SET-listed Italian-Thai Development Plc (ITD), the country's largest contractor by market value, has decided to develop a partial area of its massive Dawei project in eastern Myanmar for light industries, with operation due to start in 2014.
Somchet: Area will serve light industries
Dawei Development Co (DDC), which ITD set up to manage the project, will allocate 633 rai of the total 150,000 rai to serve light industries such as garments, food and furniture, said DDC managing director Somchet Thinaphong.
"We will begin the construction of buildings and other facilities in this area at the beginning of next year. Everything will be ready to operate in 2014," he told the Bangkok Post.
The adjustment of the Dawei project comes as details of investments in infrastructure and heavy industries at the Special Economic Zone (SEZ) remain unclear, with Japanese investors shying away from the project.
Infrastructure alone will cost US$8.5 billion baht, including roads and a deep-sea port for the first phase of development.
Tanit Sorat, chairman of the GMS Business Forum Thailand, said he recently met Japanese investors who were concerned that Dawei would take some time to develop.
"If you want investors to go there, infrastructure must be ready to support their investments, but so far nothing has been confirmed," said Mr Tanit, also vice-chairman of the Federation of Thai Industries (FTI).
"Japanese and European investors have shifted the focus to Thilawa SEZ, which is just 26 kilometres away from Yangon. Japanese auto parts manufacturers are now looking at relocating to Thilawa and somewhere around Yangon."
Thilawa is ready for immediate investments with a port managed by Hong Kong-based Hutchison, the operator of the second phase of the Laem Chabang deep-sea port in Chon Buri province.
Mr Tanit says that as there are not many industries located in Dawei, shipping companies such as Mitsui and NYK have been reluctant to commit to the planned Dawei port because they will not have enough outbound shipments to carry, resulting in non-competitive costs.
At present, inbound shipments to Myanmar total 4,000-5,000 containers.
Mr Tanit also called on the Port Authority of Thailand and the Industrial Estate Authority of Thailand to take the lead in investing in infrastructure in Dawei.
The government earlier announced that Thailand and Myanmar had agreed on a special purpose vehicle (SPV) company to manage the project, while international lenders, including the Asian Development Bank, have hesitated to extend loans to Dawei.
"Investments in infrastructure there might shoulder a loss for the first three to five years of operation," Mr Tanit said.
The FTI, meanwhile, expressed concerns about Myanmar's long-awaited new Foreign Investment Law, which President Thein Sein has returned to parliament for further amendment.
The proposed legislation sets a ceiling for foreign shareholdings at 50% for investment projects in Myanmar. The present law, which has been used since 1988, allows 100% foreign ownership.
"Foreign investors, especially Japanese and European firms, viewed that the proposed new law is less flexible than the current one, prompting them to believe that investments in Myanmar are still risky," said Mr Tanit.
Tanva Mahitivanichcha, managing partner of V Ventis Law and Consulting, said the proposed law also sets a condition that foreign investors have to sell their ownership to a Myanmar partner if they cannot follow the obligations of their investment permit.
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