The Asian Development Bank (ABD) says the Mekong River Subregion Economic Corridor should be extended to include the Dawei deep-sea port and economic zone in Burma, but it cautioned that the Dawei Project needs more careful planning and funding guarantees from private sources and governments for adequate development.
The ADB, which is part of the Greater Mekong Subregion (GMS) secretariat, believes the hugh infrastructure project, which is designed to shorten the shipment of oil, gas and commodities to China and Southeast Asia, needs more preparation time, said Arjun Goswami, the bank's director of regional cooperation and operations coordination in Southeast Asia, according to an article in the Bangkok Post on Friday.
For example, the preparation stage for the Nam Theun 2 hydropower project in Laos lasted 10 years, he said.
“The project needs to complete all feasibility studies including environmental and social impact assessments as well as due diligence. You should not rush into it,” Goswami told the Euromoney's Greater Mekong Investment Forum in Bangkok.
He said the Dawei project is critical for the GMS's credibility and failure would damage the group's reputation.
However, the Dawei project, which has been met by skepticism from environmental groups who say there has been a lack of transparency, may not need all of its planned elements to succeed, said Kenneth Stevens, the managing partner of Leopard Capital LP, an investment manager providing financial and operational support to small and medium-sized enterprises in frontier markets.
He said a controversial coal-fired power plant might not be the right option for the project, in light of renewable energy becoming “more interesting.” The power plant could even be located somewhere else in Burma besides Dawei.
He said the high profile Italian-Thai Development (ITD), Thailand largest company, is under pressure to move the Dawei project forward, or Burma could seek another contractor.
ITD has a concession to develop the Dawei Special Economic Zone including infrastructure for the deep-sea port, power plant and steel mill. The company is searching for financial partners, including governments, in the project.
Goswami said Dawei will require public investment and assurance from relevant governments in order to attract multilateral agencies and private investors.
Burma is the only Asean country that is not a member of the Asean Infrastructure Fund, which was set up last year to invest in regional Dawei-scale projects, said the article.
The latest developments in Burma are encouraging, but the final shape of reforms has yet to be seen, said Goswami.
