Tuesday, July 10, 2012

Dawei contractor says infrastructure financing lined up

Tuesday, 10 July 2012 11:47 Mizzima News

An infrastructure development loan for the Dawei deep-sea port in Burma is likely to be secured from Japan next week, the president of Italian-Thai Development Plc (ITD) told The Bangkok Post on Monday.

An artist's rendering of the Dawei Special Economic Zone in Burma. Photo: daweidevelopment.com

Premchai Karnasuta said he expected to get soft loans from Japan to finance up to 75 per cent of the US$8.6 billion required for infrastructure development at its Dawei project in southern Burma.

He said he would visit Japan from July 16-17 to finalize plans with the Japan Bank for International Cooperation and the Japan International Cooperation Agency.

Somchet Thinaphone, managing director of Ital-Thai's Dawei Development Co (DDC), said the company plans to raise 75 per cent of the total infrastructure cost in yen, with the rest made up of Thailand and U.S. loans.

The Dawei Special Economic Zone, which is being developed under a concession from the Burmese government, was in the news recently after Max Myanmar, the local Burmese partner that owns 25 per cent of DDC, announced that it would pull out of its partnership gradually.

Somchet told the newspaper that Max Myanmar remains a DDC partner.

“Max Myanmar does not want to inject more money into DDC through a capital increase in the future. Consequently, the company will see its ownership diluted from the current 25 per cent,” said Somchet.

He said DDC has been in talks with four or five potential local partners.

The first phase of Dawei's deep-sea port is scheduled to be operational in 2016.

Winston Set Aung, an economic adviser to the Burmese government, said the problems with fundraising and joint investment partners, could delay the completion date, but he said the government fully supports the massive project.

Apart from Dawei, there are two other special economic zones under development in Burma.

In January, Mizzima reported that Italian-Thai needed to secure around US$ 8.5 billion to move ahead on the infrastructure phase of the massive $50-billion project.

Thailand's largest construction company by market value, ITD will require the backing of Thailand and Burma and a blend of international partners.

The Thai contractor has said it will maintain at least a 51 per cent stake in DDC, while other partners are welcome.

The project that will cover 250 square kilometers. Located on the Andaman shoreline, Dawei is about 350 kilometers west of Bangkok. The project will supply oil and other goods to Southeast Asia, bypassing the Strait of Malacca and cutting costs.

The Dawei Special Economic Zone includes an integrated steel mill, power plants, a petrochemical complex and a fertilizer plant. Separate entities will be set up to invest in each project, Somchet said.

“China, Japan and South Korea are the key strategic partners of our projects,” he said. “Finding a balance for each of these groups is important.”

Somchet said the Thai and Burmese governments would provide support in four areas for the Dawei project:

– Physical infrastructure such as roads in Thailand to link with Burma roads.

– Simplifying border procedures between the two countries under the Asean Economic Community (AEC) in 2015.

– Financial transactions such as money exchange between the two countries.

– Enhancing competitiveness of Thai and Burmese businesses in the cross-border investment.

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