Development, Democracy, and Human Security in Myanmar:
A Case Study of the Dawei Special Economic Zone Presented to ICIRD 2012 International Conference Towards an ASEAN Economic Community (AEC): Prospects, Challenges and Paradoxes in Development, Governance and Human Security
July 26 – 27, Chiang Mai, Thailand

Dr. Naruemon Thabchumpon, Dr. Carl Middleton and Mr. Zaw Aung
Master of Arts in International Development Studies Program, Faculty of Political Science, Chulalongkorn University Funded by International Cooperation and Human Security, Chula Unisearch, Chulalongkorn University (HS1069A)

SECTION I: A Brief Background of Changes in Myanmar in the Last Five Years SECTION II: Reforms in the Political Economy of Myanmar SECTION III: Thailand’s Trade and Investment Role in Myanmar’s Transitional Economy SECTION IV: Case Study: Dawei Deep Seaport and Special Economic Zone SECTION V: Benefits and Challenges Doing Business in a Transitional Political Economy



Methodologies:Two-step Data Collection
First Step: Secondary data was collected through a desk review of the existing literature on Thai-Myanmar trade and investments and documents on the Dawei Deep Seaport, and Special Economic Zone. Second Step: the research team conducted primary data collection by travelling to the field research sites in Yangon and Dawei in Myanmar for one week from May 13 to 19, 2012. Qualitative Research Methods: Semi-structured indepth interviews with key individual informants, focus group discussions, and direct field observation.


Political Reforms Focusing on Peace and Reconciliation
Release of Political Prisoners step by step for several times, but… Inclusive political process (e.g. Daw Aung San Suu Kyi and her party in the parliamentary framework), but… Resuming ceasefire talks with various ethnic armed groups, but… Allowing freedom of press (e.g. political coverage in media), but… Allowing freedom of association (e.g. Worker unions), but… Allowing freedom of expression (e.g.. Public demonstration), but… Listen to public opinions (e.g. Myitsone Dam and Dawei coal-fired power plant), but…

Legal Reforms Focusing on Economic Area
New laws enacted by Parliament 1) Environmental Law; 2) Labor Union Law; 3) Agricultural Land Law; and 4) Vacant, Fallow and Virgin Land Law Draft laws waiting for the approval of parliament 1) Foreign Investment Law; 2) Securities Exchange Law Laws in drafting process 1) Special Economic Zone; 2) Central Bank Law; 3) Minimum Wage Law



Financial Reforms Targeting ASEAN AEC 2015
Exchange Rate: Change to managed float of exchange rate system Stock Exchange: Signed MoU with Diawa Institute of Research Ltd. , Diwa
Securities Group Inc. and Tokyo Stock Exchange Group Inc. (TSE)

Central Bank of Myanmar (CBM): Restructuring the CBM as an
independent financial institution free from the control of Ministry of Finance

National Private Banks: Allow private banks to open foreign currency
exchange counters and conduct foreign currency transaction.

Foreign Banks: the government is preparing to allow the foreign banks to
operate in the country before 2015.

Foreign Investment Policy
Four Key Policies
1) To protect the interest of Myanmar citizens; 2) To protect the dignity of the State; 3) To protect national sovereignty; and 4) To allow environmental friendly investment – outlined by President Thein Sein in US-ASEAN Economic Forum

Key Standards applied by Myanmar Investment Commission
1) To give protection to investors; 2) To focus on environmental protection; 3) To focus on social impact protection; 4) To focus on transparency and accountability in financial sector in accord with internationally accepted abiding system; and 5) To focus on job creation, corporate social responsibility (CSR) and technology transfer

Thailand’s Trade and Investment Role in Myanmar’s Transitional Economy


Thai Foreign Direct Investment in Myanmar (Up to February, 2012) Country China Thailand Hong Kong No. of Companies 33 61 38 Total Sector Value (US $ Mil) 13947.146 9568.093 6308.495 39188.147 Value (US $ Mil) 18,873.720 13,815.375 2,749.463 39,958.787 % 35.6% 24.6% 16.1% 100% % 47% 35% 7% 100%

Energy Oil and Natural Gas Mineral Total

Source: Eleven Media Group/Myanmar Government Statistics

Thailand and China (including Hong Kong) shared more than 75% of all FDI in Myanmar. Extractive industrial sectors shared 89% of the total FDIs in Myanmar



Thailand’s Import Value Trading with Myanmar (2001 -2011)
Year 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 THB-US$* Exchange Rate $1 = 43.00 $1 = 43.00 $1 = 41.53 $1 = 40.27 $1 = 40.27 $1 = 37.93 $1 = 34.56 $1 = 33.36 $1 = 34.33 $1 = 31.73 $1 = 30.49 CIF (THB) All Items 35,789,673,029 38,923,521,712 37,213,471,890 54,518,784,752 71,915,931,550 88,705,740,869 79,992,859,159 112,426,003,196 95,975,915,242 90,000,451,056 99,725,430,586 CIF (THB) Gas Only 28,888,386,599 31,741,562,267 29,393,441,465 43,471,944,438 60,085,625,312 76,446,181,276 71,922,427,574 103,880,553,254 87,644,323,375 82,975,992,515 93,821,035,484 CIF (US $) Gas Only 671,822,944 738,175,866 707,764,061 1,079,511,905 1,492,069,165 2,015,454,291 2,081,088,760 3,113,925,457 2,552,995,246 2,615,064,371 3,077,108,412 % of Gas Sale 80.72% 81.55% 78.99% 79.74% 83.55% 86.20% 89.91% 92.40% 91.40% 92.20% 94.08%

Source: Customs Department of Thailand

Exchange Rate: Bank of Thailand

Thailand’s Export Value Trading with Myanmar (2001 – 2011)
Year US$ - THB* Exchange Rate $1 = 43.00 $1 = 43.00 $1 = 41.53 $1 = 40.27 $1 = 40.27 $1 = 37.93 $1 = 34.56 $1 = 33.36 $1 = 34.33 $1 = 31.73 $1 = 30.49 FOB (THB) All Items 15,639,587,129 13,602,269,761 18,143,686,667 24,241,973,300 27,996,329,854 28,699,602,989 32,919,283,545 43,840,707,157 52,642,081,617 65,631,180,240 85,877,142,849 FOB (THB) Fuel Oil Sale 948,985,286 825,515,940 1,137,418,162 1,469,209,826 3,520,964,689 4,850,392,004 5,213,669,816 7,967,512,492 9,390,118,030 10,426,475,533 12,492,560,567 FOB (US $) Fuel Oil Sale 22,069,425 19,198,045 27,387,868 36,483,979 87,433,938 127,877,458 150,858,501 238,744,379 273,525,139 328,599,922 409,726,486 % of Fuel Oil Sale 6.07% 6.07% 6.27% 6.06% 12.58% 16.90% 15.84% 18.17% 17.84% 15.89% 14.55%

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

Source: Customs Department of Thailand

Exchange Rate: Bank of Thailand



Case Study: Dawei Deep Seaport and Special Economic Zone


Two GMS economic corridors crossing Thailand will end in Myanmar’s Andaman coastline Dawei as Western Gateway to India Ocean for GMS & ASEAN to realize India – Makong Economic Corridor Myanmar as Geo-economic Partner of Thailand for its trade with China, India, Africa and Middle East Thailand Key Interests in Myanmar: Natural Gas and Hydroelectricity Southern EC passing Tenesserim Region The two countries signed the 2nd MoU on DSEZ, Thai government may extent its commitment to the SEZ, which excluded in 2008 MoU.

East-West EC crossing Karen State

Situation in Myanmar
September, 2007: Saffron Revolution May, 2008: Cyclone Nargis May, 2008: Constitutional Referendum November 7, 2010: The First Election in Myanmar in 20 Year January 27, 2011: The former military government enacted DSEZ Law two months before it dissolved itself. March 30, 2011: A new government took the state power August, 2011: The rapid political changes including the first meeting between President U Thein Sein and Daw Aung San Suu Kyi, December 15, 2011:DDA totally rejected coal-fired power plan construction in Dawei. January 7, 2012: Ministerial Meeting in Dawei including from ADB, Thai Banks: Siam Commercial, Krungthai and Bangkok Bank. July 4, 2012: The resignation of the Vice President U Tin Aung Myint Oo and Max Myanmar confirmed its withdrawal of the

Progress of Dawei Project
May, 2008: MoU between Myanmar and Thai governments June, 2008: MoU between ITD and MPA November 2, 2010: Signing a Framework Agreement between ITD and MPA. 2011: ITD drafted the DSEZ law, citing to Kriangsak Teerakowitkajorn, a researcher from Thammasat University. June, 2011: ITD held two Road Show on Dawei project in Bangkok and Tokyo September 16, 2011: ITD registered DDC in Myanmar, holding 75% share + 25% share reportedly from Max Myanmar Group November 14, 2011: ITD signed a deal with RATCH for the investment of the plant. January 9, 2012: Myanmar canceled the 4,000 MW coal-fired power plant in Dawei, but 400 MW plant is under consideration. July 23, 2012: Thailand and Myanmar government signed a new MoU of Dawei Project



Political Risks and Human Security Implications in Dawei Project
Rule of Law
Business agreement first, SEZ law later. Constitution first, environment and social impact assessments later Grabbing farmlands and plantations first , compensation later Redrafting SEZ law, cancellation of coal-fired power plant and Max Myanmar’s withdrawal from the project. ITD took political risks to secure lucrative business concession

Investment & Energy
Investment must be transparent, accountable, environment-friendly and create jobs. (E.g. 4,000 MW coal-fired power plant) An immediate solution is to set up 150 MW combined cycle power plant with the natural gas bought from Indonesia, according to ITD

Land Acquisition & Involuntary Resettlement
Complex land acquisition through buying lands with different prices, causing price disputes and land speculation. Involuntary resettlement is the most challenging task and also costly. Design of relocation housing plan:Town setting vs.Village setting No arable land for the relocated villagers, causing livelihood security No more rice field, causing food security

Lack of Transparent Information and Public Participation
ITD released project information highlighting the project’s benefits, but hiding environmental and social costs. ITD’s public participation strategy is just to bargain the land price with the local villagers, using the power of local authorities who persuade and threat the villagers to sell their lands. The feeling of uncertainty and anxiety spread in the affected village communities due to the lack of useful information for the locals and their meaningful participation.

Rising Social Movements
Due to the exclusion of the local communities in the process, they tried to learn by themselves what is going on in their area and what will be the impacts of this project to their life and livelihoods. Social movements emerged with the concerns to loose their ancestral lands, cultural identity, social values and traditional practices while protesting against any harmful impacts on the environment.

Lack of Socio-cultural Awareness Leading to Social Discontents New York Times:“An Industrial project that could change Myanmar” Dawei is…“almost deserted… wild and sparsely populated southern coast.” …“There’s nothing in the country but wilderness and cheap labor.” …“Some industries are not suitable to be located in Thailand. This is why they decided to set up there [Dawei].



CSR Policy of ITD
Business Ethics:
“… The Company will avoid engaging the activities which are against morality.”

Respect to Human Right and Labor Equity:
“Human resource is the effective factor to drive the business … The Company, therefore, shall improve their working environment …”

Community Development:
“… The Company will establish the activities which can strengthen the community for example the education support, human resource development, employment creation, and other development project.”

Environmental Concern
“… The Company, therefore, shall set the environmental impact protection system comply with laws and regulation and participate in environmental activities with other part of society.”

CSR Report:
“The Company will disclose the information related to CSR activities of the Company in the annual report.”

Benefits and Challenges of Doing Business in a Transitional Political Economy
Is it the right time to implement a project like Dawei deep seaport and SEZ as Myanmar is in a transformation stage of changing governments and governance structures? From the regional economic integration perspective, it could be the right time to carry out the project because of the aspiration for an ASEAN Economic Community in 2015 and the project could play a key role in this process. From the domestic perspective, it is also true that Myanmar needs to develop its economy with the help of foreign direct investment, especially in this time of transforming the country towards the democratic governance. However, it is vital that all of the stakeholders do not overlook or underestimate the importance of addressing the long list of issues identified above, including the rule of law, the quality of foreign investments, energy, land acquisition, involuntary resettlement, compensation and environmental challenges. The most daunting challenges is the lack of established institutional capacity conducive to such a large-scale industrial development project.




The process of regionalization that has been taking place in the vicinity of Myanmar will suddenly collide with the country and its people as Myanmar opens up its borders to re-engage with the region. Under the present circumstances, Myanmar will not benefit from the Dawei project as much as it could if the government doesn’t pay serious attention to the issues identified in this paper, and if a greater regard is not played to the importance of public participation and the role of civil society. As such, if the project is to proceed, whether it will benefit all or instead be the source of trans-boundary social and environmental injustice remains to be seen.

Thank for your attention!


Master your semester with Scribd & The New York Times

Special offer for students: Only $4.99/month.

Master your semester with Scribd & The New York Times

Cancel anytime.