Will the Dawei Economic Zone Benefit the People of Myanmar?

Is the Dawei Special Economic Zone paving the way to environmental disaster?

An article by a Mekong Watch researcher, published on the Mekong Commons website,  begins with this question. The article provides information on the local situation and some of the environmental and social issues around the Dawei SEZ. Though Japan developed its economy using similar large-scale industrial zones, it did so in a very different economic and environmental context. To promote the same kind of development model for Myanmar actually runs the risk of creating more environmental and social damage than it will be worth.

The full article can be viewed on the Mekong Commons site, and we have also posted the article below:

Is the Dawei Special Economic Zone paving the way to environmental disaster?

The governments of Myanmar, Thailand and Japan are together investing to build a special economic zone (SEZ) covering 20,000 hectares (ha) in Dawei, a coastal town in Myanmar. The SEZ plans include an industrial estate and deep sea port to promote export-led industrialization. Project proponents hope to make Dawei the western gateway of the “southern economic corridor” promoted by the Asian Development Bank (ADB). This corridor would link Vietnam, Cambodia and Thailand. Thailand’s Italian-Thai Development (ITD) initiated the project in 2008, but it eventually stalled in 2013, since ITD was unable to raise the necessary funds. The governments of Myanmar and Thailand, however, have continued to promote the project.

In 2015, the Government of Japan formally became involved in the Dawei SEZ. Japan is investing through the Japan Bank for International Cooperation (JBIC) through a Special Purpose Vehicle that provides investment in an equal ratio to that of the Myanmar and Thai governments. In addition, the Japan International Cooperation Agency (JICA) is also conducting a survey for the construction of a road connecting Dawei with the Thai border.

In July 2016, Mekong Watch, a nongovernmental group in Japan working on environmental issues in the Mekong Region, visited the project site and met people who were facing a variety of problems due to the Dawei SEZ project. ITD had already begun the construction of access roads and leveling of land in 2010 as preparation for the construction of the road corridor and the industrial estate. Residents in one village spoke of road construction suddenly taking over their lands with no prior notice. Construction has caused erosion, and sediments have flowed over farmland, making the land unfit for cultivation. Water sources have also been polluted by soil and sediments. Community roads have been divided, and routes and habitats used by elephants and other wild animals have been fragmented. Almost none of the residents affected by these damages have received sufficient compensation.

Similar problems are also arising in the area designated for the SEZ. Farming and fishing communities were told to move out of the SEZ area. A resettlement site was built, but some people were already living there, which created problems for the original residents. People also knew they would not be able to find employment at the resettlement site, so only four households actually moved there. At present, just one household lives there. Now the site contains 480 houses standing empty, side by side. The SEZ project claims it will create employment. But so far, the reverse seems to be the case.

Among residents affected by ITD’s road construction, some have received compensation, some have been partially compensated, and some were not considered eligible for compensation. This is creating new tensions among the communities. Some residents told us that they are hoping Japan would become involved and construct the road. When asked why, they explained that because Japan is an economic superpower, people would be adequately compensated if Japan were responsible for the road. If road construction is financed with Japanese aid, it is possible that livelihood improvement programs might be implemented regardless of damage. However, Japan will not compensate for any damages caused by previous construction work undertaken before the involvement of the Japanese government.

Non-governmental groups from Myanmar and Thailand filed a complaint with the National Human Rights Commission (NHRC) of Thailand. The NHRC conducted a survey and released a report in November 2015 citing violations of the rights of the people in Dawei. The report says there are still unresolved problems, and expects that the negative impacts will continue into the future. The report also says that restoring the environment and the livelihoods of residents is the responsibility of not only the company but of the participating governments as well. ITD, however, claims that it is not responsible because it no longer has any rights in operating the project.

The Dawei SEZ’s area of 20,000 ha is one-thirds the size of Yangon. Phase 1 of the Thilawa SEZ, a project in which global Japanese corporations are investing with the support of Japan’s government is 400 ha, and the entire project is 2,400 ha.

The Japanese government is currently reviewing the Dawei SEZ plans, and we are speculating how Japan will proceed with development in Myanmar. One feasibility study commissioned by the Japanese Ministry of Economy, Trade and Industry (2013), states: “There is a need to rework ITD’s wishful concept into an economically rational plan.”1

In the 2015 report, “Comprehensive Development Plan Study for Assistance to Promote Industrialization in Myanmar,” it is interesting to note that the study anticipates very high port maintenance and management costs due to necessary dredging and erosion measures.2 The private sector was supposed to cover these costs in the initial project plan, but it is still unclear if companies will be interested if port utility fees are high. Public funds are also being considered to cover part of the burden. Another concern is that the currently planned width of the channel is too narrow to enable boats to pass if a large tanker were to enter.

In the feasibility study mentioned above, the chapter on environmental regulations states: “If strict environmental regulations similar to Thailand’s Map Ta Phut project are adopted, Dawei’s capital investment costs will rise, weakening its manufacturing edge.” The study also says, “while keeping the environmental burden that accompanies industrial town development to a minimum, there is a need to design environmental regulations that would make it advantageous for Japanese companies to come aboard.”

In other words, this study is saying that it is economically unfeasible to adopt Japanese environmental standards, and that it is even impossible to adopt standards equivalent to Thailand’s, which the Thai government has begun to revise due to its bitter experience with pollution. Unfortunately, the Japanese government’s involvement is no guarantee that people’s rights and the environment will be protected.

Dawei enables access to the Indian Ocean, and is therefore a very attractive location from a business point of view. The topography may make it impossible, however, to construct an efficient, large-scale port. Without prior construction of the port, there would be little economic benefit to connecting Vietnam to Dawei, and little economic benefit from building the SEZ. Without the SEZ, there is no need to spend exorbitant amounts to cut through beautiful mountainous terrain to construct a huge highway.

Japan achieved its past economic growth by building large-scale industrial estates and developing export industries. But is this a good model for Myanmar as it rebuilds its nation in the 21st century? It may be wise to look at some of the challenges Japan is facing now. In Japan, there is little employment outside of urban centers, and the population has concentrated in large cities, so there are disproportionately high numbers of senior citizens in rural areas. While life in large cities has been made very convenient with infrastructure, human relationships and a sense of community are difficult to develop. The culture of mutual cooperation is weakening and urban life is not easy for children and the elderly. According to a study by the Prime Minister’s Office, there are 236,000 youth who are “hikikomori,” which means they have withdrawn from society, refusing to leave their homes. They stay inside, sometimes for years, refusing, or too afraid, to go outside.

Japan’s financial condition is also unstable. According to documents from the Japanese Ministry of Finance, 24.4% of the annual expenditure for fiscal year 2016 was for servicing the national debt. In addition, 35.6% of the national budget revenue came from public bonds. This means that while one fourth of the budget was used to pay back previous debts, more than one third of the budget was borrowed from future generations. On the other hand, income from corporate income tax is only 12.6%. Due to globalization of the economy, corporate profits do not necessarily lead to national profit. The Japanese government often cites Thailand’s eastern coastal region’s industrial development as an economic success. But that took place in the context of the Plaza Accord, when the yen was very strong, and many Japanese firms were moving overseas. Would the same happen in Myanmar today with the construction of the Dawei SEZ?

In Japan, it has become recently known that the surrounding seas are largely polluted with microplastics. Years after the Fukushima Daiichi Nuclear Power Plant disaster, even today water contamination from radiation is not under control with waste still being disposed in the ocean. In Dawei, on the other hand, the ocean is vibrant with natural resources and stunningly beautiful. There are still many wonderful places along the coast. We have heard of plans to organize eco-tours with the participation of local residents.

Myanmar is in a unique and invaluable position with unlimited opportunities to steer development so that it focuses on the needs of the people in Myanmar and the integrity of the natural environment. Myanmar need not follow old, outdated models where development was implemented primarily for the benefit of corporations and governments with little benefit for the local residents while also causing health and environmental impacts. In principle, Japanese aid is provided upon request. This means that aid is given in response to requests from recipient governments. We ask that the decision-makers in Myanmar consider whether the Dawei SEZ can really benefit the people of Myanmar. Consider it carefully then let the Japanese government know what you think.

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Petition to JICA on Tanintharyi Region Development Plan

On April 2017, Mekong Watch submitted a petition to JICA regarding the Tanintharyi Region Development Plan. An English translation is provided here.

In April, JICA was accepting bids from consultants to conduct the “Data Collection Survey for the Tanintharyi Region Development Plan.”  Mekong Watch is concerned that JICA will fail to take the concerns of local people and civil society into consideration. Failure to do so has already been seen in a related study, the “Data Collection Survey for the Southern Economic Corridor in Myanmar, Final Report (September 2016)”.  In spite of NGOs and local people voicing concerns, and a report and recommendations by the National Human Rights Commission of Thailand, these concerns were not reflected in the 2016 report, and JICA claimed having had no knowledge of the NHRC’s recommendations.  Mekong Watch wants to ensure that the same mistakes to not happen with the Data Collection Survey for the Thanintharyi Region Development Plan, which includes the Dawei SEZ.

Mekong Watch made the following demands to JICA:

  • JICA is currently holding a bidding process to conduct the “Data Collection Survey for the Tanintharyi Region Development Plan.” In order to ensure that this Data Collection Survey complies with the spirit of the Guidelines, first disclose information to the residents and local civil society groups, and listen to their opinions about the project. In the bidding announcement for this survey, one of the stipulations is, “based on regional development of the Tanintharyi Region, collect and analyze basic information towards regional development that values the perspective of benefiting local residents.” To do this, it is essential to understand what kind of development local communities think is necessary and hope to see. In addition, there are already cases of opposition from residents in the Tanintharyi Region towards development plans such as those related to the DSEZ, mining, and coal-fired power plants. To make future development plans for this region, it is necessary to be fully aware of this situation.
  • In the case of the Southern Economic Corridor, a project that aims to construct a highway that will connect large cities to an SEZ with port facilities, it is likely that people living in the mountainous rural villages will feel more negative impacts to their livelihoods than positive ones. Construction of access roads by ITD has already led to human rights violations and environmental problems. JICA should do what is necessary to understand the existing problems and make proposals that include recommendations to resolve these problems.
  • JICA must become accountable to local residents and local civil society groups for the Report, “Data Collection Survey for the Southern Economic Corridor in Myanmar: Final Report.” In order to collect a wider range of opinions, it is important to translate the Report into Burmese and Karen, and disclose them in forms accessible to local residents.
  • JICA should listen to the opinions of the National Human Rights Commission of Thailand and stakeholders including civil society groups such as NGOs in Myanmar and Thailand.

Please see the letter itself for more details.

Petition_JICA_20170529_EnglishFINAL

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Legal Framework for SEZs in Myanmar insufficient to protect human rights: ICJ Report

The International Commission of Jurists (ICJ) has recently issued a report entitled “Special Economic Zones in Myanmar and the State Duty to Protect Human Rights.”  In this report, they review the legal framework in which the SEZs in Myanmar are being developed, and provide an overview and analysis of the Kyauk Phyu SEZ being developed in Rakhine State. The report also lists recommendations for relevant actors. The recommendations include a moratorium on SEZ development until laws are amended to address weaknesses and contradictions in Myanmar’s SEZ legal framework.

Mekong Watch has been monitoring the Thilawa SEZ since 2013, and have recently been monitoring Japan’s involvement in the Dawei SEZ project, and the legal issues the ICJ points out are relevant to these two SEZ projects as well.

The ICJ finds that Myanmar’s 2014 SEZ Law is not sufficient to enable Myanmar to fulfill its obligations under international law. Continue reading

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Dawei SEZ Fact Sheet Available

We have compiled information into a factsheet on the Dawei SEZ project. It can also be downloaded as a PDF document (including photos, 5MB) by clicking this link:  dawei_factsheet_eng_2016nov10

The text of the fact sheet (without photos) is below:
November 10, 2016
Fact Sheet
Project Name: Myanmar/BurmaDawei Special Economic Zone Development Project

Project Overview:

The Dawei Special Economic Zone (SEZ) Development Project is an enormous plan to build what could be among the largest industrial zones in the world if it goes according to plan. It is projected to become a hub of logistical activity in the Greater Mekong Sub-region (GMS), with a deep sea port to be built just beside the SEZ. Also with a road and railways built to link the deep sea port to the Myanmar-Thai border, connecting to roads and railways beyond, it is to create an alternative trade route replacing the traditional sea route that crosses the Malacca Straits.

The planned size of the SEZ is about 20,000 hectares, equivalent to 1/3 the size of Lake Geneva, and approximately 8.3 times the size of the already problem-ridden Thilawa SEZ on the outskirts of Yangon. Infrastructure related to the Dawei SEZ includes a deep sea port, roads, railways, reservoirs, power plants, and gas pipelines. These would replace villages, some of which are indigenous, as well as plantations, rice fields, rotational farming fields, rolling hills, rivers, beaches, mangrove forests, and ecosystems. Continue reading

Posted in Dawei SEZ, Southeast Burma Integrated Development, Uncategorized | 3 Comments

[MW Statement] Premature JICA Decision Violates Environmental Guidelines

What will it take for JICA to learn from its past mistakes? The Thilawa Special Economic Zone is entering it’s next stage, but JICA is repeating many of the same mistakes it made during Phase 1. Local people affected by Phase 1 of the Thilawa SEZ were so concerned about the repercussions of being relocated that they filed an official complaint against JICA in June 2014. An examiner who investigated the complaints wrote a detailed report with many recommendations to JICA for measures that should be implemented to improve the project. JICA put together a team of experts to talk with relocated families to try to address the problems they were facing. JICA dedicated a lot of time, money and effort for this. Why are they now repeating such similar mistakes now in Zone B?

Mekong Watch issued a statement in October (original in Japanese), and the English translation is below:

October 24, 2016

[Statement] Myanmar’s Thilawa SEZ Zone B Phase 1

JICA Violates Environmental Guidelines with Premature Decision to Invest

Agreements on farmland expropriation still incomplete

On October 21st, upon revising the joint venture contract with Japanese and Myanmar enterprises and the Myanmar government, the Japan International Cooperation Agency (JICA) decided to provide overseas lending and investment[1] to develop Zone B’s Phase 1 (approx. 100 hectares) of the Thilawa Special Economic Zone (SEZ) development project being supported by both the Japanese public and private sectors.

Agreement has still not been obtained, however, from farmers who will lose their means of livelihood due to expropriation of farmland in Zone B Phase 1, and negotiations regarding compensation measures are still ongoing. Continue reading

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[Seminar] Investment to Myanmar and Environmental and Social Aspects “What should Japan do?: Reports from Local Residents Affected by the Thilawa SEZ”

Sep 27, 2016 (Tue) 18:30-20:30

Organized by: Mekong Watch

Cooperation by: Ayus, FoE Japan, Human Rights Now
Location: Global Environmental Outreach Centre (Tokyo)
(1st Floor of UN University, between Shibuya and Omotesando)
http://www.geoc.jp/english/contact/access/
Fee:  500 Yen (Students and Mekong Watch and cooperating organizations’ members are free)

More than 2 years have passed since residents affected by the Thilawa SEZ Development Project filed a complaint and request for investigation into JICA’s what they believed to be violations of JICA’s safeguard policies. Have there been any improvements? What are the current situation and problems? Any concerns? At the seminar, residents and local NGO staff will be reporting on recent developments. Continue reading

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Thilawa Update

All residents from Phase 1 of the Thilawa SEZ Development project have been resettled, but in spite of the many unresolved problems, preparations are being made to relocate the next 2000-hectare area.

During Phase 1, residents were greatly dissatisfied with both the resettlement process and compensation. Two years since relocation, there is still insufficient clean water supply, some families have left the relocation site, and some families are still in debt.

Will lessons learned from the Phase 1 area resettlement process be reflected in Phase 2? From what we are seeing so far, it seems many of the mistakes may be repeated.

Full EIA scoping reports not available in Burmese:

In January this year, EIA scoping reports for each of 3 subsections of the 700 ha area were disclosed. Both the summaries and full reports were disclosed in English, but in Burmese language, only summaries were provided. Continue reading

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