New Burma port 'to become trade corridor'

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Image caption The Thai government says the project will provide a new trade lane between East and West

Ital-Thai Development, Thailand's half-century old construction firm, is building a deep-sea port linked to an industrial estate, with oil and gas pipelines, roads and railways on 40,000 hectares in Dawei, previously called Tavoy, in southern Burma.

The project will cost up to $10bn (£6.2bn) and offer hundreds of thousands of jobs.

Its builders say the Dawei Development Project will change the shape of world trade.

A port on the south-western edge of mainland South East Asia would allow goods which are currently shipped from China, southwards around Singapore and through the Malacca Straits, to reach Suez and Europe by skipping a whole loop of sea travel.

But sceptics point out that under Burma's military rule, residents in the area have little choice but to lose their land - and the largest economic benefits will go as usual to the project's Burmese military partners.

'Trade lane'

The Dawei contract, which gives a 75-year concession, was signed between Ital-Thai and the Burmese government on 2 November last year - just five days before elections organised by the military, and after only eight months of serious negotiations.

The investors will not be drawn on exactly how much progress has been made on the road, what clients had been attracted or even on who their Burmese partner might be. But that has not stopped them making some bold claims.

Key to the project's inception is what Thailand's Deputy Commerce Minister Alongkorn Ponlaboot calls its "connectivity".

"It is going to be the international trade lane for the East and the West," Mr Alongkorn said.

"It's going to be one of the biggest projects and investments in South East Asia within a decade, but it will [provide] benefits for all, not only Asean (the Association of South East Asian Nations) but in South Asia, in the Middle East, Europe and Africa, and also East Asia and Asia-Pacific," he said.

As such, Dawei carries echoes of a century-old plan, never implemented, to build the Kra Canal - a Panama-like shipping channel across the long narrow peninsula which is home to southern Thailand and north Malaysia.

Image caption Somchet Thinapong says his company has faith in the Burmese political leadership

Somchet Thinapong, managing director of the project at Ital-Thai Development, described the Kra idea as "basic logistic flow".

The new project, he said, combined logistic flow with what he called "a strategic production base".

Both Mr Alongkorn and Mr Thinapong point to Burma's accession to the Asean Economic Community idea, meant to be implemented by 2015.

They predict the passing of a law to create Special Economic Zones, just as China once did to create what is now the economic powerhouse of the south Chinese coast.

'Trust and confidence'

The project's designers say the nature of the Burmese state, where decades of military rule have recently given way to a nominally civilian administration, is a good thing.

"That's one part of what I like about [the] army's line...," said Mr Somchet. "When [the] army rules and if they know what they're doing, it seems that they get job done, you see," he said.

Describing the system as "highly comfortable to deal with", he said he did not expect political issues to impact on the project's development.

"We have faith, trust and confidence in the leadership that we did not expect to have ...the project can go on. Nothing political," he said.

The deputy commerce minister, Mr Alongkorn, praised what he called the development of democracy in Burma. "We try to separate our economic co-operation [from] politics," he said.

Political risk

But other commentators have suggested the deal represents an unacceptably high level of political risk even when, as in many Asian countries, there are few legal impediments to doing business with Burma.

"Burma's government is a very unreliable partner. The macro-economy is just far too volatile, and the government far too unpredictable and arbitrary in its decision making," Professor Sean Turnell, an expert on Burma's political economy, told the BBC.

Other concerns are that the prospective highway goes through a major insurgency area, and the project will be home to companies restricted at other industrial estates in Thailand, where environmental campaigns have restricted business activities.

The Bangkok Post has described Darwei as the 21st century version of Thailand's Eastern Seaboard development, adding: "By moving to Burma they can leave behind the environmental problems."

"Such a project has great potential," said Prof Turnell. "Burma is desperately short of functioning infrastructure in all sorts of areas."

But, "in order for such outlets to be truly transformative, more profound institutional reforms will be required in Burma in order to revitalise the economy," he added.

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