit and have so far conducted a ground study.

During a working level discussion which will be held in Thailand in the third week of this month, Myanmar and Thailand are expected to urge Japan to sign a government level agreement.

“If the Japan government commits, private companies are more likely to invest in Dawei like they have in Thilawa SEZ. So far, they have only offered to do surveys. But we want them to start implementation on the ground on a small or large scale,” a member of the Dawei SEZ Management Committee said.

“Three countries have agreed to develop the project and if both Thailand and Japan don’t commit to implementing it, we would have to accept investments from another country,” said U Myint San.

The Dawei SEZ project was first announced in 2008 but failed to start when ITD ran short of funds, leading to arrangements to develop the SEZ in two phases. The projects to be developed by ITD in the initial phase include a deep sea port, industrial estate and supporting infrastructure such as a power plant and liquefied natural gas terminal.

The project has also been delayed due to the lack of suitable infrastructure as well as social and environmental issues relating to the location of the SEZ.

When complete, the SEZ is expected to link the southern part of the Greater Mekong region, which includes Bangkok, Phnom Penh and Hanoi.

It will also link Myanmar to India, Africa and Europe. – Translated