By a Financial Times Correspondent
With its rough scrub fringed by gently lapping waves, Burma’s Maungmagan beach looks an unlikely candidate to become one of south-east Asia’s single biggest investment destinations.
A few kilometres north of the quiet town of Dawei on Burma’s southern coast, Maungmagan is the planned site of a 250 sq km port and industrial centre, which Italthai, the Thai developer, hopes will become a new trade hub between India and south-east Asia.
Ramshackle fishing boats bob in the channels that planners say will soon be ploughed by container vessels and families bathe in hot springs where factories will stand.
These dreams come with an initial price tag of $5.8bn – the cost of the port itself, basic utilities and an eight-lane highway to connect the Dawei Special Economic Zone to Thailand’s transport network 230km to the east.
South-east Asia has struggled to capitalise on its proximity to China and India, its efforts handicapped by poor infrastructure. Singapore, 1,600km south of Dawei, remains the region’s main import-export point for goods coming to and from India and further west, and international road and rail links are still in their infancy.
The project’s backers hope that Dawei, also known as Tavoy by some locals, will go some way to addressing these problems. It lies on the north-south axis between China and Indonesia and the east-west axis between mainland south-east Asia and India.
Somchet Thinapong, who is leading the project for Italthai, estimates the port will cut seven days off the time it takes goods from factories in Thailand and Vietnam to reach India, but he sees the project capitalising on one of Asia’s last pools of untapped cheap labour.
“It is not just about time saved,” says Mr Somchet “I think you have to see this port as more than just transport: it is a production base in itself.”
Italthai, Thailand’s largest construction firm, says the full ten-year project will initially target steel, petrochemicals, pulp and paper manufacturers before moving on to lighter industry.
The company estimates that some 10,000 residents will have to be relocated, but locals say they know little about the plans.
Although most are nervous about talking to visitors, one local rubber tapper tells the Financial Times that although he has been told he will have to leave his land, there has been no mention of timing or compensation.
The port concession has been given to Italthai by Burma’s military rulers on a 75-year build, operate, transfer contract. Small, cryptic survey signs bearing the company’s logo have gone up round the site, and some scrub has been cleared, but Mr Somchet says substantive construction will not begin until the end of the year.
Much of the start-up funding will come from Asian banks, he adds, but Italthai has already started looking for equity partners.
The company has a controlling shareholding in the Dawei Development Corporation with Burmese investors likely to take at least 25 per cent and Asian sovereign funds some of the rest. Mr Somchet said that Italthai was in negotiations with a number of funds but declined to identify them.
Foreign investment in Burma remains a sensitive issue in western nations that imposed sanctions after the crackdown on pro-democracy demonstrators in 1988.
The US is maintaining broad restrictions on doing business with Burma, and the European Union bars investments in mining, gems and timber.
Burma’s elections last year and the release of Aung San Suu Kyi, Burma’s opposition leader have raised expectations the restrictions could be relaxed.
But Mr Somchet says Italthai has made no effort to attract western businesses to set up in the Dawei project and has plenty of interest from elsewhere.
“We have options, we have solid interest from many companies from China, some from Japan, some from Singapore,” he says.
Source: http://www.ft.com/cms/s/0/ca952db2-644c-11e0-b171-00144feab49a.html#axzz1SEkf4uLM
