Plans for the Dawei special economic zone have inched ahead after the Burmese government agreed to borrow 4.5 billion baht ($128 million) from Thailand to finance the construction of a 132-kilometre road from Dawei’s proposed deep-sea port to Ban Phu Nam Ron in Thailand’s Kanchanaburi province.
Thai Transport Minister Arkhom Termpittayapaisith, who led a Thai delegation to meet Burmese officials last Friday, said the Burmese government agreed to a lending facility with an interest rate of 0.1 percent, a 10-year grace period and repayment in 20 years.
The Thai government initially offered the loan in 2015.
The Thai cabinet already endorsed the loan plan, but road construction was delayed as the new Burmese government asked to restudy the plan.
Arkhom said work on the long-delayed Dawei development project will continue. Burma and Thailand first signed a memorandum of understanding to develop the area in 2008, with an aim to transform Dawei into Southeast Asia’s largest industrial and trade zone.
Two years later, Burma granted a 60-year concession to Stock Exchange of Thailand-listed Italian-Thai Development Plc (ITD) to develop a deep-sea port, industrial estate, and road and rail links to Kanchanaburi.
ITD then withdrew from the agreement in 2013 citing financial difficulties, before resigning the concession agreement in 2015.
Premchai Karnasuta, president of ITD, said recently the company is ready to restart construction of the Dawei project over the next few months if the Thai and Burmese governments approve a continuation of the megaproject at a joint meeting on 10 February.
ITD signed an agreement in August 2015 to start developing the first phase of the megaproject, which covers 18,000 rai (7,100 acres), with an initial investment budget of $1.7 billion.
Of the 18,000 rai, 12,000 rai has been slated for an industrial estate for light industry as demanded by the Burmese government, which wants to focus on creative jobs for local workers.
Some $500 million will go toward a 450-megawatt gas-fired power plant. ITD also plans to invest in an additional coal-fired power plant once the Dawei industrial zone is fully developed.
An additional $500 million will be spent on a petrochemical plant and oil refinery to serve demand at Dawei.
Premchai said the company has already invested $200 million in the initial phase of the project, which includes roads in the industrial estate, a small port, water facilities, electricity and the cost for land expropriation for road construction from the Thai border to the Dawei project.
This story was originally published by the Bangkok Post here.