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Dawei project could give Thai economy a lift: analysts

Publication Date : 14-01-2013


The Dawei mega industrial project in Myanmar could boost Thailand's economy by 1.9 per cent and upgrade it from labour-intensive to value-added, according to the Economic Research Institute for Asean and East Asia.

Transport from Thailand to India will take only three days instead of seven without having to pass through the Strait of Malacca.

Thailand would gain closer access to natural gas and oil, which are abundant in Myanmar, while Thailand will run out of proved natural gas reserves in nine to 10 years.

The environmental problems in Thailand, such as at Map Ta Phut, make it difficult to build heavy industry there.

"It appears to us that Thailand needs to invest in Myanmar more than Myanmar needs investment from Thailand," Nomura Research said in its recent report.

Myanmar will likely continue to receive its share of press coverage in Thailand this year, it said.

Italian-Thai Development (ITD) has won the mandate to develop and run this project, which will become the largest industrial estate in Myanmar. However, ITD appears to need help to finance this mega-project, as it will require up to US$8.5 billion just to set up infrastructure and $50 billion to complete.

The Myanmar government has proposed eight joint ventures to operate the roads, railways, water systems, power industrial estates, the port and telecommunications systems, and to relocate residents in the initial stage.

Many meetings of officials from the two countries have been held over the past few months. In November, they reaffirmed their plans to jointly develop the Dawei special economic zone. The Thai PM visited Dawei in December to meet Myanmar President Thein Sein and finalise details. Following the meeting, both governments agreed to jointly finance the project, which is in line with the guidance provided by the transport minister.

The joint committee will finalise the plan by next month before signing the framework agreement by March. Fundraising should start in April, followed by construction of the project.

Myanmar keen to reduce size

Following the latest meeting, Myanmar officials have suggested reducing the scale of the Dawei project from 204 square kilometres to 150 sq km. Myanmar also intends to invite a third country such as Japan to join the project.

Thailand is expected to spend about 45 billion baht ($1.4 billion) for the construction of a motorway between Bang Yai and Kanchanaburi and 10 billion bath for a motorway between Kanchanaburi and Banphu Namron on the Myanmar border.

The railroad from Dawei to Map Ta Phut would require about 20 billion baht.

To facilitate Thai companies' investment in Myanmar, the Board of Investment may give special privileges.

A few examples of these projects are steel and automobile factories.

Thailand has invested $9.6 billion in key projects such as natural gas, factories and agriculture since 1988. Major Thai players in Myanmar are PTT Exploration and Production, Electricity Generating Authority of Thailand, ITD, Charoen Pokphand Group and Siam Cement Group.

Latest investment plans in Myanmar by Thai companies include SCG's $400-million greenfield cement plant. It is waiting for the licence. The plant is scheduled to be up and running by 2015.

Airports of Thailand has been invited by the Myanmar government to develop and operate the airports in Yangon and Nay Pyi Taw. In 2011, Yangon airport handled about 2.4 million passengers.

Bangkok Dusit Medical Services wants to build a hospital this year, but is waiting for clearer directions on key issues such as land acquisition and fund transfers. Demand for medical services is already there.

3 phases

Dawei development phases:

0 - basic infrastructure by next year

1 - ports, roads, water systems and transport systems by 2015

2 - downstream investment by 2020

*US$1=30.2 baht


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