Understanding the durability of Dawei

Understanding the durability of Dawei

In recent months, a spate of news reports has raised concerns about whether or not the Dawei deep-sea port and industrial zone project in Tenasserim division will actually go forward.

According to these reports, national-level political support for the project in Burma is failing amid a dawning recognition that the project will largely benefit Thailand, not Burma. The cancellation of the project’s coal-fired power plant earlier this year has been seen as reflecting this decline in political patronage.

It hasn’t helped that Italian-Thai Development (ITD), the lead developer for the project, has very publicly struggled to secure funding for the project’s second and third phases, while Thailand’s announcement that it will move forward on a port below Dawei on its own Andaman coast – unceremoniously leaked in a UK-based trade publication – has more deeply furrowed the brows of Dawei watchers in Burma and Thailand.

With the ink barely dry on the 2010 framework agreement that gave ITD the green light, is it possible that the project is already on the chopping block? If so, the news hasn’t filtered down to areas in and around Dawei, where project implementation activities proceed apace.

Over a few muggy days in mid-May, bulldozers and pick-ups emblazoned with the orange logo of ITD were busy turning earth and kicking up dirt on the road link to Thailand. ITD employees were actively liaising with communities around the dam site about upcoming social and environmental impact assessments, while construction on company facilities, relocation sites, and worker camps were moving forward in and around the industrial zone area. The perception among local activists and community leaders in the Dawei area is that the project has not even slowed, much less stalled.

Just days ago, Thailand committed some THB 30 billion (USD 1 billion) to supporting the project on the Thai side of the border, while rumours circulated around Dawei that former PM Thaksin was due soon for his second secret visit to the industrial zone site. For an initiative said to be on life support, the Dawei project is inordinately lively.

What has been missing, perhaps, in the death-knell reportage on Dawei, is a keen sense of the deep-lying dynamics in play – especially the circumstances surrounding ITD’s involvement, and the broader structural context of regional economic integration in the Mekong countries.

ITD has myriad reasons to see the project through. The main one is essentially financial: the Dawei project, the showpiece contract for ITD’s expansion outside of Thailand, is central to the company’s growth strategy. For the better part of six years now – that is, since the fall from grace of Thaksin, a personal friend of ITD president Premchai Karnasutra – ITD, Thailand’s largest construction company, has struggled to sustain the company on domestic contracts.

[pullquote] “For an initiative said to be on life support, the Dawei project is inordinately lively” [/pullquote]

With the onset of the global economic downturn in late 2008, the company sought to turn abroad for more work, pursuing a diversified, albeit no less risky, portfolio as a tonic for uncertain times. ITD pursued the same strategy with limited results during the 1997 financial crisis, but this time the company seems firmer in its resolve.

In 2010, ITD secured not only the 75-year concession in Dawei, but also a 25-year concession to build an elevated highway in Dhaka; and earlier in 2011 they locked in another long-term concession to develop a monorail system in Ho Chi Minh City.

Notably, against a distinctly red balance sheet in 2008 and 2009, ITD barely turned a profit in 2010 – and only then by selling a series of assets; but 2011, unsurprisingly, has seen a return to the red. In other words, ITD needs Dawei going forward. And with the return of at least one Shinawatra to prominent power in Thailand, Dawei likely couldn’t go to the trash heap without a serious international relations imbroglio.

Of course, that ITD needs Dawei is no guarantee against the project’s cancellation; though as a firm suddenly back in step with power politics in Thailand, its needing the project means that at least on one side of the border, it can count on substantial political support. The wildcard in this scenario is the much-vaunted new class of ‘liberal reformists’ in Burma. Would they be willing to pull the plug on Dawei?

While the Myitsone suspension and the cancellation of the coal-fired power plant in Dawei do spell a degree of the ‘reformers’ willingness to assert power vis-à-vis strong foreign investors, these were relatively ad hoc, non-systematic decisions. Moreover, they took place against a backdrop whereby industry and infrastructure increasingly are the twin pillars of Burma’s liberalisation strategy.

And this is not just a China and India story. In Southeast Asia’s mainland, the idea of a regionalised approach to economic growth has proven seductive for policymakers for decades. The pursuit of a ‘pure’ regional market space through trade linkages and infrastructure development has long been central to the region’s evolving political economy. As a former perennial blind spot in integrationist politics, Burma’s objective now is to re-embed its economy in regional networks of trade and investment.

The Dawei project is very much of a piece with this structural context – not only as a putatively transformative infrastructure project aimed at stimulating greater intra- and inter-regional trade, but also in Thailand’s leadership in pursuing the project, a hallmark of the main regional integration initiatives since Chatichai’s time in office.

In this sense the project has a force and a logic that, while not impenetrable and certainly not uncontested, nonetheless leaves it fairly well-prepared to withstand early-stage financial challenges and political instability, especially as Burma’s neoliberal turn is built on precisely the kind of market linkages that Dawei stands to deliver.

Burmese policymakers could, then, go lights out on Dawei, but they would do so in contravention of both their own policy trends and the deeper dynamics of regional integration. For now at least, it seems unlikely, while for an influential company in dramatic pursuit of regeneration, the incentive to ensure as much could not be higher.

Debates about whether or not the project will go forward are very different than debating if or how it should go forward. Fortunately, recent conversations with Dawei-area activists and community leaders suggest they are well versed in the deep-lying elements in play. An admirably clear-eyed understanding of the project, its stakeholders, and related power dynamics has, indeed, been pivotal to impressive community organising at the local level thus far. Surely it will remain as such as the project proceeds, however slowly for now.

Soe Lin Aung is an independent researcher based in Rangoon. 

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