ADB urges kick-start to Dawei project

Says Thai investment would only be 'rational'

Thailand, other Southeast Asian nations and countries that have established a regional presence should take steps to kick-start development of the Dawei megaproject, says the Asian Development Bank (ADB).


While the Thilawa and Kyauk Phyu special economic zones are ready to take off with Japan and China as the key sponsors, it is difficult for Dawei to "really gets off the ground", given that the project is so large, said Craig Steffensen, country director of the ADB's Thailand resident mission.

He said the ADB would consider the possibility of granting financial support to Dawei, but the project's developer has not submitted a proposal and feasibility study to the bank.

"The project is good for Thailand, the Greater Mekong Subregion and Asia," Mr Steffensen told the Bankok Post.

"Vietnam, Cambodia, Laos and Singapore as well as Japan, China and other large investors in this region, can play their part, but Thailand has to take the first step."

Italian-Thai Development, Thailand's largest contractor by market value, has been granted a concession to develop the Dawei special economic zone and a deep-sea port in eastern Myanmar.

Cost of the project is estimated at US$50 billion.

That forecast includes $8.5 billion for the first phase of infrastructure.

In addition to the seaport, Mr Steffensen said roads and railway links, as well as power transmission lines, are critical to attracting investors to Dawei by making their shipment costs more competitive.

The cost of moving a container between Dawei and Laem Chabang is about $1,000 compared with only $10 per container from Laem Chabang to Europe, said Mr Steffensen, adding that rail link from Dawei port to Thailand will help to lower shipment costs.

Pansak Vinyaratn, an adviser to Prime Minister Yingluck Shinawatra, last month said leaders of Thailand and Myanmar had agreed on a special-purpose vehicle, with stakeholders from Thailand, Myanmar and Japan managing and handling investment in Dawei.

The idea was slammed by critics who said the government should not spend taxpayers' money in a foreign country.

Later, PM's Office Minister Niwatthamrong Bunsongphaisan clearly stated that the government itself cannot invest directly in the project.

Investments should be handled by Thai state enterprises or the private sector, he said.

But Mr Steffensen said such criticism is arguable.

Given the fact that Dawei will facilitate more investment in Thailand and the subregion, investment by the Thai government in the project would only be rational, he said.

He recommends the government, neighbouring countries and major foreign investors in the region sit down and talk about whether they want to see Dawei happen and then work out a development plan together.

Analysts have said the Dawei special economic zone will be operational no sooner than 2018, while Thilawa's zone, which is close to Yangon, has attracted solid backing from investors led by Japan.

The Kyauk Phyu zone is moving ahead with a deep-sea port and a big plan to link to southern China.