Dawei: Thai-backed mega project in Burma hits a snag

Originally published at Siam Voices on January 11, 2012 Almost a year ago, we have reported about a large industrial estate and port built in Dawei Burma's west coast and Thailand's involvement in the mega-project. Thai academic Pavin Chachavalpongpun has, among other crucial factors, outlined in an very detailed essay the Thai stakes in Dawei:

The Burmese government has given a green light to a huge port and industrial estate development in Dawei, for which the Italian-Thai Development Public Company Limited (ITD) is a major contractor. The first-phase contract for the 10-year project is worth an estimated $8.6 billion. All in all, the entire project could be worth US$58 billion or more. The role of Thailand in Burma's transition is therefore crucial. (...)

For Thailand, Dawei will serve both the national interest and the private sector. There is nothing new in Thailand downplaying democratic development in Burma for the sake of Thai economic benefit. (...) the Thaksin administration brushed aside the issue of political reforms and human rights as he traded with the Burmese junta.In 2010, Abhisit followed the same course in the name of bringing change and prosperity to the impoverished nation. New Thai Premier Yingluck Shinawatra, Thaksin's youngest sister, quickly reached out to Burma after she took office in August. Aung San Suu Kyi even congratulated her.

The Thai government has worked closely with ITD in ensuring Thailand's long-term gains from the Dawei project. (...)

The Thai government has promoted Dawei as part of the national interest, despite Western skepticism about Burma. The West is coming around to accepting that change in Burma may be real, (...)

The Thai private sector will also get rich from Dawei. The project could secure a firm source of revenue for ITD for at least 10 years. (...) More Thai companies are now in negotiation with ITD for their prospective investments in Dawei's subsequent development phase. This will intensify the Thai economic influence in Burma in the long term.

"Dawei Port: Thailand's Megaproject in Burma", by Pavin Chachavalpongpun, in: Global Asia, Winter 2011

However, there are also big environmental concerns surrounding the still quiet fishing village, as this industrial estate is projected to be about 10 times bigger than Map Ta Phut, an industrial estate in Rayong province and infamous for the negative health effects on local residents. With environmental guidelines likely being even less strict than in Thailand, the companies involved are being demanded to carry out impact assessments. No doubt it will change the landscape - politically, economically and literally. Up to 30,000 locals could be affected by this project and could face forced relocation.

But on Tuesday, the Dawei mega-project has surprisingly hit a bump - here's fellow Asian Correspondent blogger Francis Wade:

Burma’s befuddling rulers have launched another surprise attack on our (somewhat waning) ability to rationalise what is happening in Naypyidaw: four months after the shock suspension of the China-backed Myitsone Dam in the country’s north, the government’s environment minister yesterday announced that a massive, Thai-financed power plant in the south of the country has been scrapped.

The move has prompted (...) immediate questions: first, what has become of the 60-year lease awarded to Ital-Thai to develop the Dawei industrial zone (surely it has been spectacularly breached)? (...)

Like the Myitsone decision, the government has cited public opposition as the key trigger for the Dawei cancellation; also like Myitsone, its newfound fans have been quick to link the scrapping of the plant to the reformist nature of Thein Sein and his cabinet. But while it may have been China’s increasing economic influence in Burma, rather than disquiet among Burmese, that prompted the country’s nationalistic rulers to (temporarily) jump ship on Myitsone, the Dawei decision is slightly more puzzling – the government doesn’t stand to benefit, economically or ideologically, unless it has really developed a conscience and translated that into policy.

"Power plants, dams and mind games in Burma", by Francis Wade, Asian Correspondent, January 10, 2012

According to The Irrawaddy, Burma's Minister for Electrcity Khin Maung Soe says that the government will instead build a smaller power plant with an output of 400 megawatt - just one per cent of the originally projected 40,000 megawatt. However, the Thai stakeholders apparently remain confident that a power plant of the original size will be built, just with a slight modification:

Thai companies remain confident in the future of a 4,000-megawatt coal-fired power plant at Dawei despite Burma abruptly halting construction on Monday after a domestic outcry over the plant's environmental impact.

Italian-Thai Development (ITD) and its partner Ratchaburi Electricity Generating Holding Plc (Ratch) said they had yet to be notified and were satisfied the power plant would proceed, perhaps using natural gas instead.

"Thais in the dark on Dawei plant", Bangkok Post, January 11, 2011

This latest episode in the Dawei mega-project illustrates the still unpredictability of doing business in Burma, with corruption and nepotism still not a thing of the past, while the country's formerly-junta-turned-civillian-government itself self is still figuring out how to push the apparent economical reforms in order to gain legitimacy from the international community. Past and present governments of Thailand have been too eager to to give that very legitimacy, even in times of brutal oppression and international condemnation, and Thailand's biggest corporations are now predicting a new gold rush in Burma. The question remains: for what price?

Saksith Saiyasombut is a Thai blogger and journalist based in Hamburg, Germany again (*sigh*). He can be followed on Twitter @Saksith and now also on his public Facebook page here.