Death knell for Thailand's Dawei project?

Death knell for Thailand's Dawei project?

Thailand's dream of developing a US$8.6 billion (S$10.7 billion) port and industrial zone in southern Myanmar has receded, with the pullout of Ital-Thai Development Plc (ITD) on the lapse of the company's framework agreement with the Myanmar government.

The mammoth 205 sq km project, sketched out in a 2008 memorandum of understanding between the Thai and Myanmar governments, was to develop Dawei into a deep sea port and industrial zone with a road connection to Bangkok via Kanchanaburi.

It would have enabled Thailand to relocate some of its own manufacturing there, and open up a shorter land-and-sea route to South Asia, replacing the current roundabout route from its ports on the Gulf of Thailand, via the Strait of Malacca.

But separate reports yesterday in Myanmar media and in Thailand's The Nation newspaper quoted sources as saying ITD, which had done some preliminary road and port work at Dawei, was pulling out. ITD, a major Thai construction firm, had taken the lead in the project and has been seeking with little success the co-investors it needs, while the project has been beset by problems.

The Nation quoted a source as saying: "We're now closing our camp at the Dawei site and have been asked to stop operations and leave there before Nov 21."

Last week, Thailand's Energy Minister Pongsak Ruktapongpaisal appeared to signal the demise of the project when he told The Nation that ITD would have to stop work until the results of a consultant's appraisal of the work it had completed was released.

The project development rights would be returned to the Myanmar government and, in the meantime, "ITD will only do maintenance", the minister said. A request for an interview yesterday with Dr Somchet Thinaphong, managing director of ITD's Dawei Development Corp, was declined.

Successive Thai governments have pushed for the project, which has been most vigorously championed by billionaire Thaksin Shinawatra, former premier and older brother of Thai Prime Minister Yingluck Shinawatra.

But the headwinds have been steadily building. In July last year, ITD's local partner Max Myanmar pulled out citing doubts over the project's viability.

At the Myanmar government's insistence, ITD cancelled plans for a 4,000 megawatt power plant. Local villagers at the site have organised themselves to resist relocation.

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