Myanmar unveils huge Japan-backed industrial zone

Japan's State Minister of Economy, Trade and Industry Yosuke Takagi during the opening ceremony of the Thilawa Special Economic Zone (SEZ) on Sept 23, 2015.
Japan's State Minister of Economy, Trade and Industry Yosuke Takagi during the opening ceremony of the Thilawa Special Economic Zone (SEZ) on Sept 23, 2015.PHOTO: REUTERS

THANLYIN, Myanmar (AFP, Reuters) - Myanmar and Japanese dignitaries on Wednesday launched the first phase of a huge industrial zone on the outskirts of Yangon, as the long-isolated nation pushes to rapidly accelerate its industrialisation.

Housing everything from children's toy manufacturing to a car assembly plant and a deep sea port, the US$1.5 billion (S$2.1 billion) Thilawa Special Economic Zone (SEZ) has risen rapidly from the tropical countryside in recent years with major investment from Japan.

The factory complex, set to sprawl 2,400 hectares (6,000 acres) along the banks of the Yangon river when complete, is a first of its kind in Myanmar, which saw its economy ravaged by half a century of military rule.

"We have missed quite a few opportunities that the other countries in the region had enjoyed. Today we are not only ready to take all opportunities we have missed but also to give all the opportunities to investors," said Myanmar's Vice President Nyan Tun.

Speaking in English at a lavish opening ceremony, which attracted a small band of curious locals from nearby towns, he said the site would be "a great example" for the country.

The plan is for the zone eventually to host about 100 factories employing more than 40,000 people.

"I personally take this moment as dream comes true," he added.

Myanmar, which is due to hold landmark elections on November 8 likely to be swept by Aung San Suu Kyi's opposition, desperately needs investment to drive its economic revival.

The first phase of the project, which started in December 2013, aims to have its factories are up and running in the next few years.

A second phase is due to reach completion by next year.

- Challenges ahead

Boasting rich natural resources and 51 million potential consumers the country has caught the eye of investors eager for a stake in Asia's next frontier market, after the installation of a quasi-civilian government in 2011.

But would-be investors face a host of challenges, including legal and political uncertainty, unreliable electricity supplies and poor road and rail infrastructure.

Thilawa has its own water, power and Internet supplies and is governed by a distinct SEZ legal framework.

It is the first of three such zones, with the Chinese-backed Kyaukpyu in western Rakhine state yet to be fully operational, while the ambitious Dawei project in the far south has hit snags over funding.

The industrial zone is led by a consortium of Japanese companies including Mitsubishi Corp, Sumitomo Corp. and Marubeni Corp.

There was little sign of activity at the site on Wednesday, except a few cement mixers trundling between rows of anonymous factory buildings, but around 2,151 people are employed there already.

Some 23 Japanese firms have invested in the project, compared to four from Myanmar, along with companies from the United States, Australia and Sweden.

Unlike its Western allies, Japan maintained trade ties and dialogue with Myanmar during junta rule, saying a hard line could push it closer to China - a key ally of the former military regime.

Tokyo is looking to foster growth across the resource-rich Mekong region, a part of the world that is also being courted by Beijing.