Thursday, March 27, 2014

First Thilawa SEZ factory construction to start in May

Japan’s finance minister and deputy prime minister Taro Aso (second from the right), gestures during a tour of the Thilawa industrial zone near Yangon on January 4. Photo: AFP
Construction on the first factories to be built in the multi-billion dollar Thilawa Special Economic Zone (SEZ) will begin in May, the chief executive for the project announced last week.

Takasahi Yanai, president and chief executive of Myanmar-Japan Thilawa Development Co, announced the SEZs latest plans during a speech at Yangon’s Sedona Hotel on March 18, adding that some of those factories could be operational before the end of 2015.

The announcement comes after more than US$21 million worth of shares of SEZ went on sale earlier this month, while land leasing for the SEZ is still expected to go forward before May.

The large-scale project worth at least $3.28 billion has drawn 17 foreign companies thus far across the manufacturing, garments, processed foods and electronics industries. Though the names of those firms have yet to be released, Mr Yanai said some that the interested parties hail from Australia, China, Japan and Hong Kong.

“We’re in a better position than we expected,” he said.

With some investors are concerned that the industrial zone could face a labour shortage, Mr Yanai said his firm would be prepared to discuss a labour training program if need be.

“We think industries investing in Thilawa will be able to find enough labour resources, as the SEZ is very near to Yangon, which has 6 to 7 million people in it,” he said.

Still, others are worried that renting land in the SEZ would likely be unaffordable to many potential investors.

“The rent would not be affordable for local businesses over the long term,” said U Myat Thin Aung, chair of the management committee for Hlaing Tharyar industrial estate in Yangon. “They may be able to do it however under a shorter period than what is being asked, say five years.”

Under the law, foreign investors are permitted to rent land in Myanmar for up to 70 years.

The zone is being developed by a Japanese consortium as a 39pc shareholder with participation from Mitsubishi, Marubeni and Sumitomo corporations, and locally run Myanmar Thilawa SEZ Holdings (MTSH), who together have 41pc of the shares.

An additional 10pc of the project belongs to the Thilawa SEZ management committee, while the remaining shares belong to the Japan International Cooperation Agency (JICA).