Myanmar Consolidated Media
Education feature story
60th Anniversary of Indonesia~Myanmar

SPDC signs Special Economic Zone law into effect on Jan 27

By Aye Thidar Kyaw and Stuart Deed
February 7 - 13, 2011

MYANMAR appears set to follow in the development footsteps of China, South Korea, Cambodia and the Philippines with the January 27 enactment of the Special Economic Zone Law.

The law, signed into effect by the State Peace and Development Council just before the first sitting of parliament on January 31, includes 12 chapters, the New Light of Myanmar newspaper reported on January 28.

The international media has recently focused on Dawei, in Tanintharyi Region, as the site of an expected – an enormous – Special Economic Zone (SEZ), following a US$8.6 billion deal signed on November 2 between Italian-Thai Development (ItalThai) and Myanmar Port Authority, under the Ministry of Transport, to develop a seaport there (see MTE issue 549 for more information).

The project involves the development of Dawei as a deep-sea port and a 250-square-kilometre industrial estate with sea, land and rail links to the country’s neighbours.

Another site that might also house a SEZ is Yangon’s Thilawa Inter-national Port in Thanlyin township.

Economists and business-people say the SEZs will encourage economic development and could create jobs for thousands.

U Han Htun, a former customs officer who now writes economics books, articles and reports, said the law would encourage economic development in a number of areas, including advanced manufacturing, processing and information technology.

Under the law, foreign operators who choose to invest in the SEZs are required to take on increasingly large proportions of domestic workers as part of their labour forces the longer they stay, thereby increasing employment here and transferring skills and know-how. After five years foreign firms are required to employ at least 25 percent locals in their workforce; by 10 years that rises to 50pc; and 75pc after 15 years.

He added that the establishment of SEZs, particularly the upcoming development at Dawei, could allow Myanmar to compete with Malaysia and possibly Singapore in the logistics field.

But he doubted that Thailand and China would invest in Myanmar’s SEZs.

“I think it’s unlikely that we’ll get a lot from Thailand and China, which usually invest here. In reality what we want is investment from developed nations in Europe or the United States because these are markets that we want to target,” he said. He added that short-term invest-ments should also be discouraged.

He added that for the SEZs to be successful they would need to be accompanied by the development of inter-national-level banking systems, a functioning stock market and a competitive market.

U Paw Hein, the chairman of Myanmar Industrial Association (MIA), said the formation of SEZs would be an “excellent change for the country”. He predicted it would spur an explosion in the number of small and medium enterprises, as well as some large companies.

“A lot of supporting industries, infrastructure and skilled workers will eventuate but it’s a little worrying for domestic enterprises that will have no choice but to embrace the competition,” he said. He added that if the SEZs were successful, wages would inevitably rise, just as they have done in China.