Friday, 28 March 2014

Will Dawei be the new hub of South East Asian Sea transportation?



The recent opening of Myanmar to foreign investments has brought new perspectives for South East Asian Sea transportation. In 2008, the Thai Government of Yingluck Shinawatra signed a memorandum of understanding with the Republic of Myanmar for the construction of a deep sea port on the Southern shoreline of Myanmar at the far west of the East-west Great Mekong River sub region economic corridor. 

The project aims to shorten maritime routes from Thailand (and incidentally its neighboring countries) to Europe, India, Middle-east and the rest of the western world. 
Products manufactured in Thailand for the western market will usually travel all the way down through Singapore and the dangerous and congested Malacca strait before reaching the Indian Ocean. The construction of a deep-sea port along the cost of Myanmar would provide a direct access to the Andaman Sea and the Indian Ocean and therefore significantly reduce freight and time of shipment between the west.

On a voyage from Lang Chaban to Dubai, a container ship has to travel 4800 nautical miles through the traditional shipping route. At an average speed of 10 nautical miles per hour it takes her 20 days to reach her destination. 

The traditional route form Bangkok to Dubai

If the Dawei deep seaport project is achieved, as well as its related highway network, goods manufactured in the industrial zone of Bangkok will travel 350 kms on land in a day, up to the loading deck, and a further 3500 nautical miles to Dubai. A vessel sailing 10 nautical miles per hour would resume the voyage in 15 days. Fuel consumption and distances would be cut off by a quarter by the opening of this alternative route.

The project would have an important impact on the ASEAN trade but also on Korea, Japan and the South of China as projects for the construction of highway networks along the three main economic corridors of the Great Mekong River sub region are being developed.
Together with the deepsea port, the Dawei project also plans on the development of large Hinterland infrastructures such as terminals, industrial complexes etc, and the construction of a new pipeline to supplement the already existing Yadana one. Thailand’s future energy needs directly depend on its trading relationships with Myanmar. Around 70% of Thailand’s electricity is produced from gas fired. Among those 70% only a small proportion comes from national production the rest is provided by Myanmar. 

Even though the project sounds promising, its future remains uncertain. In 2012, shortly after the signature of a second agreement of understanding, the Thai construction firm Italian-Thai development Public Company Limited was granted, by the government of President Thein Sein, a 75 years concession to develop the project. Two years later the two Governments were revoking the concession as the company had failed to attract enough investors to resume the first stage of the project. If Japanese Investors and other Thai industrials expressed their interest in resuming the project by investing new funds, it seems that no official negotiations will be undertaken before December 2014.
Political instabilities on both sides of the border (the ethnical conflict between Muslims and Buddihsts in the South of Myanmar and the recent overthrow of the Pheu Thai Party) make the realization of the project more difficult as they are not without repercussion on the willingness of investors to invest in the area. 

Geoffroy Ygouf 



For further information about this topic: Geoffroy Ygouf  LL.B Cean (FR), LL.M Thammasat (T),  LL.M Southampton.  E-mail: geoffroy.ygouf@gmail.com

[Figures and marine distances: Economic Dependence Subjucates Policy-Thai-Burma by Thitinan Pongsuhirak/Dawei Developemnt Company Ltd/Sea route & Distances-ports.com]

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