NAYPYITAW: After months of negotiations and failed promises, a proposed multi-billion dollar Myanmar port and special economic zone that could transform Southeast Asian trade appears back on track.
Thai banks aim to keep the project afloat with short-term loans until an expected Japanese loan of up to 3.2 billion dollar can be secured, officials and sources famliar with negotiations told Reuters.
Thailand’s largest construction firm, Italian-Thai Development Pcl, signed a deal in 2010 to build a deep-sea port and Special Economic Zone (SEZ) in southern Myanmar’s coastal Dawei into Southeast Asia’s largest industrial complex.
But the project foundered, as the Thai builder failed to secure 8.5 billion dollar to finance construction of its first phase — roads, utilities and a port.
Underlining Dawei’s strategic importance, Japan and Thailand have since intervened to rescue the project.
‘Italian-Thai has had difficulty in mobilizing the funding. So now the Thai government has effectively taken over the project,’ Thaung Lwin, chairman of the Dawei SEZ told Reuters. ‘The next step is to invite Japan’, which he said is committed to seeing the project succeed.
Since the Thai and Myanmar governments agreed on July 23 to connect Dawei to the Thai port of Laem Chabang, 100 km southeast of Bangkok, Thai banks led by Bangkok Bank and Siam Commercial Bank have arranged a 325 million dollar bridge loan to sustain it for another 8-10 months, Somjet Thinaphong, managing director of the Dawei Development Co, an Ital-Thai unit, told Reuters in an interview.
That loan would be followed by a soft loan from the state-backed Japan Bank for International Cooperation to finance the basic port and road infrastructure needed to push the project forward, he added. A source involved in the negotiations said the soft loan could total 3.2 billion dollar. Thaung Lwin of the Dawei SEZ said he expected Japan to emerge as the project’s biggest shareholder.
As the former British colony embarks on its most dramatic changes since a 1962 military coup in what was then Burma, mega-projects like the 50 billion dollar 250 sq km Dawei SEZ hint at what lies ahead. Super-highways, steel mills, power plants, shipyards, refineries, pulp and paper mills and a petrochemical complex are part of it, as are two golf courses and a holiday resort.
Road and rail routes could link Dawei to neighbors China, India and other parts of Southeast Asia, allowing cargo to bypass the narrow and congested Strait of Malacca to forge shorter trade routes from the Middle East and Africa to China and Japan. The Association of Southeast Asian Nations (ASEAN), a grouping of 10 countries, hopes Dawei will play an important role in its ambitions for a common market in 2015.
For Japan, a better-connected Southeast Asia makes it easier to sell their products and knit together a vast network of suppliers to Japanese-owned factories and manufacturing plants, which include autos and electronic goods.
‘Before the yearend, we will have major progress,’ Pisanu Suvanajata, Thailand’s ambassador to Myanmar, said in an interview with Reuters. (Reuters)