Thai caretaker government asked Japan to invest in Dawei SEZ Development Co mega-projects

Thailand’s caretaker government has asked Japan to take part in Dawei SEZ Development Co (DSEZ), a special-purpose vehicle for the project, particularly in mega projects such as power plants, integrated steel mills and refineries.

Located along the Thai-Myanmar peninsular with highway links to industry hubs near Bangkok and along its eastern seaboard, Dawei is one of  Southeast Asia’s most ambitious industrial zone and a potential benefit for firms relying on the transport of goods around the cumbersome Malacca Strait, the world busiest shipping lane, and other, that wants a manufacturing foot-hold to supply ASEAN, as the grouping integrates.

But a Thai firm, ITD, was unable to secure adequate support for the project, and Dawei suffered long delays. Dawei’s story stands in stark contrast to that of the 2,400-hectare (5,900-acre) Thilawa economic zone near Myanmar’s biggest city, Yangon, which is moving ahead quickly following the establishment of a Myanmar-Japan joint venture involving Mitsubishi Corp Marubeni Corp and Sumitomo Corp as well as Japanese state support.

However, recently Thailand and Myanmar seized control of the multi-billion dollar Dawei special economic zone from Italian Thai Development Pcl (ITD) to rescue the floundering project and convince foreign investors to finally come on board. The takeover of the strategically located complex, billed as a gateway for trade with Southeast Asia, follows years of delays that have been blamed largely on the Thai firm’s failure to secure private investment and agree on a power source for the 250 sq km (100 sq mile) deep-sea port, petrochemical and heavy industry hub.

The Thai Myanmar take-over, setting up a unit to manage the project, could pave the way for the involvement of Japanese industrial and hi-tech firms long established in neighbouring Thailand and who are fast taking advantage of investment opportunities in Myanmar since its new government introduced a raft of liberal reforms two years ago. The unit focus was on getting the basic infrastructure in place in Dawei to attract Japanese firms.

Initial proposals included an $8 billion deep-sea port, a refinery, gas and coal power plants and steel mills. All these plans are set to be reviewed under any new agreement.

“We will bring a new project management company on board,” Thai Commerce Minister Niwatthamrong Boonsongpaisan said. “The next step is to find a new investor for phase one which includes roads, two small ports and light industries.”

Government involvement in Dawei is likely to boost Japan’s confidence in a project that faces problems ranging from a lack of basic infrastructure to conflicting information on power supply, funding, costs and planned facilities.

Masaki Takahara, head of the Japan External Trade Organisation in Myanmar, told a wire service that Japanese firms were hesitant about ITD’s leadership and now would be drawn to Dawei once basic infrastructure was ready. “I know a lot of Japanese companies will be interested in entering into Dawei,” he said. “I really support the development of this area. It’s a beneficial project for the entire ASEAN” area.

After years of uncertainty, the prospects of the massive Dawei project took a recent twist when Thailand and Burma officially tied the knot to push the ambitious scheme forward, coming out with three memoranda of understanding signed by the two countries to push the Dawei SEZ Development Co (DSEZ), a special-purpose vehicle for the project.

DSEZ, a 50-50 venture of Thailand and Burma, now has a 75-year concession from Burma’s government to develop the special economic zone and a deep-sea port – replacing ITD, which had received the concession from the Burmese government in November 2010.

DSEZ is expected to award concessions for three projects – a dual-lane highway linking Thailand with Dawei [Tavoy], a small port and an industrial estate – by the second quarter of 2014.

The Dawei development is four times the size of the Thilawa SEZ that Japan has already committed to, but caretaker Commerce Minister Niwatthamrong Bunsongphaisan has said that Dawei’s site in eastern Burma will make it competitive as the deep-sea port sustains export-oriented industry.

Located some 350 km from Bangkok by road, the project is envisaged as a key component of the East-West Corridor and supports Thailand’s vision of becoming the logistics hub of ASEAN.

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