The “will of the people” is not a phrase you hear very often in government communications about foreign direct investment in Myanmar. But that is the reason the nominally civilian government of president Thein Sein gave for its surprise decision to cancel a multibillion dollar coal-fired power plant project by Thaipower and construction companies on Myanmar’s southeast coast.
Khin Maung Soe, one of Myanmar’s energy ministers, told reporters in Yangon the government decided to cancel the project after “listening to the people’s voice”, according to Agence France Presse.
In another surprising statement – “surprising” given Myanmar’s record on protecting citizens’ rights – he said the government had become concerned about the environmental impact of the coal-fired plant after “reading media reports”.
The plant is part of the preliminary development of the $56bn-plus Dawei special economic zone being led by Italian-Thai Development, Thailand’s largest construction company. ITD signed an agreement with Ratchaburi Electricity Generating last year to build the 4,000-megawatt plant to provide power for construction of the Dawei zone, which includes petrochemical, steel-making and fertiliser plants as well as deep-sea port facilities. Costs for the first, four-year phase of the project to 2014 is estimated at about $8bn.
The Dawei zone is one of the largest and most ambitious development projects in Asia. While ITD is struggling to raise funds for the construction, the premise at the heart of the plan – a “supercorridor” of high-speed transport stretching from Vietnam throughThailand to the Dawei industrial and shipping facilities straight on the Andaman Sea and Indian Ocean – has drawn strong interest from several governments, including the Japanese, South Korean, Thai and Chinese, as well as potential investors throughout the region.
The abrupt cancellation of the power plant is a setback but not a critical blow to the Dawei mega-plan. Myanmar is still considering a plan to build a smaller, 400-megawatt plant to provide necessary electricity for the first phase, the energy minister noted.
But the move has deepened mistrust among potential and existing investors in Myanmar – just a few months after the government abruptly moved to suspend construction of a $3.6bn Chinese-financed dam project at Myitsone, in Myanmar’s northeast.
In both cases, the entities involed were not given advance notice of Myanmar’s decision. Following news of the Dawei decision, a headline in Wednesday’s Bangkok Post said it all: “Thais in the dark on Dawei plant.” ITD and its partner Ratchaburi however put a brave face on it, telling the Post they were confident the plant would proceed, “perhaps using natural gas instead”.
In the case of the Myitsone dam, the government also cited popular opposition as a reason for suspending the project. Whatever the motivation, the moves are the first real sign that the government is beginning to heed public opinion. Indeed, before the Myitsone decision, unprecedented public criticism of growing Chinese investment in Myanmar, from gas pipelines and other resources to construction and rail projects, galvanised academics, environmentalists and Aung San Suu Kyi, the pro-democracy leader.
Ultimately, say diplomats, Myanmar’s government hopes sanctions imposed by the US and European Union will be eased, possibly this year. Australia announced some loosening of its sanctions this week.
“The hope is that with sanctions lifted, Myanmar will attract the kind of investment it really wants – from big western companies. But they have to realise they need to put in place proper investor protections, and the abrupt cancellations send the wrong signal in this regard”, remarked one Yangon-based western diplomat.
For the Chinese, who are increasingly portrayed as the “villain investors” in Myanmar, the move against the Dawei plant at least provides comfort, of sorts. They do not have to feel discriminated against in Myanmar’s growing push for reform. The treatment, as the Thais have now found, is equal – and sometimes equally brutal.
