Dawei and Thailand’s stake in Burma’s industrial mega-project

Originally published at Siam Voices on January 6, 2011 Burma has vanished from the international headlines ever since the hotly debated elections and the release of democracy icon Aung San Suu Kyi from house arrest late last year. Around the same time there was coverage about the Thai involvement in the Burmese industrial complex Dawei, located on the west coast. Thailand is one of the few countries that has economic ties with the military dictatorship.

For Thailand it is an great economic opportunity and many big companies have invested - or are thinking about investing - in the project, as the New York Times and Bangkok Post explain:

The project is also crucial for geo-strategic reasons: Construction of a deep-sea port would create a shortcut between Europe and Indochina. Companies in Thailand and the fast-growing economies of Vietnam and Cambodia could save fuel and time by bypassing the long journey through the Strait of Malacca, a detour of several thousand kilometers. (...)

Italian-Thai has been awarded a huge chunk of territory for the project — 250 square kilometers, or about 97 square miles, more than four times the size of Manhattan. (...) Italian-Thai ... has been given exemptions from import duties and a 75-year concession to build and operate the heavy-industrial part of the project, as well as a 40-year concession for light industry, like garment factories.

"An Industrial Project That Could Change Myanmar", New York Times, November 26, 2010

The Burmese government is promoting the development of a huge port and industrial estate development in Dawei (Tavoy), for which SET-listed Italian Thai Development Plc will be a major contractor. The first-phase contract that ITD has signed for the 10-year project is worth an estimated US$8 billion. The entire project could be worth $58 billion or more.

Companies planning to invest in a Dawei industrial estate include PTT Plc, Siam Cement Group and the upstream complex of a Japanese steel company.

"Big shift to Dawei predicted", Bangkok Post, November 14, 2010

It is quite obvious why Thai companies look beyond the kingdom's borders to do their business if one recalls the troubles it has domestically, with one name being synonymous for corporate pollution in Thailand: Map Ta Phut.

For foreign companies, the project also means less environmental oversight. In the case of Thailand, new laws that require more environmental safeguards have slowed the expansion of the industrial complex at Map Ta Phut, the country’s largest petrochemical facility. (...)

By contrast, Italian-Thai officials said that there were no laws in Myanmar covering environmental protection but that they had conducted their own assessment of the likely impact in Dawei. (...) Somchet Thinaphong, who helped devise the master plan for Map Ta Phut, is the managing director of Dawei Development, which is to oversee the project. “This will be exactly 10 times bigger than Map Ta Phut,” Mr. Somchet said.

"An Industrial Project That Could Change Myanmar", New York Times, November 26, 2010

There's no doubt that the Dawei project will completely change the place beyond recognition, the NYT story goes on to say that at least 3,800 local households would be forced to move - the region is estimated to have 19 villages with around 5,000 residents.

On a bilateral level, it can be observed that the Thai government has more or less 'cuddled up' to the Burmese junta in recent times, as hinted during his last visit in October.

The construction deal was signed five days before Burma’s election last month, and it’s noteworthy that Thai politicians have becoming friendlier towards the Burmese ruling junta in recent years. When in opposition, Abhisit’s party was hostile to the military rulers next door – and critical of the then Thai prime minister, Thaksin Shinawatra, for cosying up to them. Such antipathy has now been forgotten.

"Why Thailand invests in Burma", by Simon Roughneen, Financial Times, December 2, 2010

One has also to recall how much Thailand already relies on Burma in terms of energy:

Thailand already relies heavily on Myanmar for energy; the Dawei project is only a few dozen kilometers south of a pipeline to Thailand built more than a decade ago by the U.S. oil company Chevron and the French oil company Total, and which supplies electricity for greater Bangkok. The sale of gas to Thailand, worth $4 billion last year alone, has been crucial in helping buttress the power of the military leadership in Myanmar.

"An Industrial Project That Could Change Myanmar", New York Times, November 26, 2010

This gold rush on Dawei goes to show that the Western sanctions on the military regime are not really working (as Abhisit himself pointed that out in an interview) and that the Thai companies are promising themselves the industrial el dorado that Map Ta Phut should have been. Maybe an economic boom is a chance for Burma to open up the country, but on the other hand the junta will keep a close eye on the progress and, given its track records, will be tempted to intervene, which ultimately is a high risk for the companies involved.