The Myanmar government is tightening its regulations to ensure that future investors will have the financial capabilities to fulfil the requirements of developing the Dawei Special Economic Zone (SEZ).
Developments there ran into a snag when the sole contractor, Italian-Thai Development (ITD), failed to deliver the projects due to a lack of funding.
Myanmar gave the Thai-based ITD, a 75-year, US$8.6-billion concession in 2010 to develop the special economic zone in five phases.
Dawei is one of three SEZs in Myanmar. It is located at the southeast coast of Myanmar and offers many attractions for businesses.
It can house facilities like oil refineries, petrochemical plants and a deep sea port.
But the Dawei SEZ has come to a standstill because the government is now conducting a due diligence assessment on the work done by ITD so far.
Renowned accounting firms such as PricewaterHouse Coopers, Ernst and Young and Deloitte will carry out the assessment.
Set Aung, chairperson of Dawei Project Rules & Regulation Sub-Committee and deputy central bank governor, said: “Hence, the Italian-Thai company stopped its operations because the governments already agree that it has to stop for the due diligence assessment.
“The due diligence assessment is going to convince the other international investors to come in, so there has not been any misunderstanding, there has not been any consequences related to the bilateral relationship between the two countries.”
For the Dawei projects, the government will also hire an international consulting firm to draw up a concessional agreement.
Set Aung said:”…The proper monitoring and evaluation systems, proper bank guarantee fund systems, performance bond guarantee and also proper compensation structures (will) be there in the concessional agreement.”
“So if there’s going to be any failure that’s going to happen, there are going to be a lot of penalties and consequences to be agreed upon in the concessional agreement.”
Although work on the Dawei SEZ has not been smooth-sailing, the government believes the area remains attractive.
Aye Myint, chairman of Dawei SEZ Working Committee and labour minister, said: “The starting point is not a smooth one…now we have progress than before. I’m confident that this project will be successful.”
Even though development projects at the Dawei SEZ have been delayed, the Myanmar government instead sees that as a necessity in order to allow them to improve the criteria for choosing the right investors.
Stricter terms and conditions will allow Myanmar to weed out the speculators and instead zero in on investors who are committed to the long-term success of the Dawei SEZ.
Source : Channel News Asia | December 10, 2013