Dawei Special Economic Zone: Its Prospects and Challenges

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

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: zawaung.maids@gmail.com 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 countrys political changes as nominal. Despite that, the new government recently acknowledged that the countrys 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 couldnt 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 governments 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
The 4th International Conference on Human Rights & Human Development , Chulalongkorn University
August 18-19, 2011
A Brief History of the Industrialization in Burma/Myanmar In its economic history, the Burma/Myanmars 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 countrys economy. To describe the industrialization efforts of the nationalist political leaders at that time, Tin Maung Maung Than (2007) said: Myanmars 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 countrys 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 governments 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 Wins 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
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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 countrys industrial development is sharply different from the three countries in the region. While the countrys 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 countrys 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 governments 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 regimes 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 regimes 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 countrys 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).
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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 countrys 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 (ITDs 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 Malaysias 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 Kingdoms 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 coalfired 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
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PTTEP Factsheet (2011). Retrieved from http://www.pttep.com/en/InvestorRelations_Presentation.aspx?ContentID=339 PTTEPs 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 2 EPPOs 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
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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. Thailands 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 Thailands 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 Kingdoms 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 doesnt 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 countrys 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 countrys 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 countrys 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 Chinas
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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 states 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 doesnt 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 whats 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 didnt 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
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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 mayors 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 mayors 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
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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 nations 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 unsustainablethat 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 Programs 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.
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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 countrys 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.
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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 companys Notes to Interim Financial Statement which was authorized by the ITDs 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) 250 sq.km 1 sq.km 1 sq.km 1 sq.km Land Lease Price Land Area (US $) (Rai)4 37,500,000.00 156,250 Rais 15,000.00 1 Rai 2,500.00 1 Rai 208.33 1 Rai Land Lease Price (Thai Baht)5 1,125,000,000.00 7,200.00 120.00 10.00 Per Year 60 years 60 year 1 year 1 month
Despite the Land confiscation of the vast land area, the ITDs 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 doesnt 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 states 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
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The ITDs Notes to Interim Financial Statement converted 250 sq.km land into approximately 156,259 Rai Exchange rate: US $1 = 30 Baht
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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 Ministers 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 regimes minister in 20 years that the regime silently nationalized
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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.
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the lands from the poor peasants, regardless of the peasants 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 cant 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 companys 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 didnt 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 companys construction first, compensation later strategy weakens the bargaining power of the local people to ensure fair compensation in dealing with the company.
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Bangkok Post (9 June, 2011). Retrieved from http://www.bangkokpost.com/business/economics/241310/daweifinancing-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.
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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
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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 countrys 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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Bibliography Constitution of the Republic of the Union of Myanmar (2008). Union Legislative List. Naypyidaw: Printing & Publishing Enterprise, Ministry of Information Dawei Special Economic Zone Law (2011). Naypyidaw: State Peace and Development Council, Ministry of National Planning and Economic Development Greig, A., Hulme, D. & Turner M, (2007). The Postwar Development Project. In Challenging Global Inequality. New York: Palgrave Macmillan. Hongyi Harry Lai, (March, 2006). SEZs and Foreign Investment in China: Experience and Lessons for North Korean Development. In Asian Perspective Vol. 30, No. 3. International Herald Tribune (IHT), (November, 2010). An Industrial Project That Could Change Myanmar. US: The New York Times. Retrieved from http://www.nytimes.com/2010/11/27/world/asia/27iht-myanmar.html Italian-Thai Development PCL, (2011). Dawei Deep Seaport & Industrial Estate Development Project (PDF File). Thiland: ITD Website. Retrieved from http://www.itd.co.th/en/Dawei%20Final%20May%202011_ROADSHOW%20FINAL_WEB SITE.pdf Italian-Thai Development PCL, (2011). Notes to Interim Financial Statements. Thailand: Stock Exchange of Thailand (SET) Myat Thein, (2006). Parliamentary Democracy Period (1948 1962). In Economic Development of Myanmar. Singapore: Institute of Southeast Asian Studies, National University of Singapore. Pieterse, J.N., (2001). Trends in Development Theory. In Development Theory: Deconstructions/ Reconstructions. London: Sage. Sen, A., (1999). The Perspective of Freedom. In Development as Freedom. New York: Alfred A. Knopf Siu-Wai & Bo-sin Tang, (2005). Challenges to the sustainability of development zones: A case study of Guangzhou Development District, China. ELSEVIER Vol. 22, No. 4 (p. 303-316). Soubbotina, P. T. & Sheram, A. K., (2000). Beyond Economic Growth: Meeting the Challenges of Global Development. Washington D.C: World Bank Summary of Thailand Power Development Plan (2010 2030). Thailand: Electricity Generating Authority of Thailand (EGAT). Retrieved from http://www.egat.co.th/en/images/stories/pdf/Report%20PDP2010-Apr2010_English.pdf Tin Maung Maung Than, (2007). Industrialization and the Economy. In State Dominance in Myanmar: The Political Economy of Industrialization. Singapore: Institute of Southeast Asian Studies, National University of Singapore Tin Soe, (March, 2008). Policy Dilemmas and Economic Development: A Case Study of Myanmar Economy in Transition. Journal of International Cooperation Studies, Vol. 15, No. 3. Japan: Kobe University Retrieved from http://www.research.kobe-u.ac.jp/gsicspublication/jics/soe_15-3.pdf Toshihiro Kudo, (2009). Industrial Policies and the Development of Myanmars Industral Sector in the Transition to a Market Economy. In The Economic Transition in Myanmar After 1988: Market Economy versus State Control. Koichi Fujita, Fumiharu Mieno and Ikuko Okamoto (Eds.). Singapore: National University of Singapore Press World Bank (1990). Involuntary Resettlement. Operational Directive (OD 4.30) of The World Bank Operational Manual. Retrieved from http://www.ifc.org/ifcext/enviro.nsf/AttachmentsByTitle/pol_Resettlement/$FILE/OD430_In voluntaryResettlement.pdf
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August 18-19, 2011