dawei special economic zone: its prospects and challenges

Dawei Special Economic Zone: Its Prospects and Challenges August 18-19, 2011

The 4th International Conference on Human Rights & Human Development, Chulalongkorn University 1

Dawei Special Economic Zone: Its Prospects and Challenges

Presented

In the Special Panel ―Burma Environmental Governance and Equity‖

At the 4th

International Conference on Human Rights & Human Development

Critical Connections: Human Rights, Human Development and Human Security

Zaw Aung

MAIDS, Class of 2008

Faculty of Polical Science, Chulalongkorn University

Email: [email protected]

Abstract

Burma/Myanmar is now in its critical juncture of the transition from the military rule to the

civilian governance. The country has turned to the direction of reestablishing the democratic

characteristics such as the introduction of a new constitution and electoral system, the formation of

the political parties, election process, and the establishment of the new bicameral parliament and a

civilian government as well as regional parliaments and governments. Other new institutions such as

the election commission, constitutional court and financial commission are now in place. However,

there are parties domestically and internationally that largely viewed the country’s political changes

as nominal. Despite that, the new government recently acknowledged that the country’s economy has

been lagged behind other countries in the region and planned to take a further step to gain the

economic growth by creating the Special Economic Zones (SEZs) specifically to attract the foreign

direct investments (FDIs) with the unprecedented package of tax exemptions and other investment

incentives in order to end the long-stagnant economic condition.

In the past two decades, the country has been encountering the endless debates on what

should be prioritized between democracy and development. Daw Aung San Suu Kyi, the leader of the

pro-democracy movement, holds the policy that democracy and development must go hand-in-hand,

but prioritizes that the restoration of the democratic institutions is a must for the right discourse of

development. This policy believed that development under the weak democratic institutions with the

lack of transparency, accountability and the rule of law couldn’t be sustainable. However, practicing

the authoritarian governance for half a century, the military leaders believe that “economic growth”

as a form of development in their definition is a prerequisite to democratization. Inheriting the

legacy of the military regime, the new government is reluctant to speed up the democratic reforms

which they may feel could loosen their power centralized on the basis of the military institution. The

two different policies have so far been unable to be reconciled each other.

However, with the establishment of the Dawei Special Economic Zone (DSEZ), the

government has taken a step forward to liberalize the market with the intention to engage more with

the regional and global markets. But it is still a partial economic liberalization, delinking the SEZs

with the rest domestic economy in order to protect the weak domestic market from the adverse

impacts of the stronger multinational companies. The two central issues that this paper will examine

are whether the new government’s SEZ model could really take off the economy while this

industrialization plan could maintain the livelihoods security and sustainable development of the

local communities.

Key Words: Dawei Special Economic Zone, industrialization, involuntary resettlement, human

security, and sustainable development

mailto:[email protected]



A Brief History of the Industrialization in Burma/Myanmar

In its economic history, the Burma/Myanmar‘s successive governments tried to develop the

economy to be industrialized, but they failed to achieve that goal under various circumstances of the

political economy. The first independent government led by Prime Minister U Nu in 1948 was

strongly committed to industrialize the country‘s economy. To describe the industrialization efforts

of the nationalist political leaders at that time, Tin Maung Maung Than (2007) said: ―Myanmar‘s

industrialization was not only driven by a desire to ensure higher productivity and better living

standards but also influenced by the trauma of losing its sovereignty to an industrial power.‖

Therefore, the concept of the political leaders behind their industrialization plan at that time (and still

relevant to date) is to reduce the dependence on foreign countries by targeting to establish the

import-substitution industrialization (ISI). The first industrialization efforts began with a two-year

economic plan in 1948 which was later followed by the eight-year industrialization plan known as

Pyidawtha Plan or (Welfare Economic Plan), which was based on the report of the American

economic consultancy company called Knappen Tippetts Abbett Engineering Co., or KTA (Myat

Thein, 2006). This early effort as a crucial state-building task after the two wars with the British and

Japanese was disrupted by a civil war between the fledgling democratic government and the ethnic

insurgencies eventually followed by a military coup in 1962. This is the conventional view on why

the country‘s early industrialization plan failed. However, in his book titled ―Economic Development

of Myanmar,‖ Myat Thein, a former rector of the Institute of Economics in Rangoon, analyzed the

failure of the Pyidawtha Plan through the perspective of the economic policy management as

follows: ―the government‘s indecision and lack of clarity as to the role of state and that of the private

sector, the lack of highly trained and skilled people in the administration and management of the

economy, and the weakness in sector-wise economic policy, which emphasized industrial

development to the neglect of the agricultural sector.‖

The myth of building a welfare state through the Pyidawtha Plan ceased to exist with the

military coup and General Ne Win, the then Commander-in-Chief of the Armed Forces and the coup

leader, introduced socialism as the sole political ideology and practiced the socialist planned

economy by nationalizing all the private sector economic entities with three phases in 1963, 1968

and 1972. The formation of Industrial Promotion Board and the state-sponsored industrial loan

scheme as well as the promulgation the Law to Invest Powers to Construct the Socialist Economy

allowed the state to fully manage the economy. On the other hand, U Ne Win‘s Administration were

pragmatic to accept the Oversea Development Assistance (ODA) both from the capitalist and

socialist countries in order to develop the industrial sector through the technical and machinery

assistance from Japan, United States, China, the former Federal Republic of Germany (FRG) and the

former East European socialist countries (Tin Maung Maung Than, 2007). However, due to the

incompetency and mismanagement of the government, the socialist planned economy began

dismantling after the two demonetizations in 1985 and 1987, leading to a series of the nationwide

student democratic uprisings in 1988.

As a result, the second military coup occurred on September 18, 1988. Soon after the coup,

the military leaders tried to transform the economy by enacting a series of laws, including Myanmar

Foreign Investment Law, to practice the market-oriented economy. Koichi Fujita, Fumiharu Mieno

and Ikuko Okamoto (2009) analyzed that the two major economic problems the military government

[called early as the State Law and Order Restoration Council (SLORC) and later reconstituted as the

State Peace and Development Council (SPDC)] faced are: ―How to reform the inefficient socialistic



economic system in conformity with a market economy and how to develop the agricultural and

underdeveloped industrial and service economy.‖ The regime conducted major economic reforms

such as liberalizing trade and foreign investments and opening up the private sector investments,

including private banks, in the economy. About the same time, Vietnam, Laos and Cambodia

embarked on their economic transitions in the region. But after two decades, the comparative result

of the country‘s industrial development is sharply different from the three countries in the region.

While the country‘s private sector responded well to the new market-oriented economic policies, the

regime failed to transform its failed state-owned economic enterprises (SEEs) which they inherited

from the failed socialist economy (Koichi F., Fumiharu M. & Ikuko O., 2009).

After more than two decades military rule, the country has now been in its critical transition

to a civilian rule through the democratic elections in November 2010 in accord with the country‘s

third new constitution and the establishment of multiparty political system, the new bicameral

parliament and a civilian administration headed by a President and two Vice-Presidents as well as

local parliaments and governments headed by Chief Ministers for the first time in 50 years. Located

in the mainland Southeast Asia, Burma/Myanmar has still been the only nation in the region

embedded with the internal political crisis and ethnic armed conflicts since its independence from the

British in 1948. On March 30, 2011, the ruling SPDC dissolved itself and transferred the sovereign

power to the new government. Despite these changes, the new government was widely seen

domestically and internationally as a transformation of the military government in civilian disguise.

The new government simply inherited the legacy of the former military government and

announced that it would continue to implement the policies of their predecessor. Based on the

concept of ―the economic growth prior to the political freedom,‖ the former military government

carried out economic reforms since 1989, but these reforms alongside with the internal political crisis

and ethnic armed conflicts only gained a modest growth in which the industrial growth was

significantly low. There have also been endless debates on whether the government‘s failure to

improve the economy was due to the Western economic sanctions. However, the military generals

have been able to resist the western sanctions by maintaining its economic ties with the Asian

economic alliances such as China, India, and the Association of Southeast Asia Nations (ASEAN) to

which the country has belonged to as a member since 1997. There was, however, an assumption that

the regime‘s incapability and incompetency to stabilize and improve the economy coupled with the

centralization of the economy through the highly state intervention into the market in the past two

decades resulted in the distortion of the market economy flourishing cronyism and nepotism while

leaving the majority population in poverty. To characterize the regime‘s economic management, Tin

Soe (March, 2008), a well-known Burmese economist, said: ―The policies and plans in Myanmar

especially since early 1960s under military regimes were characterized by inconsistency, instability,

interruption and discontinuation, rigidity and limited scope and vision, lack of transparency,

unpredictability and uncertainty, quantitative physical targets-orientation, inefficient and ineffective

implementation, and use and abuse of consultancy and advisory services.‖

Recently, the new government begun to acknowledge that the country‘s economy was lagged

behind other countries in the region and planned to take a further step to catch up with the regional

economies with the introduction of the Special Economic Zones specifically to attract the foreign

direct investments (FDIs) with the unprecedented package of tax exemptions and other investment

incentives in order to end the long-stagnant economic condition. Thus, the DSEZ has become the

first-ever SEZ in Burma/Myanmar (DSEZ law, 2011).



Dawei Special Economic Zone: A Prospect for a New Economic Growth?

The DSEZ industrialization plan is designed to initially pump an estimated US $8.6 billion

into the 250 sq.km coastal land in Dawei to completely transform the region from the agro-based to

the industrialized society. Located in the country‘s southern coastline in Tenesserim Region, the

DSEZ is envisaged to be the gateway of the mainland Southeast Asia to Indian Ocean to trade with

Africa, Middle East and Europe. Moreover, a new inland trade and logistic highway linking linking

the India Ocean with the South China Sea crossing Thailand, Laos, Cambodia and Vietnam results in

shortening four or five days travel across the most congested Malacca Strait. The project includes the

construction of a three-basin deep-sea port capable of accommodating about 25 large-size vessels

with 20,000 to 50,000 tons, a shipbuilding and maintenance yard, 10,000 MW coal-fired power

plants, steel mills, fertilizer and petrochemical factories, oil and natural gas storage compound and

refinery plants. Moreover, the SEZ is designed to build industrial zones for heavy petrochemical and

chemical factories, medium and light industrial estates, as well as a commercial zone and a

residential district. The design of the DSEZ and its planned investment scale are unprecedented in

the economic history of the country (ITD‘s Dawei blueprint, June 2011). In this point, the paper

examined why Dawei attract the Thai government and investors so strongly.

Dawei is strategically located between Burma/Myanmar's two biggest natural gas fields –

Yadana and Yetagun – in the gulf of Mataban. According to the PTT Exploration and Production

PCL (PTTEP)1, the company is the major investor in the above two offshore gas fields as a sole

operator owning the 100 percent share in Block M3, 4, 7, 9 and 11 in the gulf of Mataban. All of

these blocks are very close to the Dawei deep seaport. Also, the company possessed a 25.5% share in

other blocks of the Yadana operated by the French oil giant TOTAL and a 19.3178% in Block M12,

13, 14 of the Yetagun operated by the Malaysia‘s Petronas. According to the statistical data of the

Energy Policy and Planning Office of Thailand (EPPO)2, the country has steadily increased

importing natural gas from Burma/Myanmar for the past twelve years between 1998 and 2009,

starting from an average 2 million standard cubic feet per day (MMSCFD) in 1998 to an average 803

MMSCFD or 26.85% of the Kingdom‘s domestic natural gas production in 2009. Compared with the

statistical data in the past 20 years, Thailand has already increased 6.7 times of its natural gas

consumption since 1989, according to the EPPO's ―Consumption of Natural Gas by Sector.‖

Thailand's domestic natural gas consumption is mostly from the electricity sector, followed by the

industrial sector. Thailand's electricity demand will become more than double from 23,249 MW in

2010 to 52,890 MW in 2030, according to Summary of Thailand Power Development Plan 2010 –

20303 issued to the public by Electricity Generating Authority of Thailand (EGAT).

To meet the strong domestic demand of the energy consumption in the future, Thailand is

keenly seeking its energy security not only from the imported natural gas, but also from the coal-

fired and hydropower energies from Burma/Myanmar. According to the ITD, the company is now

negotiating with the EGAT to sell 3,600 MW of the electricity via the transmission line from the

1PTTEP Factsheet (2011). Retrieved from http://www.pttep.com/en/InvestorRelations_Presentation.aspx?ContentID=339

PTTEP‘s Myanmar Project Data. Retrieved from

http://www.pttep.com/en/ourBusiness_EAndPprojects.aspx?type=2&Region=4&Phase=0&Investment=0&sort=asc&cso

rt=asc&groupsort=asc&group=name 2EPPO‘s Energy Statistics. Retrieved from http://www.eppo.go.th/info/3ng_stat.htm

3 Retrieved from http://www.egat.co.th/en/images/stories/pdf/Report%20PDP2010-Apr2010_English.pdf

http://www.pttep.com/en/InvestorRelations_Presentation.aspx?ContentID=339

http://www.pttep.com/en/ourBusiness_EAndPprojects.aspx?type=2&Region=4&Phase=0&Investment=0&sort=asc&csort=asc&groupsort=asc&group=name

http://www.pttep.com/en/ourBusiness_EAndPprojects.aspx?type=2&Region=4&Phase=0&Investment=0&sort=asc&csort=asc&groupsort=asc&group=name

http://www.eppo.go.th/info/3ng_stat.htm

http://www.egat.co.th/en/images/stories/pdf/Report%20PDP2010-Apr2010_English.pdf



planned coal-fired power plant in the DSEZ. Other energy sources to import from Burma/Myanmar

are the 369 MW Mai Khot coal-fired thermal power plant invested by the ITD in Shan State to

import the electricity to Map Chan District in Chiang Rai Province; the 1,190 MW Hutgyi

hydroelectric project from which to import the electricity to Tha Song Yang District in Tak Province;

and the 7,000 MW Tasang hydroelectric project to import to Map Eye District in Chiang Mai

Province starting from 2016 to 2030 (EGAT PDP 2010 – 2030). Therefore, Dawei is clearly a

strategic interest of Thailand. Thailand‘s giant companies such as Petroleum Authority of Thailand

(PTT), Electricity Generating Public Company Ltd. (EGCO), Ratchaburi Electricity Generating

Holding PCL and Siam Cement Group (SCG), are now observing the DSEZ potentials and will be

the first investors in Dawei.

Back to the DSEZ industrialization plan, the DSEZ industrialization plan has the encouraging

prospects to take off the long-term stagnant economy, but the development is heavily based on

Thailand‘s financial resources, technological capacity, market accessibility and managerial

experiences of the industrial estates. The types of the industries in the Dawei industrial complex are

much similar to the model of the Kingdom‘s Map Ta Phut Industrial Estate located in the Gulf of

Thailand in terms of the industrial types and investments. After this mega construction project, the

prospects are the advanced transportation and telecommunication networks, the creation of million

job opportunities and the development of other social infrastructures such as schools and hospitals.

However, looking at the socio-economic conditions outside these prospective advancements in the

DSEZ, Burma/Myanmar doesn‘t have a sound banking system, a stock exchange well-connected

with the global financial markets, the advanced transportation routes and communication system

connected to other parts of the country, poor health and education infrastructures, etc., resulting in a

possible development gap between the rich and poor who are the majority of the population, but have

little access to the economic opportunities opening up within the DSEZ.

Given the history of the country‘s economic reforms, the challenges to the economic growth

were always intertwined with the unresolved political, ethnic and social issues which have existed

for decades and will continue to exist if not finding any lasting solutions in the future. Deepening this

situation is the poverty and an unequal distribution of the country‘s natural resources such as timber,

gems, minerals, oil and natural gas which are mostly located in the ethnic states, but not entitled to

extract and utilize them for the development of these states. Only the new government can exercise

the centralized control over all these resources (The Constitution of the Republic of the Union of

Myanmar, 2008). Therefore, the government must not merely focus on the economic policy reform

with the fair distribution of wealth and resources, but it should also look at other policy reforms to

maintain the country‘s social, cultural and environmental equilibrium in order to provide human

security and human development in the long run. Whether the government could address these

broad-based issues simultaneously alongside with its new industrialization plan to improve the

wellbeing of the people will remain questionable at this moment.

Governance Structure in Dawei SEZ

According to the ITD President Mr. Premchai Karnasuta, Senior General Than Shwe, the

former head of the military regime, envisaged the DSEZ to be another Shenzhen, the most successful

special economic zone in China (IHT, November 2010). This is the vision of the Burma/Myanmar

authorities to follow the regional economic growth example. If Burma/Myanmar will take China‘s



footstep in implementing the DSEZ, they need to learn how the Chinese government under the

leadership of Deng Xiaoping carried out the fundamental policy and administrative reforms in

Shenzhen SEZ in the early 1980s. Also, there were other specific conditions behind the success of

Shenzhen SEZ: Being a port city with the right geographical location to implement a SEZ, the state‘s

technological and machinery capability to construct the massive infrastructure buildings, the

interactive economic relations with the surrounding strong economies such as Hong Kong, Macao

and Taiwan and the domestic political stability (Hongyi Harry Lai, 2006).

Except being a coastal city with an access to India Ocean, Dawei doesn‘t look like Shenzhen,

lacking the strong economies surrounding the SEZ. The government of Burma/Myanmar has no

technological and machinery capability to construct the infrastructures and what‘s more is the

uncertain domestic political condition with the ongoing armed conflicts with the ethnic armed

groups. The only input of the state into the DSEZ is to grant a land lease with a cheap price and to

enact ―the Dawei Special Economic Zone Law.‖ According to the law, the government formed a new

administrative hierarchy with four new bodies in order such as Central Body, Central Working Body,

Management Committee and Supporting Working Body. Central Body was formed with the

representatives from at least a dozen different cabinet ministries and headed by a cabinet minister

accountable to the President. The representatives from the business developers and investors are

allowed to be members of the Supporting Working Body, the lowest administrative hierarchy of the

DSEZ and the ITD saw it positively as a significant move from the government to incorporate the

business representatives in the administrative mechanism (See the following chart drawn by the

ITD). However, the law didn‘t specify the roles and responsibility of the Supporting Working Body,

possibly leaving the authority to the Management Committee to define them.

DSEZ Administrative Structure

Source: ITD



This administrative design is simply a top-down control structure usually practiced under the

previous military regime. Comparing it with the administrative reform of Shenzhen SEZ in the early

1980s, the Chinese government carried out an effective administrative decentralization by giving the

full governing authority to the Shenzhen Mayor, who was also the politburo member of the Chinese

Communist Party simultaneously, meaning that the mayor‘s accountability is directly linked to the

highest authoritative body of the country. Moreover, the administrative structure of Shenzhen was

downsized by combining the existing bodies under the mayor‘s authority and reduced the number of

officers and staff in order to simplify the bureaucratic process in the SEZ (Hongyi Harry Lai, 2006).

As administering a SEZ economy under the specific law and governing structure is unprecedented in

Burma/Myanmar, it is no doubt that a number of challenges to the administrative capacity of the new

governing bodies in the DSEZ will lie ahead. Thus, the prospects of the DSEZ depend very much on

whether the new administrative structure will effectively reduce the existing practices of the

bureaucratic red tapes, corruption, favoritism, discrepancy, etc.

Development Theoretical Approach to the DSEZ

The 250 sq.km of the vast hinterland between the western Maungmagan coastline and the

eastern Dawei River has become ―the zone notified and established by the Government as a Special

Economic Zone by demarcating the extent of territory and boundary in Dawei District in Tanintharyi

(formerly known as Tenesserim) Region under the Myanmar Special Economic Zone Law‖ (DSEZ

Law, 2011). The DSEZ include both a three-basin international deep seaport and the industrial zones

such as high-tech industrial zones, export processing zones (EPZs) and sub-trading zones. ―The

United Nations Industrial Development Organizations (UNIDO) defines EPZs as administratively or

geographically delimited areas enjoying special status and allowing free import of production

equipment and material.‖ However, A more specific definition for EPZ is ‗‗a designated area within

the territory of a country where economic activities are promoted by a set of policy instruments that

are not generally applicable to the rest of the country (Siu-Wai Wong and Bo-sin Tang, 2005, citing

UNIDO, 1980 & Ge,1999).‘‘ Moverover, Siu-Wai Wong and Bo-sin Tang (citing Ohmae, 1990;

Bartlett, 1998; Cheng and Kwan, 1999) highlighted three factors that the global investments mostly

focus on before entering into a new place: ―First, to achieve the economy of scale via access to more

customers and markets, second, to exploit other countries resources (e.g., labor and raw materials),

third, to diversify macroeconomic and operational risks, and last, to crossover customers between

markets.‖

In this context, the DSEZ could become a classical industrialization model to catch up with

the economic modernization of the newly industrialized countries in the region through the massive

injection of the capitals in a form of the foreign direct investments (FDIs) and advanced technologies

into this specially designated area. This development discourse can often be seen in the developing

countries, but their implementations are not always smooth and even create social disorder as a

consequence. In the book entitled “Development Theory: Deconstructions/ Reconstructions,”

Pieterse (2001) said: ―The classic aim of development, modernization or catching up with advanced

countries, is in question because modernization is no longer an obvious ambition. Modernity no

longer seems so attractive in view of ecological problem… Westernization no longer seems attractive

in a time of revaluation of local culture and cultural diversity.‖ Also, the modernization sociologists

viewed that development is not merely representing economic growth, but demanding more than an

injection of capital and technology. ―The principle issue for development became how different



institutions function to maintain social cohesion, and the consequences for social equilibrium when

changes are introduced into the social structure (Greig, A., Hulme, D. & Turner M, 2007, citing

Eisenstadt, 1973).

In its millennium report ―Beyond Economic Growth: Meeting the Challenges of Global

Development,‖ the World Bank (2000) said: ―It is true that economic growth, by increasing a

nation‘s total wealth, also enhances its potential for reducing poverty and solving other social

problems. But history offers a number of examples where economic growth was not followed by

similar progress in human development. Instead growth was achieved at the cost of greater

inequality, higher unemployment, weakened democracy, loss of cultural identity, or

overconsumption of natural resources needed by future generations. As the links between economic

growth and social and environmental issues are better understood, experts including economists tend

to agree that this kind of growth is inevitably unsustainable—that is, it cannot continue along the

same lines for long.‖ This concept of the World Bank in its new millennium report reflected the

United Nations Development Program‘s Human Development Report 1996, which said: ―Human

Development is the end, economic growth is a means.‖ Likewise, in his book ―Development as

Freedom,‖ Indian Economic Noble Laureate Amartya Sen (1999) said: ―An adequate conception of

development must go much beyond the accumulation of wealth and the growth of gross national

product and other income-related variables. Without ignoring the importance of economic growth,

we must look well beyond it… For the same reason, economic growth cannot sensibly be treated as

an end in itself.‖



To conceptualize the mega project of the DSEZ, it is a ―Big Push‖ from localization towards

internationalization as characterized in the above analytical framework (See Framework 1) in which

the main driving agents are the state and business sectors. There will be at least eight push factors

into the Dawei society which traditionally lives in their self-sufficiency economy harmonized with

the existing local resources that this research briefly identifies as another eight factors (See

Analytical Framework 1 above). Due to this ―Big Push‖ from the state and multinational companies,

the whole landscape could be shifted drastically and the research identifies the third eight factors as

the possible outcomes. Therefore, based on the above-mentioned development concepts, the

preliminary conclusion of this paper is that while the government is seeking the microeconomic

development by attracting the billion dollar investments of multinational companies (MNCs) for the

country‘s future economic prospects, each push factor of the industrialization plan poses great

challenges to the living style and livelihood security of the local communities who are mostly poor

peasants, plantation workers and fishermen.

In the following second analytical framework, the people of Dawei region will have three

choices to face the ―Big Push‖ situation pressured by the state and business: Adaptation, mitigation

and prevention from the changes that they are going to encounter during the implementation process

of the industrialization which they have never experienced before. While the rural farmers and

fishermen as well as the small retailers and traders have to change greatly from their traditional

agrarian livelihoods and trading practices to be able to adapt to the environment of an industrialized

urban society, they will also need to seek ways to mitigate the socio-economic hardships that they

could face through the negotiations in the industrialization process, but the bargaining power from

their part is relatively marginal. Sometimes, they may even experience some unacceptable conditions

that will push the local people to prevent them from happening with no room to negotiate with the

industries. This second analytical framework is to try to describe the possible pattern of solution

from the part of the local communities to mitigate the hardships in this industrialization process.



Land Ownership, Land Confiscation and Landlessness

Dawei is a completely agrarian society. The region constitutes a long pristine coastline with

the enrichment of marine and mineral resources. The towns of Kan Pauk, Heinda and Hamyingi in

Dawei District have long been home to several mines which produce tin and tungsten, essential

metals useful in steel industry. Off the Dawei coastline, the region is close to a large natural gas

reserve in the Andaman Sea. In the vast hinterland, the region is green with paddy fields and

plantations of rubber, beetle nut, cashew nut, and durian, the major livelihoods of the local people.

Also, the local villagers rely on fishing in the Maungmagan coastline and Nipa (locally known as

Dani) palm forests along Dawei River. After signing the framework agreement between the ITD and

Myanmar Port Authority on November 2, 2010, the Thai construction conglomerate has legally been

entitled to own the 250 sq.km land with a price of US $37.5 million from the Burmese/Myanmar

government, according to the company‘s ―Notes to Interim Financial Statement‖ which was

authorized by the ITD‘s director on November 15, 2010 and was published in the website of the

Stock Exchange of Thailand (ITD, 2009). The simple mathematical calculation in the following chart

showed that the ITD just paid only 10 Baht per rai per month for the land lease in Dawei. As DSEZ

law has now been in effect, the communities living within the project area are no longer entitled to

own their lands according to the law because the ITD has now been the owner of the land legally to

implement the project. However, the local communities do not seem to be aware of their landless

situation.

The Price of Land Lease Paid by the ITD to the Government of Burma/Myanmar

Land Area

(Sq.km)

Land Lease Price

(US $)

Land Area

(Rai)4

Land Lease Price

(Thai Baht)5

Per Year

250 sq.km 37,500,000.00 156,250 Rais 1,125,000,000.00 60 years

1 sq.km 15,000.00 1 Rai 7,200.00 60 year

1 sq.km 2,500.00 1 Rai 120.00 1 year

1 sq.km 208.33 1 Rai 10.00 1 month

Despite the Land confiscation of the vast land area, the ITD‘s greatest challenges is the issue

of relocating at least the 19 existing local communities outside the project area and compensation to

the villagers for their own crops and trees planted in their farmlands and plantations in the project

area. But the ITD doesn‘t need to compensate the local farmers and plantation owners for

confiscating their lands because according to the constitution and other land laws in

Burma/Myanmar, the government is the ultimate ownership of all the land within the sovereign

territory of the country.

If so, what are the rights of the peasants who compose of the 70 percent of the population in

Burma/Myanmar? During the first session of the new parliament which was held in last March for

the first time in 20 years, some members of parliament (MPs) questioned the then military regime

about the state‘s policy on the issue of the unfair land confiscations conducted by the government

itself in the name of various development projects and the business companies for their own

4 The ITD‘s ―Notes to Interim Financial Statement‖ converted 250 sq.km land into approximately 156,259 Rai

5 Exchange rate: US $1 = 30 Baht



commercial profits. The then Minister for Agriculture and Irrigation U Htay Oo6 (―U‖ is used as a

prefix of the name of every middle-age men in a polite way) referred to the three existing land laws

such as the Land Nationalization Act (1953), the Tenancy Law (1963) and the Law Safeguarding

Peasant Rights (1963). These laws were enacted under the different political systems and governance

of the past and they are now contradictory to each other. The key articles of these laws that Minister

U Htay Oo, who is now the secretary general of the ruling the Union Solidarity and Development

Party (USDP) as well as the MP to the Pyithu Hluttaw (or Lower House) emphasized on at that time,

according to the state-run New Light of Myanmar, are:

Article 38 (1) of the Land Nationalization Act (1953)

“If the President may deem benefitable to the State or to the agriculturalists, by growing

some specific crops in some areas and by using specific means to agricultural lands, the

President may deem to apply or ask to apply specific crops or specific means to use on

agricultural land respectively.”

Article 39 of the Law

“However, other provisions of this Act mentioned, the President or authority appointed by

the President for this particular matter, may deem necessary, any agricultural land can be

summoned to use specific mean or method.”

The Tenancy Law (1963)

Under the law, peasants enjoy the rights:

(a) No one except farmers can do agricultural farming; (b) Land can be inherited if it is

farmed as a family business; (c) No need to pay rent; (d) Land can be farmed as long as land

rules are not violated.

Article 3 (1) of the Law Safeguarding Peasant Rights (1963)

“Notwithstanding anything elsewhere contained in any existing law, a Civil Court shall not

make a decree or order for:—

(a) A warrant of attachment for or confiscation of agricultural land; neither for employed

livestock and implements, harrows and implements, other animate and inanimate

implements, nor the produce of agricultural land.

(b) Prohibition of work upon or entry into agricultural land.

(c) Prohibition of movement or sale in whole or part or use of employed livestock and

implements, harrows and implements, other animate and inanimate implements, or the

produce of agricultural land.

(d) Arrest and detention of a peasant in connection with any matter included in paragraphs

(a), (b) and (c).

According to the Minister‘s explanation to the parliament, the government is currently using

the Article 39 of the Land Nationalization Act to confiscate the land under the name of ―the national

interest,‖ regardless of any other laws guaranteeing the rights of the peasants. It was the first public

confession of the former military regime‘s minister in 20 years that the regime silently nationalized

6 The answer of U Htay Oo, the then Minister for Agriculture and Irrigation, to the parliamentarians‘ questions appeared

fully in the New Light of Myanmar on March 10, 2011. The articles of these three laws are extracted from his answer.



the lands from the poor peasants, regardless of the peasant‘s rights in other laws and they claimed

that they paid reasonable compensation to the peasants, but no official figures are available about the

land area that the state confiscated and the amount of compensation during the military ruling, but

more incidents of the farmers to file lawsuits against the domestic business companies in local courts

has occurred due to the forced confiscation and their lands and unfair compensations in recent years.

In this point, it is crucial to look into the political implications of the term ―compensation.‖ When the

state or business sector in Burma/Myanmar has often used the term to justify that their action to

confiscate the peasants‘ land is fair and legal because they pay compensation, the view of the victims

is sharply different because they see the confiscation unfair and illegal because they are forced to

involuntarily move from their ancestral lands and they believed that they have the customary right to

possess their lands. Moreover, their social and cultural attachments to their lands where they were

born and grew up are the social capitals that can‘t be replaced by the new relocated place.

Involuntary Resettlement and Compensation in the DSEZ

On June 8, the ITD held an investment promotion seminar for the DSEZ in Bangkok and the

Bangkok Post7, referring to the company‘s president Mr. Premchai Karnasuta, wrote an article titled

―Dawei financing deals imminent,‖ in which the newspaper said: ―the [DSEZ] development area has

a total population of 10,000, and Burmese officials have pledged that a relocation plan will follow

World Bank guidelines.‖ According to the local sources, the number of the affected population could

be between 15,000 and 30,000, much higher than the ITD figure. Therefore, it will definitely cause

the involuntary resettlement8 for which the government of Burma/Myanmar and the ITD, the sole

developer of the project, must have a systematic resettlement plan for the project-affected villages in

Dawei, according to the DSEZ Law. Article 34 of the law stipulated as follows:

“The developer or investor shall bear the expenses of transferring and paying compensation

of houses, buildings, farms and gardens, orchards/fields, plantations on land within the

Dawei Special Economic Zone permitted by the Central Body if these are required to be

transferred. Moreover, he shall carry out to fulfill fundamental needs of persons who transfer

so as not to lower their original standard. The relevant Management Committee shall

coordinate as may be necessary for the convenience of such works.”

In the initial construction of the access roads to the DSEZ and the road link to Thailand, the

ITD has constructed the roads across the plantation fields and cut down many trees. However, the

villagers claimed that the ITD didn‘t give them any information regarding the compensation plan and

timeframe. But receiving the cooperation and support of the local authorities, the company

approached village by village along the roads in different times and urged the villagers to sign on

paper to record the number of trees that the company cut down during the road construction. The

company guaranteed the villagers to pay compensation for the tree, but the company‘s ―construction

first, compensation later‖ strategy weakens the bargaining power of the local people to ensure fair

compensation in dealing with the company.

7 Bangkok Post (9 June, 2011). Retrieved from http://www.bangkokpost.com/business/economics/241310/dawei-

financing-deals-imminent 8 The World Bank defined the involuntarily resettlement caused by the development projects such as construction or

establishment of (a) dams, (b) new towns or ports, (c) housing and urban infrastructure, (d) mines, (e) large industrial

plants, (f) railways or highways, (g) irrigation canals, and (h) national parks or protected areas.

http://www.bangkokpost.com/business/economics/241310/dawei-financing-deals-imminent

http://www.bangkokpost.com/business/economics/241310/dawei-financing-deals-imminent



The Relocation Map for the Villages Affected by Dawei Deep Seaport

Source: the government of Burma/Myanmar

According to the planned relocation map, the government planned to relocate the affected

villages to the northern part of the DSEZ project area. Among the five relocation sites marked with

pink color boundary, three places are located close to in the coastline while the other two are located

in the inland areas. Nevertheless, the Operation Directive (OD 4.30) ―Involuntary Resettlement‖ in

the World Bank Operational Manual (1990) described the costs of the displaced people affected by

the development projects as follows:

Development projects that displace people involuntarily generally give rise to severe

economic, social, and environmental problems: production systems are dismantled;

productive assets and income sources are lost; people are relocated to environments where

their productive skills may be less applicable and the competition for resources greater;

community structures and social networks are weakened; kin groups are dispersed; and

cultural identity, traditional authority, and the potential for mutual help are diminished.

Involuntary resettlement may cause severe long-term hardship, impoverishment, and

environmental damage unless appropriate measures are carefully planned and carried out.

According to the local residents in Dawei, these places were already occupied by the existing

communities, but the government will expand the communities‘ boundary to relocate the affected

population from the project area. However, the local residents have so far received no information

either from the company or local authorities on whether the farmers will regain the same farmland



acres that they owned previously or whether the fishermen will get an access to their fishing water as

they did traditionally. The livelihood and food securities will be possibly an immediate impact of the

project on the local residents facing in the new relocated place.

Ensuring Human Security of the Affected Population in Involuntary Relocation Plan

The construction of the Dawei deep seaport and industrial complex is under way and there

will definitely have irreversible impacts on the local communities. While the planners of the DSEZ

see its prospects to take off the country‘s economy, they should not overlook the fact that it is

equally important to maintain the livelihoods security and sustainable development of the local

communities. Industrialization at the expense of the local agricultural livelihoods which depend on

the land and other natural resources could create irreversible social and environmental impacts on the

Dawei region. According to the ―Analytical Framework 2‖ of this paper, for the local population who

will unavoidably face this development discourse, they will have three options: Adaptation,

mitigation and prevention to the challenges they will encounter now and in the near future. In

conclusion, referring to the Operational Directive (OD 4.30) of the World Bank Operational Manual

(World Bank, 1990), this paper recommends the following key points to mitigate the economic and

social hardships associated with the unavoidable involuntary relocation of the project.

To explore all viable alternative project designs to avoid involuntary relocation or minimize

the extent of relocated population where feasible.

If the relocation is unavoidable, compensation should be fully paid for all the losses of the

relocated people prior to their actual move to the new relocation places

It should be carried out under the systematic resettlement plan and executed as a development

program which means to provide the affected population with sufficient investment

opportunities to rehabilitate and improve their livelihoods and production levels in their new

places during the transitional period

The special attention should be paid to provide assistance to the most needy families or

individuals (disable, children and elderly people) in the relocation process

Community participation should be encouraged in planning and implementing the relocation

process. To construct the new relocation places, it is a good option to employ the affected

people with the fair payment as part of the job creations for them.

However, in the name of community participation, involuntary recruitment in the affected

population in order to use their labor freely to reconstruct the relocation sites is clearly

categorized as ―forced labor‖ under the internationally accepted labor laws

The formation of the social, cultural and religious organizations in the affected community

should be encouraged to maintain and improve the social cohesion of the affected society

If there are existing communities near the relocation sites, the relocation plan should consider

the smooth integration of the relocated population into the host communities in order to

minimize the adverse impacts on both sides.

The relocation plan should make sure the fair provision of land, housing, economic and social

infrastructure, the accessibility of the local resources from the affected population which

include indigenous groups, ethnic minorities and even homeless people who should have the

customary right to the land and other resources taken by the development projects. They

should not be excluded from receiving compensation and treated on the humanitarian

ground.



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