Ital-Thai looking for partners

Construction News Laos Myanmar Vietnam

By Yuthana Praiwan, Bangkok Post, Thailand

Italian-Thai Development Plc, Thailand‘s largest construction company, will seek strategic partners to co-develop its 75-year landlease development project worth US$58 billion in Dawei, Burma.

Chairman Premchai Karnasuta said more than 20 investors have been approached to become the project’s strategic partners and they would co-invest in the first phase worth $8 billion that involves key infrastructures such as a deep-sea port, roads and railways linking to the Thai border in Kanchanaburi.

“We will take about six months to finalise our partners. After that, we will run at full capacity to develop the project,” he said.

ITD will develop this mega-project through its wholly-owned subsidiary, Dawei Development Co (DDC), with $100 million in registered capital. ITD signed the landlease with the Myanmar Port Authority last week.

A 160-kilometre road linking to the Thai border is being built to prepare for transporting construction materials to Dawei with expected completion next April.

Mr Premchai said the landlease agreement with the Burmese government covers 250 square kilometres or 170,000 rai. The first phase comprises major infrastructure and will be developed from 2010-15. The second phase worth $50 billion will be an industrial estate, which will include heavy industries such as power plants, an oil refinery, a petrochemical complex, and steel and fertiliser plants. The estate will attract industries from 2016.

DDC may allow investors to join as an industrial estate operator to manage the area.

Local policymakers in Burma are now drafting regulations to make Dawei a free trade zone to facilitate industrial developments in the future.

“I believe developed countries with trade sanctions on Burma may lift their bans. The sanctions that have lasted over two decades only serve to make the locals poor. With the massive investments in this project creating jobs, why not take part?” Mr Premchai said.

An analyst said ITD will definitely return to profit this year. Three of six analysts marked ITD to profit nearly 1 billion baht in 2010 and nearly 500 million baht in 2011. ITD lost 2.66 billion baht in 2008 and 1.77 billion in 2009.

In addition to operating results, share sales in its subsidiaries such as 15% in the Nam Theun 2 hydroelectric plant worth $110 million a month ago and a 10.8% stake in Toyo-Thai Corporation this week will drive returns, said the analysts.

ITD reported backlog projects as of Sept 30 at 51 billion baht, with another coming worth 100 billion baht, which will generate revenue for ITD in 2011 and 2012.

Mandated projects will generate 460 billion baht, particularly mega-projects in Vietnam, Laos and Malaysia.

The company is now considering selling a portion in the Asian Pacific Potash Co’s operations in Udon Thani and Laos, in which ITD holds 90% and 40% shares, respectively. The company aims to raise capital for the new development project in Dawei.

This year, ITD expects sales may drop by 10% to 40 billion baht but will rise 25% to 50 billion next year.

ITD shares closed yesterday on the SET at 4.82 baht, down 12 satang, in trade worth 645 million baht.


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