‘Italian-Thai’ will cut down its shares to hold only 25% of shares in the 50-billion-dollar valued Dawei Industrial Estate Project in Myanmar from the original 100%. It admitted that the project is huge and requires high amount of capital. It said it would be pleased to let the government manage the remaining 75% of the shares, to be allocated to the Myanmar and Japan government. The Secretary of the National Economics and Social Development Board (NESDB) revealed that the government is preparing to present an investment plan to Myanmar for reconsideration. The plan is to divide projects aiming to draw private capital and establish a company to manage the benefits. It is ready to propose the establishment of a joint organization with three nations: Thai-Myanmar-Japan. Meanwhile, “Yingluck” is planning a visit to Myanmar on 19-21 September to negotiate the investment model in Dawei Industrial Estate.
Dawei Deep Seaport Development and Industrial Estate in Myanmar, has been leveraged to an inter-state project between Thai-Myanmar after Ms Yingluck Shinawatra, Thai PM and Mr Thein Sein, Myanmar President had signed a MoU in July. However, it is a big project that requires enormous investment. The two governments therefore have to oversee the project closely in the fundraising stage.
Mr Somjate Tinnapong, Managing Director, Dawei Development Co., Ltd. gave an interview to “Bangkok Business” about the Dawei Deep Seaport Development and Industrial Estate Project in Myanmar that after the company received permission from the Myanmar government to develop the project on the area of 250 sq km or around 200,000 rai, the Italian-Thai Development PCL or ITD has spent 16 years in studying the project. It saw that this strategic area is appropriate for investment to support the growth of the global economy in the future. It also admitted that it is a huge project. The Myanmar government has announced that the area be Dawei Special Economic Zone (DSEZ) due to the large scale of this project.
"Resulting from the meeting of the working committee of the NESDB, Ministry of Finance, ITD would be happy to accept the government to be a partner in this project. The party who is the major shareholder will own the project. For ITD, now we would like to hold only 25% of shares, the government must allocate the remaining 75% of shares to be held by Myanmar or Japan government. The government must take care of the allocation in this part.” Mr Somjate said.
“Somjate” admitted that ITD request to hold 25%
Mr Somjate admitted that there is no private company in the world can solely invest in a huge investment project. For ITD, it’s also impossible to completely run the operation itself. However, the project started from ITD, but after we agreed to hold 25% of the shares, it’s up to the government to discuss with the Myanmar government. The government can use any mechanisms or units to hold the shares, either Wayupak Fund, state enterprise, or whatever.” Mr Somjate said.
However, the first phase of the development project will cost 240-250 billion Baht in operations, which include construction of world's largest deep seaport that can accommodate 20 million tons of cargo containers a year or twice as much as Laem Chabang seaport’s capacity. The next phase will be developed to accommodate up to 100 million tons per year.
The project began in September 2010 when Mr. Premchai Kannasuta, CEO of Italian-Thai Development PCL announced the establishment of Dawei Development Co., Ltd. with registered capital of 100 million dollars. The company owned 100% of the shares to manage and develop the Dawei Deep Seaport Project in Myanmar valued 50 billion dollars. He said that the company had signed a Framework Agreement with the Government of Myanmar to be a concessionaire for the project as the Build Operate and Transfer or BOT concession for 60 years and can be renewed.
Dawei Deep Seaport Project consists of
- Alarge deep seaport with 15-meter depth and a shipyard that can serve five ships at the size of Panamax ship simultaneously. When completed, it will be able to accommodate up to 200 million tons of cargo each year.
- A large industrial estate that includes a 6,000-MW power plant, steel mill, fertilizer plant, petrochemical factory and refineries. Dawei Company has been licensed by the Government of Burma to implement these projects. It is currently in the process of sourcing investors.
- Transportation system, such as road construction from Dawei deep seaport to Baan Punamron, Kanchanaburi province, with a distance of 300 kms, railways, petrol pipelines, natural gas pipelines as well as related infrastructure.
- tourism industry, aiming to develop Dawei to be a world-class tourist destination like Phuket, Thailand. It requires constructing hotels and resorts to accommodate tourists. These development projects will be implemented in 170,000-rai of land, which Dawei Company has the right to develop for a period of 75 years.
NESDB said the government will offer a new investment model.
The incident is in line with the interview with Mr. Arkom Termpittayapaisith, NESDB Secretary-General, who stated that the government plans to offer an investment model in Dawei Industrial Estate and Deep Seaport to the Myanmar government to move this project forward. Since it is a huge project, it requires a large amount of capital. Therefore, the investment should be divided into smaller projects such as the investment in the deep seaport, infrastructure systems ie electrical systems, water systems and roads, and the industrial area where the facilities will be set up.
The investment model in Dawei may be the same as the model during the development of the Eastern Seaboard Industrial Estate. When the project is divided into sub-projects, there will be opportunities to join the venture in each project. This can be done in various ways, such as a joint venture between the three parties: Thai government, Myanmar government and the Italian-Thai company; establishment of a company or state enterprise. The governments of both countries will find partners to hold the shares and set up an organization to allocate benefits after the industrial estate has started the operation. The governments need to discuss to find out an appropriate investment model.
Mr Arkom said that currently there are many countries interested to join the investment in Dawei Industrial Estate, especially Japan, which is now investing in Thilawa Industrial Estate and Deep Seaport in Yangon. It expressed readiness to provide financial support for the construction of the infrastructure in Dawei to make this industrial estate happen; aiming that it will be an important upstream industrial production base and another Japan’s investment base.
Push forward the 3-Nation Joint Venture in Dawei
A source from NESDB said that the investment model for investment in Dawei Industrial Estate will require a joint enterprise of the Government of Thailand, Myanmar and Japan to develop the projects together. Thailand and Japan will provide financial resources to ITD to develop the project, because the Myanmar government does not have the capability to raise funds. Since it is a big project, if Thailand raises the entire fund, there will be limitation in sourcing sufficient capital. Therefore, Japan was drawn into a joint venture. According to the preliminary discussion, the Japan Government is ready to join the project because it can be linked to Japan’s industry located in the Eastern of Thailand. This will be discussed in details with the President of Myanmar during Ms Yingluck's visit to Myanmar this month.
In addition, Thailand plans to develop a project on a high-speed rail linking Dawei and Lam Chabang Seaport, to push forward Thailand and Dawei Industrial Estate as an economic gateway and the strength in linking Growth Nodes in GMS region of the Southern Economic Corridor.
Set up IEAT International for the Investment in Dawei
Mr Veerapong Chaiperm, the Industrial Estate Authority of Thailand (IEAT) Governor, said the organization is exploring to set up IEAT International Co., Ltd. as a subsidiary of IEAT to invest in the industrial estates in other countries. IEAT is the state enterprise and cannot invest in foreign countries. Therefore, it requires setting up a subsidiary, the same way as the Electricity Generating Authority of Thailand (EGAT) set up EGAT International Co. Ltd.
IEAT has assigned Sasin Graduate Institute of Chulalongkorn University to study this matter to be completed by September this year. Initially it will be a holding company to invest in ventures that the government wants to invest in foreign countries, and IEAT owns 100% of the shares. The investment in industrial estate establishment can be done in various forms and it will look into the model of the investment in Dawei, Myanmar as well. IEAT agrees to establish Ban Punamron Border Industrial Estate in Kanchanaburi, which shall be an industrial estate that provides logistics services connecting Dawei Industrial Estate and Thailand’s Eastern Seaboard, for example, logistics of vehicles manufactured in the Eastern region to be exported to the Middle East.
A source from the Government said it is currently waiting for formal response from the government of Myanmar about an official visit of Ms Yingluck Shinnawatra, the Prime Minister. The Thai government has already scheduled the date of the PM’s visit to Myanmar on 19-21 September. The visit is planned to review the progress in the Dawei Industrial Estate and Deep Seaport, and discuss with the Myanmar government. This is the further cooperation after the two countries had already signed a memorandum of cooperation to enhance the Dawei project to be state-to-state or government-to-government.
Italian-Thai Company allows the Government to take the leadership.
A source said that there is still no final conclusion regarding the model of investment in Dawei Industrial Estate. However, during the Myanmar visit, the government will propose to form a joint-venture between the government and the private sector, including 3-party investment between Thailand, Myanmar and Italian-Thai Development Co., Ltd. However it is unable to determine whether the investment is to be owned by government or private company or state enterprise because the Myanmar government needs to participate in decision-making, in consideration with the Myanmar’s law on investment.
"Previously, the government had sent a delegation to negotiate with Mr. Premchai Kannasuta, a concessionaire for the construction of the industrial estate and deep seaport, several times to allow the government to implement the Dawei Project, and leverage the project to be government-to-government. Mr Premchai understands that this is a major project that requires an enormous amount of money. With the government’s support, it will enhance fundraising capabilities and solve liquidity problem.” the source said.
"NGOs" crowd against the Dawei Project claiming high impact on the environment
Mr Detchrat Sukkamnerd, Foundation for Ecological Recovery, has done a research on the impact of Dawei Project by using Map Ta Phut Industrial Estate as a research model. Dawei Industrial Estate is eight times as large as Map Ta Phut Industrial Estate. The study found that Sulfur dioxide emissions will be 1,213 tons per day and nitrogen emissions will be 970 tons per day. Greenhouse gas emissions from coal power plant will be 30 million tons per year and emissions from natural gas power plant will be 13 million tons per year. Regarding the waste; there will be 2,074 tons of solid waste per day, 124 tons of industrial hazardous waste per day, and 277 tons of community waste per day. The study also shows that the demand for water will be 5.9 million cubic meters per day. The release of wastewater will be 1.5 million cubic meters per day.
The results suggested that there will be an increase of substances that cause acid rain 1 million tons per year and small particle 100,000 tons per year. Geographically, Dawei has the Tanaserim mountain range along the eastern side. This causes the accumulation of the air pollution in the area, resulting in a significant impact on farmers and health of the communities.
Furthermore, there was an assessment of the direct impact on the communities. The results show that the group living in the 250-sq km area of the deep seaport development, total 32,274 residents in 21 villages will have to move out of the area. About 1,000 people living in the area of dam construction and about 1,500 people living in areas of road construction from Dawei to Thai border will have to be evacuated from the areas. There will be direct impacts to 500 families that will be expropriated for the construction of the motorways connecting Bangkok - Myanmar border. There will also be environmental impact on the Sai Yok National Park and Thong Pha Phum National Park since there will be transportation all the time.
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