Desperately seeking bidders: Dawei SEZ

The massive Dawei project has taken a new twist, as no interested bidders have applied for concessions opened in February for three jobs: a dual-lane highway linking Thailand with the site in eastern Burma, a small port, and a 30,000-rai industrial estate.

“The terms of reference for the three projects should be revised to make them more appealing to foreign investors,” said a source from Thailand’s Government House who asked not to be named.

Under the original schedule, Dawei SEZ Development Co (DSEZ), a special-purpose vehicle, had planned to open bidding for the three construction jobs in February and announce the results in April.

Thailand and Burma officially agreed to push the ambitious scheme forward last November, with three memoranda of understanding (MoU) signed by the two countries.

The first MoU covered the framework agreement of the Dawei concession and its transfer to DSEZ from Italian-Thai Development Plc (ITD), which had received the original concession from the Burmese government in November 2010.

Thailand and Burma agreed last June to set up DSEZ with an equal shareholding and an initial investment of 12 million baht, far below the 100 million baht proposed earlier. The company is registered in Thailand.

The two countries also agreed to set up special-purpose companies (SPCs) to manage projects such as the port, road and rail links, power plants, waterworks, industrial estates, a telecom network and the township. The SPCs will be registered in Burma.

The second MoU concerns the revocation of the existing concession between ITD and Burma, and the third involves the warranty that new investors in the port and roads are legally obligated to pay for what ITD has already invested, worth about 6 billion baht (US$200 million).

Chanvit Amatamatucharti, deputy secretary-general of the National Economic and Social Development Board, said the Neighbouring Countries Economic Development Cooperation Agency has already approved 18 million baht to finance a study to revise the terms of reference for the three projects and make them more flexible and attractive to foreign investors.

“DSEZ itself has admitted that the terms of reference may not be attractive enough for investors,” he said.

According to Mr Chanvit, consultants would be hired to revise the three projects in terms of investment cost and rate of investment.

This article was first published in the Bangkok Post on 24 March 2014.