Thailand says it will continue backing the Dawei/Tavoy deep-sea port project in Burma despite recent setbacks, but won’t intervene on behalf of its Thai developer.
BANGKOK—The Thai Government and key investors are backing the Dawei (Tavoy) harbor and economic zone project despite Naypyidaw’s recent cancellation of a 4,000MW coal-fired power station there and the Karen National Union (KNU) stalling a linking highway.
Speaking to The Irrawaddy on the sidelines of a Thailand Board of Investment (BOI) forum in Bangkok, Kittirat Na Ranong, Thailand’s deputy prime minister—who was appointed finance minister in last week’s cabinet reshuffle—said that he remained hopeful that the US $58 billion project will proceed. He added, “Thailand will never interfere with any other country for the benefit of any business group.”
According to Thai media reports earlier in January, Italian-Thai Development (ITD)—the industrial giant which won the contract to develop Dawei—was caught unaware by the government announcement.
On Jan. 9, Burma’s Electricity Minister Khin Maung Soe announced that a planned 4,000-megawatt coal-fired power plant, which would supply electricity to the port and surrounding area, would not be built.
“We [the government] listened to the media, and studied the impact of a coal-fire power plant. After reading [the reports], we said it is not appropriate to have a coal-fire power plant. We decided to cancel the 4,000-megawatt coal-fire power plant,” said the minister at the time.
In an email, an ITD spokesperson said that the company “has not received an official report from the Myanmar government to halt the power plant construction in Dawei.” But ITD noted that “the Myanmar government has ranked natural gas, alternative energy and coal to be the priority for the source of fuel to generate electricity,” and that it “will take such details into account in order to develop the power plant construction in the Dawei industrial estate.”
Environmental groups in the nearby area have campaigned against the project, seeking some modifications. Paul Sein Twa of the Burma Environmental Working Group (BEWG) welcomed the cancellation of the coal plant, but added “the overall project needs a proper environmental impact assessment and social impact assessment before it should proceed.”
These remarks have been echoed by the KNU—an ethnic rebel group operating near Dawei—which has forced the suspension of construction of a highway linking Dawei to Kanchanaburi in Thailand, according to sources inside Burma.
ITD and the KNU are currently negotiating a solution to the dispute, say both sides, a prospect perhaps made more likely by the recent inking of a ceasefire deal between the KNU and Burmese government. Contradicting claims of a stand-off, an ITD spokesperson told The Irrawaddy that “the road construction has proceeded very well and the accessibility is almost completed.”
Siam Cement is one of the big-player Thai companies interested in the Dawei project. CEO and President Kan Trakhulhoon told The Irrawady that “we are still committed to it, if they can provide natural gas then that is OK,” referring to the possible replacement of the canceled coal-fired pant with a gas-fueled alternative.
However, despite Burma’s offshore gas fields, there is not yet a pipeline linking them to Dawei, making it unclear to potential investors, such as Thailand PTT, if the gas option is feasible. PTT had not replied to emails about the issue at the time of publication.
Despite the sanguine noises from investors, some analysts say that the project remains fraught with challenges. In a research note published last week, DBS Vickers Securities assessed that “Despite potential to bring economic prosperity to Burma, the project is still in its infancy and clouded with risks. In our view, ITD faces a country risk and an unpredictable business climate. The sudden call to halt the 4,000MW coal-fired power plant project would make it difficult for ITD to secure strategic partners to help fund the project.”
However, Thai and other investors remain interested in the Dawei project, with Japan’s trade and economy minister Yukio Edano discussing it with both the Burmese and Thai governments when he visited the countries in mid-January. Dr. Virabongsa Ramangkura, chairman of Thailand’s Strategic Committee for Reconstruction and Future Development, told the BOI forum that “in meetings with Japan, the Dawei project came up constantly”.
If realised, Dawei/Tavoy will be the biggest development of its type in southeast Asia, and a potential boon for a Burmese economy that has languished due to military and government mismanagement as well as corruption, with Transparency International, a Berlin-based NGO that monitors graft, putting Burma close to the bottom of all its recent annual league tables.
Nonetheless, Dr Virabongsa believes that the Dawei/Tavoy project will benefit Thailand and southeast Asia. “The changes in Burma have given us a great opportunity in Thailand”, he said, adding that “we believe the new economic zone [Dawei/Tavoy] will be of great benefit to Myanmar and to the region.Show