Burma raises doubts on $50b port development

08-May-2012 Intellasia | Vancouversun | 7:05 AM Print This Post

As Burma contemplates its prospects as an economic powerhouse of Southeast Asia, the government is coming to realise it has been played for a sucker by its neighbours during its decades of political isolation.

That’s especially true of three major port projects being developed by Indian, Chinese and Thai companies.

A swift glance at the map makes it evident that all three projects are of immeasurably more benefit to the investing countries than they are to Burma.

The $120 million renovation by Indian companies of the Sittwe port on the Bay of Bengal is far too isolated in the far northwest to be of much use as an entrepot for Burma, at least in the medium term.

It is, however, in a perfect spot to serve India’s landlocked eastern provinces.

It’s the same with the Chinese project to build an oil port at Kyaukpyu on Ramree island a couple of hundred kilometres to the south of Sittwe.

This is intended to be the head of a pipeline running across northern Burma and into China’s southwestern Yunnan Province.

The idea is to give China a secure route for its essential Middle Eastern and African oil supplies by avoiding the Strait of Malacca “choke point” which would be all too easily blocked by the United States or its allies in times of conflict.

But it is on the third project, the massive $50 billion scheme to build a port and industrial centre called Dawei at Tavoy on Burma’s southern Andaman Sea coast that the new civilian government appears to be drawing the line.

This project envisages a 250-square-kilometre “global gateway of Indochina” including steel mills, shipyards, refineries, pulp and paper mills, a petrochemical complex and holiday resort.

In November 2010, Burma’s military junta, shortly before elections for a civilian government, signed the project deal with Thailand’s largest construction company, Italian-Thai Development (ITD).

But a look at the map again shows that while Tavoy is only 250 kilometres due west of the Thai capital and commercial hub, Bangkok, it is about 600 treacherous kilometres south of Burma’s business centre Rangoon.

Dawei is perfectly positioned to cut shipping time and costs for Thailand’s trade with Europe and the Middle East.

It’s a hopeless position for Burma’s future trade.

There are gathering indications that Burma’s new president Thein Sein is at the very least withdrawing government encouragement for the Dawei Port project.

Instead, he is promoting the development of a port at Thilawa, 25 kilometres south of Rangoon.

Soon after coming to power Thein Sein made two dramatic rulings intended to convey the message that his government intends to respond to the concerns of the country’s 60 million people and not the interests of the military.

The first was to order the suspension of construction of a controversial hydroelectric dam in northern Burma.

The second, citing environmental concerns, was to cancel plans for a 4,000-megawatt coal-fired power plant intended to provide electricity for the Dawei Port development.

To rub the point in, Thein Sein’s government didn’t bother to inform ITD before making the announcement in January.

ITD’s partner responsible for the power plant aspect of the project is scrambling to come up with a new plan, perhaps using natural gas as fuel.

But, as can be readily understood, the company is now finding it hard to lure investors.

It has secured $8.5 billion for the first phase, which is largely infrastructure such as roads, a telecommunications network, utilities and the basic port construction on which building the rest of the project will depend.

But there is no rush among investors to sign up for the rest or for either the Thai or Burmese governments to provide loan guarantees.

The prospects for the Dawei scheme dimmed even further last month when Thein Sein visited Japan, one of Burma’s major investors, and didn’t mention the project at all.

Instead he did a deal with the Japanese to complete a feasibility study this year on the development of a port and industrial centre at Thilawa outside Rangoon.

If that were not enough of a thumbs down from Thein Sein, his chief political adviser, Ko Ko Hliang, last week told the Bloomberg Business News agency the government doubts the ability of ITD to manage the project.

The company “haven’t much experience in developing such a very big special economic zone,” he said. “We need other big investors.”



Category: Regional

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