By Clifford McCoy, Asia Times
A multi-billion dollar port and infrastructure deal signed days before Myanmar's general election early this month could signal sweeping changes to the country and the wider region, while also serving as a pointer of how business may prosper under the new "civilian" but still military dominated regime.
The Dawei Development Project agreement between Myanmar and Italian-Thai Development, Thailand's largest construction company, will lead to construction of a deep-sea port and highway linking the two countries, and looks likely to bring to fruition a plan that has been around for more than a decade.
In May 2008, the idea gained new traction when a memorandum of understanding (MOU) was signed by then-Thai foreign minister Noppadon Pattama and Myanmar Foreign Minister Nyan Win on the sidelines of an Association of Southeast Asian Nations (ASEAN) foreign ministers' meeting in Singapore.
This was followed on October 11 this year by an agreement between Thai Prime Minister Abhisit Vejjajiva and Myanmar Prime Minister Thein Sein in the Myanmar capital of Naypyidaw following talks on the development of the port as a special economic zone.
On November 2 - five days before the Myanmar elections - a deal was signed for the port and infrastructure project between Premchai Kratasuta, chairman of Italian-Thai Development, and Myanmar Port Authority managing director Thein Htay in Naypyidaw.
Italian-Thai in 2008 won a contract from the Myanmar government to survey and build a road linking Dawei with the central Thai city of Kanchanaburi.
Myanmar state media announced at the same time as the signing of the latest deal that a 40,000 hectare plot around Dawei would become Myanmar's first special economic zone (SEZ). In exchange for developing the project, the Myanmar government has granted Italian-Thai import duty exemptions, a 75-year concession to build and operate the heavy industrial portion of the project and a 40-year concession for the light industry part. The concessions can later be extended or revert to Myanmar control. Some observers say the entire project could be worth more than US$58 billion, making it Myanmar's largest singe investment project.
The Dawei Development Project consists of three phases: the construction of a transportation corridor to Thailand as well as roads linking the public utilities and facilities in the industrial zone; the port; and the industrial estate. The first stage is expected to take five years and the final two stages are expected to take another five years with total project completion expected in 2020.
Construction on an eight-lane highway linking the port to the central Thai city of Kanchanaburi is already underway and work is expected to begin on the port in Myanmar in January. Italian-Thai has said the first phase of the project will cost $8 billion with financing already secured from an unnamed private bank. The Thai government is also contributing $60 million toward the highway. The highway from the port will lead 130 kilometers to the Thai border, then on to Kanchanaburi. A rail line will be built parallel to the new road.
Construction plans for Dawei port, the second phase of the project, allow for 22 wharves capable of handling up to 25 vessels at a time of from 20,000 to 50,000 tonnes. Other sources say the port will be capable of handling vessels as large as 300,000 tonnes.
The third phase of the project is the construction of a 40,500-hectare industrial estate. Once completed, the estate will have seven zones; port and heavy industry, petroleum and chemical complex, upstream and downstream petrochemical complex, medium industry, light industry, and a town with homes, public facilities and a commercial complex.
The new port will be offer a shortcut between Europe and the Middle East and Asia. Cargo unloaded at Dawei will avoid the necessity of transiting the Malacca Strait. Several thousand kilometers and up to 10 days could be cut from transit times, lowering transportation costs.
The new port connects with the three economic corridors of the Asian Development Bank's Greater Mekong Sub-Region development project, which aims to create links between the economies of mainland Southeast Asia and China.
Through Myanmar's road network, goods can be shipped north to Moulmein where it intersects the East-West Economic Corridor (EWEC) through Moulmein, the Myanmar border town of Myawaddy and its Thai counterpart, Mae Sot, through Thailand to Savanakhet in Laos and finally the Vietnamese port of Danang.
To the east, the new transport corridor connects through Bangkok with both the Southern Economic Corridor (SEC) and the North-South Economic Corridor (NSEC). The SEC connects Bangkok with Phnom Penh and the port of Sihanoukville in Cambodia and Ho Chi Minh City and Vung Tau port in Vietnam. The NSEC links southwestern China and Thailand by routes passing through northern Myanmar and Laos. China is currently funding and facilitating the construction of a railway from Kunming through Laos to the Thai railhead at Nong Khai.
These links represent important trade routes for Chinese goods from its landlocked southwest. They also provide a more rapid route for Vietnamese, Cambodia and Thai goods to Europe by avoiding the journey around Singapore. Plans have also been proposed for a Chinese funded railway linking the new port with China directly through Myanmar.
Support for the project was given a boost by the five members of the Ayeyawady-Chao Phraya-Mekong Economic Cooperation Strategy (ACMECS) which met for their fourth summit on November 17 in Phnom Penh. ACMECS is a working framework covering Cambodia, Laos, Myanmar, Thailand and Vietnam aimed at bridging economic gaps between the countries. The group agreed to support the development of a so-called South-South Economic Corridor linking Dawei port with southern Thailand and Malaysia. The route would be linked by rail to the China-Laos railway and a $6.6 billion Chinese-funded railway project from Nong Khai through Bangkok to Padang Besar in northern Malaysia.
Thailand seems to have the most to gain from the Dawei project. Bangkok has aspirations of becoming a regional transportation hub. Thailand remains as Myanmar's top investor as of mid-2010 with some $10.3 billion in projects.
Several Thai companies are involved as sub-contractors or have expressed interest in becoming involved in the project. Amata Corporation has been named as the developer of the industrial estate for which, together with Italian-Thai, the company has carried out a two-year feasibility study. A subsidiary of state-owned PTT Chemical, Thai Tank Terminal, has also expressed interested in operating a storage terminal near the port. Siam Cement Group, Thailand's third-largest company by market value, is also interested in setting up a cement plant at the port. Bangkok Bank is reportedly interested in offering loans for the project.
Contributing reasons for such interest in developing the port are cheap labor and the lax or non-existent environmental laws in Myanmar. Recent environmental laws in Thailand sparked by public concern have slowed expansion of the country's Map Ta Phut petrochemical complex.
A proposal for a project to expand Pak Bara port in Satun province on Thailand's west coast and link via a land bridge to the port of Songkhla on the eastern coast failed to win approval from the office of the National Economic and Social Development Board after protests against the plan in July.
Italian-Thai is seeking investment partners for the Myanmar project and investors from Japan, Taiwan, China, India and South Korea have all reportedly shown interest. The Bangkok Post reported on November 14 that Abhisit sought support for the project on the sidelines of the Group of 20 meeting in Toronto in June. He reportedly encouraged Chinese companies to invest in projects in Amata's planned industrial estate.
For Myanmar, the benefits will come in the form of tens of thousands of jobs that will become available for construction of the project as well as later in the factories and refineries. Myanmar's government will benefit directly from a profit-sharing agreement with Italian-Thai, although the exact terms have not yet been made public.
Not all predictions for the Dawei port project are rosy. Proving the efficiency of these links will be important. Singapore port's proven efficiency could be a problem for the new port. In order to convince shippers that they will truly be saving time and money through the use of Dawei, goods will have to be processed and transshipped to truck and rail carriers speedily. Much also depends on the quality of the rail and road links slated to connect to the port.
Myanmar's road networks are notoriously bad. The portion of the EWEC from the Thai border, funded by Thailand and under construction by Thai companies, is still far from complete after several years of construction.
The routes also run through territory where guerrillas from the Karen National Union operate. They have been largely quiet in the past few years, but renewed pressure on the ethnic groups after the recent elections could result in renewed fighting. The New Mon State Party (NMSP) also has troops in the area. The NMSP's relationship with the government is tenuous after it rejected the regime's plan earlier this year to convert its armed wing into a Border Guard Force under army control before the November 7 elections.
In an example of what could happen, rebel soldiers took over the major border crossing at Myawaddy and a lesser one at Three Pagodas Pass on November 7. The road linking Myawaddy with Moulmein, part of the EWEC, has been the scene of insurgent ambushes in the past and a new route from Dawei could be equally as dangerous as it passes through territory where both the insurgent Karen National Union and the NMSP operate.
There are also concerns about possible human rights violations associated with the project. Numerous human rights reports in the early and mid-1990s detailed the use of tens of thousands of villagers as forced labor on an extension of the Myanmar rail network from the town of Ye to Dawei. Human rights groups allege villagers, including women and children, were forced to work without pay, denied medical attention and beaten and raped by soldiers.
The construction of the Yadana gas pipeline to Thailand by oil and gas companies Total of France and Unocal the United States in the same area drew even more criticism. Extensive documentation of human rights abuses linked to the project during its construction between 1995 and 1998 was produced by rights organizations. A court case in the United States against Unocal was settled out of court for an undisclosed amount of money. Unocal was later bought by Chevron.
Rights groups allege civilians were forcibly relocated to make way for the project and a security corridor around it without compensation. They were also conscripted for forced labor supporting the numerous battalions brought into the area to provided security for the oil companies and the pipeline. According to environmental and human rights organization EarthRights International, some 36,000 villagers were relocated to secure a corridor for the pipeline.
The Independent Mon News Agency, an exile media group, has already reported that its sources indicate the Dawei port project will be constructed where five villages are currently located. Although the inhabitants of the villages have yet to receive orders to relocate, in Myanmar where the government has a history of relocating people for "development" projects with little to no compensation, there is much worry.
The Dawei Development Project, if managed correctly, could be a boon for Myanmar as well as the region. However, as it seems to be shaping up, the project appears based on motives of exploiting Myanmar's cheap labor and environmental laws. While the jobs may be welcome, in the long run it may only be regional companies and Myanmar's generals who profit.
Clifford McCoy is a freelance journalist.
Source: http://www.atimes.com/atimes/Southeast_Asia/LK30Ae01.html
