Tuesday, September 29, 2015

A special zone on Myanmar's border


Ambitious plans to turn Dawei, on the Myanmar-Thai border, into a special economic zone and industrial park, meet with resistance from the locals

DAWEI (Myanmar) • It has been eight long years since engineer Suphap Satthathum first set foot in the tropical scrub jungle by the immense curve of beach near the port town of Dawei, in Myanmar's southernmost Tanintharyi state that borders Thailand.

But today, as he strides on the jetty his construction company has built, he finds new energy as he shows visitors around the 27 sq km first phase of the Dawei Special Economic Zone (DSEZ).

Despite false starts and continuing scepticism, the ambitious development to transform this sleepy, isolated patch of the Andaman Coast into one of Asia's largest industrial areas may finally be gaining some traction - even if what is visible on the site is still largely open land.
The DSEZ was born out of a memorandum of understanding between the governments of Myanmar and Thailand in 2008, one of three special economic zones in the country meant to attract foreign direct investment, create jobs and spur growth.

Bangkok-based Italian-Thai Development (ITD) was given the 50-year concession to develop the DSEZ and is now working on Phase One of the project.

At ITD's company office on site, large maps and aerial views of the site are displayed on big posters in a building on land cleared of vegetation. Mr Suphap, who is in charge of the project at the site, showed off a building under construction - the first of several to eventually house thousands of workers, he said.

Industries targeted for Phase One are auto parts, furniture, electronics and home appliances, garments and leather, canneries and frozen foods, pharmaceuticals and rubber processing. ITD is offering land to investors, but it is not clear if any deals have been struck yet. With the promised jobs yet to materialise, the zone has yet to find much favour with locals.

One of the problems of the economic zone is its origin. It was conceived during the reign of the much-hated military regime and has struggled to shrug off its inevitable baggage of distrust even as the regime has been replaced by a semi-civilian government.

"It's not going to happen," says Ms Ei Ei Myint, 35, owner of a mobile phone and accessories shop in Dawei, the capital of Tanintharyi.

"This is a matter of trust," she said. "We don't trust the government; they can't manage this kind of industrial development. There are so many problems - like land confiscations and compensation - that they have been unable to solve."

Other issues bother local residents. In multiple interviews in and around Dawei, locals in the lush region of verdant rice fields and rivers - fringed by kilometres of pristine beach to the west and mountain ridges to the east - said they worried about air and water pollution.

The state's chief minister, Mr Myat Ko, in an interview, conceded that the issue of land ownership and compensation was complicated. The project developer's lack of understanding of the locals' needs has not helped.They resent that ITD has brought in Thai workers, and fear the impact of foreign men bringing avariciousness and vice to an essentially conservative community. "In terms of business opportunities, it will be positive, but in terms of social issues it will be negative," Ms Ei Ei Myint worries.

An example is a relocation village, Bawah, built by ITD for locals whose lands will be acquired for the DSEZ. The new houses are generous in size and sturdily built, but lack the open spaces locals are used to, in their dispersed hamlets surrounded by rice fields and cashew orchards. Most houses lie empty, surrounded by weeds.

Opposition to the project gathered strength in 2010 after then Thai Prime Minister Abhisit Vejjajiva, in a comment on TV on the Dawei project, said: "Some industries are not suitable to be located in Thailand. This is why they decided to set up there."

The government in Naypyitaw was quick to deny that Myanmar was to be a dumping ground for polluting industries. But Mr Abhisit's remarks raised red flags for civil society organisations, that are increasingly finding their voices - and an audience - as more political freedom emerges in Myanmar.

Local activists made contact with Thai activists and went to Thailand on study tours. One was Mr Zaw Oo, a native of Dawei and head of the Myanmar Knowledge Society.

In 2009, 29 villages were to be relocated. "The site for the new villages was there but there was no infrastructure," he said. The villagers refused to move."The Dawei project started under a military government not concerned about local people," Mr Zaw Oo said in an interview. "They had signed a memorandum of understanding without any Environmental Impact Assessment. We organised young people to monitor the project and it became a civil society movement."

The opposition to the project is nuanced, though. "Dawei people agree on the deep sea port," explained Mr Zaw Oo. "But we have a lot of concern over the DSEZ."

The most serious issue has been the project's plan for a 2,000 megawatt coal-fired power plant, a dam and reservoir. There is also a separate plan for a petrochemical complex. These plans have raised concerns. Researchers from Bangkok's Chulalongkorn University, who were doing an environmental impact assessment, were chased away from the dam site by angry villagers, activists say.


In December 2013, locals formed the Dawei Nationalities Party to take their fate into their own hands. It is putting up candidates in the coming Nov 8 general election, for the state legislature.

Said Mr Maung Maung Aye, its 54-year-old vice-chairman: "We do need industry. But we need industry that does not damage the environment - like garments or fisheries." If such industries were developed, then tens of thousands of natives from the region would not need to work in the garment and seafood sectors in neighbouring Thailand, he said.

His position is not very far from that of Chief Minister Myat Ko, who will also be contesting the election on a ruling Union Solidarity and Development Party (USDP) ticket. "I am from here, I know about the land issues," he said in an interview at his office. "I always side with the people. This is about job opportunities. In Thailand there are a lot of job opportunities; here, we have none."

Mr Myat Ko estimated that between 100,000 and 200,000 people from the Dawei area worked in Thailand. These people were an available trained workforce. Developing small and medium- sized enterprises (SMEs) in the DSEZ was the first step to bringing them back, he said.


At the project site, developments include a small reservoir, a quarry and a concrete production plant. And while the company currently employs more Thais than Myanmar people, that would change, Mr Suphap said - because under its agreement only one in four employees can be a foreigner.

There are plans for a fibre optic cable along the road to Thailand, which is currently a 138km compacted red dirt track which takes about three to four hours to traverse to the Thai border at Phu Nam Rong.

From there, Bangkok is just two hours away. Door to door, the journey from DSEZ to Bangkok today takes about seven hours; when the Tanintharyi  side of the winding mountain road is completed it would take just four, Mr Suphap said.

But there has been little progress because of the project's complexities, the local resistance and lukewarm investor interest. That proximity is the main rationale for the project, pushed most vigorously by Thailand which has long wanted a short cut from the Gulf of Thailand to the Andaman Sea, completing the so-called Greater Mekong Subregion Economic Corridor which will link Dawei through Kanchanaburi to Bangkok and onwards to Phnom Penh in Cambodia, Ho Chi Minh City and Vung Tao on Vietnam's southern coast and Quy Nhon on the central Vietnam coast.

Things have begun to look up, however, with the Japanese government coming on board in July, signing a US$50 billion (S$71 billion) tripartite agreement with Myanmar and Thailand to support the Dawei project.

Part of the plan is to expand the port to be able to handle 250 million tonnes of cargo per year to support the 200 sq km DSEZ. Thai Prime Minister Prayut Chan-o-cha said Dawei could become a new "distribution centre for the world".

Japanese Prime Minister Shinzo Abe was more circumspect, saying the DSEZ would "create an opportunity to strengthen the economic partnership between Japan and Asean, and Japan and Thailand".

At the DSEZ, Mr Suphap is upbeat. "We don't say everyone agrees with this project. It's a question of adjusting it," he said.

The coal-fired power plant was no longer in the plan, he said. Instead, ITD would buy natural gas to power the DSEZ. Last month, it signed an agreement with Royal Dutch Shell to set up a liquefied natural gas (LNG) terminal at the DSEZ.

"According to our concession agreement, ITD has to create 70,000 jobs in the next two to three years," the key to obtaining the cooperation of local communities, he said.

"Seven square kilometres will be ready in two years. It is progressing," he said. "The most important is the SMEs. Heavy industry and the deep sea port can come later."