TORU TAKAHASHI, Nikkei staff writer
YANGON -- The scene today is
tranquil. Water buffalo graze in the shadows of a Portuguese church
built in 1470. This is Myanmar's Thanlyin district, some 20km southeast
of downtown Yangon. The Myanmar government hopes by 2015 the Thilawa
special economic zone will be operational in this area -- a symbol of
industrial modernity for a growing nation.
As
Myanmar emerges from decades of economic and political isolation, the
government is pinning the Southeast Asian country's future on foreign
capital and technology to finance and develop special economic zones
that can drive growth. The country has great potential, but few of its
industrial parks have access to a stable power supply, modern ports or
good roads. The government has designated three special economic zones
it hopes will underpin its drive to liberalize and attract investment --
essential steps if Myanmar is to integrate into the region and catch up
with its economically vibrant neighbors.
In the zone
This
is the government's second attempt to develop Thilawa, which will have
an area of 24 sq. km. A consortium of companies from Singapore and
Malaysia in the 1990s began work on an industrial park there. That
project was shelved in 1997 in the aftermath of the Asian currency
crisis and economic sanctions imposed on Myanmar's military junta. The
government of President Thein Sein, which assumed power in 2011, revived
the project. It decided in July last year to put Japan in charge of
developing Thilawa.
Three of Japan's
largest trading companies -- Mitsubishi Corp., Sumitomo Corp. and
Marubeni -- on Oct. 29 signed a contract with a public-private body in
Myanmar and created a joint venture to develop the Thilawa zone. The
venture will be 51% owned by a Myanmar's entity, and 49% by the Japanese
entities. A 10% portion will be owned by the Japan International
Cooperation Agency, known as JICA. The Japanese government will provide
yen loans for the construction of a power plant and a port in the zone.
Japan's Penta-Ocean Construction won the bid to develop the land and
plans to begin building by the end of the year. The joint venture aims
to open a 4 sq. km portion of the zone around mid-2015. Suzuki Motor is
considering building an auto plant in the zone.
Other
plans are afoot. In the southern city of Dawei, a project for a coastal
industrial park that will dwarf Thilawa is on the drawing board. The
200 sq. km Dawei project will be one of the largest zones of its kind in
the world if it gets built. Land for the site has been secured in a
fishing village facing the Indian Ocean, 300km west of Bangkok. Myanmar
intends to bring integrated steel plants and chemical plants, among
other operations, to the industrial park. Thailand agreed last August to
jointly develop Dawei with Myanmar. Once the zone is linked by road and
rail with its neighbor, it could become a base for a cross-border
division of labor. Wages are climbing in Thailand, but are much cheaper
in Myanmar. The zone could also serve as a distribution hub linking
Southeast Asia with India, the Middle East and Africa.
Thein
Sein sought Japan's participation in the Dawei project when the East
Asian nation's Prime Minister Shinzo Abe visited in May. Japanese
officials in late September had their first formal meeting with Thai and
Myanmar counterparts in Yangon. With as many as 4,000 Japanese
automakers, electronics companies and others operating in Thailand, the
Dawei industrial park could be a boon. But with its hands full in
Thilawa, Japan Inc. has been cagey about taking part in the Dawei
project.
Kyaukpyu, in northwestern
Myanmar, is a candidate for the third zone. With oil and natural gas
pipelines from the city to China's Yunnan Province operating since
September, the zone is expected to attract petrochemical companies, and
other corporations. But Kyaukpyu is still in the early planning stages. A
lead developer has yet to be selected.
If
all goes well, foreign companies should find the three special economic
zones in Myanmar attractive. Each has advantages and disadvantages.
Thilawa is close to Yangon, the country's largest city, making it
relatively easy to find workers. But the zone is not suited to heavy
industry because the port that serves it, on a river, cannot accommodate
large ships. Dawei offers convenient access to Thailand, but requires
infrastructure building from scratch. Kyaukpyu has a good deep-water
port, but is far from Myanmar's industrial centers and those of its
neighbors.
Tune in, turn on
Other
infrastructure projects are in the works. In June, Myanmar auctioned
off operating rights for two mobile communications companies, with
Norway's Telenor and Qatar Telecom tendering the winning bids. The two
companies plan by 2015 to start offering service, once networks are in
place. The local mobile communications market is dominated by Myanmar
Posts and Telecommunications and another government-affiliated company.
The mobile penetration rate in Myanmar is around 10%. The government
hopes introducing competition from overseas telecom companies will boost
that figure to 80% by 2016.
Myanmar is also
looking to upgrade the country's air links. A consortium comprising
Incheon International Airport and other South Korean companies won the
right to build and operate Hanthawaddy International Airport in a
northern suburb of Yangon. The airport is scheduled to open in 2018 and
will be able to handle 12 million passengers a year. The capacity of
Yangon's current international airport will also be doubled to 5.5
million passengers by 2015. The government has set a goal of drawing 7.5
million overseas tourists annually, seven times the current level, by
2020. With many underdeveloped assets, such as ancient Buddhist temples,
Myanmar's ambition to grow tourism into a $10 billion industry is
achievable.
Ref;http://asia.nikkei.com/magazine/20131121-Hang-on,-Yangon/Cover-Story/Myanmar-pins-growth-ambitions-on-new-economic-zones?page=2
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