Isolated state keen to open doors to investors
Myanmar is opening up. In recent months, foreign leaders, including US Secretary of State Hillary Rodham Clinton and British Foreign Secretary William Hague, paid high-profile visits to the country that has long isolated itself from the world. They rushed to congratulate Myanmar for its progress in democratisation.
Meanwhile, Myanmar's neighbours, the Association of Southeast Asian Nations, China and India now perceive the new government in Naypyidaw as 'lawful' and feel ever more comfortable engaging with it. Myanmar's priority is still to consolidate its position in the face of a weakened opposition. However, equally important is its compulsion to complement the ongoing political process by opening up economically through aggressive promotion of foreign trade and direct investment.
In other words, Myanmar is transforming itself from an old socialist state into a modern market-oriented nation. Accordingly, it has approved a huge port and industrial estate development project in Dawei, for which Italian-Thai Development (ITD) is a major contractor. The first-phase contract for the 10-year project is worth an estimated US$8.6 billion. All in all, it could be worth US$58 billion or more.
In November 2010, ITD signed a 60-year framework agreement with Myanmar's port authority to build a port and industrial estate at Dawei on 250 square kilometres of land. The agreement outlines three phases of development. The first, from 2010 to 2015, comprises major infrastructure. The second will be the construction of the Dawei port. A total of 25 vessels ranging from 20,000 to 50,000 tonnes will be able to berth at 22 wharves simultaneously in two adjacent ports, which together will have an annual handling capacity of 100 million tonnes of goods. Phase three will be to set up an industrial estate, likely to be the largest in Southeast Asia, costing up to US$1.3 billion, and with six zones: port and heavy industry; oil and gas; upstream petrochemical complex; downstream petrochemical; and medium and light industry. Policymakers plan to make Dawei a free-trade zone.
But the true success of this project and others will depend on continued political stability, transparency of business practices and respect for human rights in the country. Already, local people have been forced to relocate to pave the way for construction.
It is possible the Dawei port project could be used to further legitimise Myanmar's new regime and its embrace of capitalism and regional integration. It remains to be seen whether the revenue from the multibillion-dollar project will trickle down to local people, or end up in the generals' bank accounts.
Pavin Chachavalpongpun is a fellow at Singapore's Institute of Southeast Asian Studies