Myanmar has dismissed the developer for what would be Southeast Asia’s largest economic zone, throwing Dawei SEZ into question yet again. Though the grandiose plan is backed by Thailand, Japan and China, its continued financial struggles reveal a project plagued by instability and mismanagement.
Myanmar’s Dawei Special Economic Zone (SEZ) has hit yet another snag as the Myanmar government has terminated its agreement with a Thai construction company to build the US$8 billion, 200-square-kilometer project.
Italian-Thai Development (ITD) announced on December 30 that the Myanmar government had dismissed the firm and its development firm partners for failing to make concession payments and meet other conditions. The announcement is the latest in a string of financial and public relations troubles for the Dawei SEZ developers.
The Dawei projects have been a strategic priority for Myanmar since their inception in 2008, as the SEZ represents one of the country’s biggest opportunities for foreign investment and could allow trade to bypass the Strait of Malacca.
The Dawei SEZ site sits along a stretch of beach in Tanintharyi Region, over 600 kilometers from Yangon by road but less than 150 kilometers from the Thai province of Kanchanaburi. A road is currently under construction in the forests of southeastern Myanmar that will link Dawei to Bangkok and the deep-sea port in Thailand’s Chonburi province, to the east of Bangkok.
In the past 13 years, the Dawei SEZ has become highly controversial. Though residents are not uniformly against development in Dawei, they have objected to unfair land confiscations and a lack of public consultations and information as required by Myanmar and Thai law. Though it’s still not clear if the project will move ahead, some residents have already been relocated and many have seen their livelihoods disrupted or destroyed. For years, Dawei has been plagued by uncertainty and a lack of transparency.
The process around ITD’s dismissal also remains unclear. The Dawei SEZ Management Committee had not yet “approved the cancellations”, according to a report from the Myanmar Times as of January 14.
But the Myanmar government’s dismissal of ITD indicates that proponents of the Dawei SEZ don’t have any clearer idea of what’s going on than local residents. It would be a welcome relief if the Dawei projects, crafted by Myanmar’s waning military dictatorship and then dragged through the mud by the ruling National League for Democracy (NLD), have now ground to a halt for the last time.
Dawei SEZ struggles with financing troubles, allegations of threats to livelihoods and environment
Plans for Dawei include a deep-sea port, an industrial estate and petrochemical production. When the SEZ was first approved, there were also plans for a dam, oil and gas pipelines, a refinery and a coal power plant, at an estimated cost of up to US$58 billion.
In 2008, Myanmar granted ITD a 75-year concession as the main developer for the project, then scheduled for completion by 2015. In 2013, ITD pulled out of the project due to financial issues. That same year, local residents filed a complaint with Thailand’s National Human Rights Commission over alleged land rights and other abuses in Dawei.
The project has faced strong objections from local residents for years, with major studies of local opinions and human rights impacts conducted by the RAND Corporation, Dawei Development Association and EarthRights International. Civil society groups have said the SEZ poses a major threat to people’s livelihoods, environment, and health.
In 2015, the Myanmar government brought ITD back in to develop the first phase of the project at a cost of around US$1 billion—though in October 2019, Thailand and Myanmar agreed to move ahead with all phases of the project at once, by this point at an estimated cost of US$8 billion. ITD still struggled with financing for the project, as the announcement of ITD’s dismissal shows, despite new interest from at least eight Chinese firms.
The 2015 agreements also saw Japan and its foreign development agencies throw their support behind the Dawei SEZ; the Japanese ambassador to Myanmar said as recently as November 2020 that Japan is fully committed to supporting the project. One of Japan’s roles has been to work with Thailand’s Neighboring Countries Economic Development Cooperation Agency (NEDA).
But the Dawei road link to Thailand has drawn significant opposition—in some cases more definitive opposition than to the SEZ—from local and national groups in both Thailand and Myanmar, as communities in the area have largely not consented to the construction.
The road has already led to land disputes, negatively impacted water sources and damaged fragile ecosystems. The impacts threaten the food supplies and livelihoods of residents along the route—including in areas that have historically been sites of armed resistance against the Myanmar government.
One of the highest-profile hiccups for Dawei in recent years came in February 2018, when ITD president Premchai Karnasuta was notoriously caught poaching; Thai authorities found him and his associates in a wildlife sanctuary with the skin of a black leopard and a soup made from the leopard’s tail. The scandal caused political outrage in Thailand but didn’t seem to affect the course of the project.
Despite the recent announcement and past failures, ITD will likely find its way back into Dawei eventually. As the project lurches forward, Myanmar’s NLD government may also move to downsize the SEZ and associated infrastructure yet again. But regardless of how the government and SEZ backers handle the shift, Dawei residents will still face uncertainty and upheaval for years to come.