Dawei panels down to two: Terms of reference likely to be revised

8 September 2014 | Chatrudee Theparat | Bangkok Post

Source: http://www.bangkokpost.com/business/news/431024/dawei-panels-down-to-two

According to a source from the National Council for Peace and Order (NCPO), one will be a policy committee chaired by a deputy prime minister, and the other a working committee chaired by the permanent secretary of state and relating to ports, roads and industrial estates.

The previous government had set up a three-layered system policy, high-ranking and coordinating committees to supervise the project.

Earlier, Arkhom Termpittayapaisith, secretary-general of the National Economic and Social Development Board (NESDB), said the committees supervising the Dawei project should be consolidated into two levels, policy and working.

He said the terms of reference should also be amended to make the project more appealing to investors.
Typically, investment in megaprojects or large industrial towns is handled by governments, which invest in utilities and infrastructure while offering privileges to persuade the private sector to set up factories.

But Dawei's concept differs from normal practice. The two partners, Thailand and Myanmar, instead opened concessions for the private sector to develop infrastructure and facilities.

The two countries opened bidding in February for three jobs: a dual-lane highway linking Thailand with the site in eastern Myanmar, a small port and a 30,000-rai industrial estate.

Bidders declined to apply, citing the unappealing terms of reference for the three projects.

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 Myanmar 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 Myanmar government in November 2010.

Thailand and Myanmar agreed last year 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 to manage projects such as the port, road and rail links, power plants, waterworks, industrial estates, a telecom network and the township. The companies will be registered in Myanmar.

The second MoU concerns the revocation of the existing concession between ITD and Myanmar, 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.

The source said that while the NCPO has yet to deliver guidelines for the project, related agencies continue to work on the details.

Two consultants have been hired to revise the terms of reference and make the project more attractive to foreign investors, as well as conduct due diligence regarding the project's viability.

Due diligence is expected to conclude in October, while the terms of reference should be completed this month.

Porametee Vimolsiri, deputy secretary-general of the NESDB, said the latest Mekong-Japan Economic Ministers Meeting in Nay Pyi Taw, Myanmar agreed to support creating special economic zones in three locations in the Greater Mekong Subregion, in addition to the Dawei project.

Thailand also requested cooperation from Japan in industrial development and linkage between Thailand's Eastern Seaboard production base and Dawei.

Mr Porametee said the NCPO had a clear policy of cooperation among neighbouring countries and had approved a plan to establish five special economic zones: Mae Sot and Mukdahan along the East-West Economic Corridor and Songkhla, Aranyaprathet and Trat along the North-South Economic Corridor.