The Irrawaddy News Magazine [Covering Burma and Southeast Asia]
Boom or Bust?

The Burmese junta is moving ahead with the Myawaddy special economic zone, which may or may not benefit the DKBA

The Burmese military regime has long talked about, but never implemented, a special economic zone (SEZ) near the Burma-Thailand border. But the junta’s cabinet recently approved the official creation of the SEZ, along with a plan to increase investment in the project.

This could result in a business boom for Col. Chit Thu and his Democratic Karen Buddhist Army (DKBA) cronies who control the area surrounding the SEZ and have already established their own commercial empire on the border. But if the project is too successful, it could turn into a bust for Chit Thu, because the junta might want to keep control in the hands of its own generals.

DKBA Battalion 999 Headquarters on Burmese slide of the Moei River.(Photo: YENI / THE IRRAWADDY)
As described on the Burmese Ministry of Commerce (MOC) website, the SEZ is a 189-hectare (466 acres) site located  10 kilometers (6 miles) from Myawaddy, which lies just across the border from Mae Sot, Thailand. According to the MOC, border trade in the area accounted for US $606 million in 2008, and it expects that the SEZ, on which more than 100 warehouses have been constructed for storage or factory use, would push that figure up to $1.2 billion annually.

In theory, the SEZ should benefit the DKBA. Following the defeat of the Karen National Liberation Army’s (KNLA) Brigade 7 last June, the DKBA secured control of a long stretch of the Burma-Thailand border extending in both directions from the SEZ. Chit Thu has built a business conglomerate in the area that includes trade in timber, metals and automobiles, and for the last few years the junta has let him operate as he sees fit.

According to an Indian timber trader based in Singapore, the SEZ will indeed benefit the DKBA. The businessman told The Irrawaddy that although the lack of infrastructure on the Burma-Thailand border has always been a deterrent against his company doing business, “Now things are getting better—Thailand is building more roads, so it [the border] has become a much more attractive place for us.” And with more businesses like his setting up shop on the border to gain trading access to the resources of Karen State, the DKBA will become an even bigger player, he said.

But other sources believe that future border trade will be controlled directly by the Myanmar Federation of Chambers of Commerce and Industry, functioning together with the Department of Border Trade, which combines units from Burma’s army, police, customs and immigration authorities.

Given these whisperings, some DKBA members are understandably nervous about whether the junta will grant them business dominion over the area. “The [DKBA] leaders have discussed the [SEZ] before,” said a DKBA official. “They know it could mean big business, but we’re not sure how much the government will control it.”

David Takapaw, the deputy chairman of the Karen National Union (KNU), the KNLA’s parent political organization, told The Irrawaddy that he believed the DKBA would not benefit from the economic zone at all.

“This project is for the Burmese government, they won’t let the DKBA have any control,” he said. “Only a few top leaders will benefit who are directly paid by Burma’s military government.”

Not only could the DKBA be cut out of the SEZ bonanza, if it ever materializes,  it may lose some of its lucrative black market trade as well. There is a maze of smuggling routes which see massive amounts of goods going across the Moei River every day, ranging from Japanese cars to Burmese fabrics. Much of the illegal border trade is run by the DKBA, which operates the majority of the gates where “traders” have to pay tax to move their products into and out of Burma. One of the aims of the SEZ, however, is to reduce illegal smuggling over the border and create an official channel for the trading of raw materials and other goods.

Some DKBA officers are reportedly concerned about the effect that regulated trade would have on their small enterprises. “Some of the gate commanders see it [the SEZ] as a threat, but for the big leaders it could be a gold mine,” said the DKBA source.

In the future, if only selected members of the DKBA are allowed to reap the rewards of the SEZ and border trade, the DKBA may find itself with a divisive issue splintering its ranks. Given that a large faction of the DKBA led by Col. Saw Lah Pwe recently defected, this is the last thing the DKBA needs right now.

In addition, the defection of Saw Lah Pwe and his troops, who will potentially join forces with  the KNLA, a mainly Christian Karen militia which the primarily Buddhist DKBA broke away from in 1994, may become the equivalent of a hand grenade tossed into the SEZ.

Observers say that Saw Lah Pwe’s defection will probably result in conflict near the SEZ between his forces and the KNLA on one side, and either the DKBA or the Burmese military on the other. And if a significant portion of the remaining DKBA forces refuse to join the junta’s border guard force, then they may end up battling the Burmese military as well. If this happens, all bets on the SEZ materializing any time soon will probably be off.

On top of the other impediments to the SEZ, a string of disputes over Thailand’s decision to build a concrete reinforcement on their river bank led to the junta closing down the Myawaddy-Mae Sot border crossing in July. Not only did the junta halt border trade in goods by shutting down all known trade routes, it prohibited people from entering Burma from Thailand and blocked their ability to cross the Moei River at the official Friendship Bridge crossing and at more than 20 well-known unofficial river crossings.

Despite the junta’s claim that the border closure relates to the Thai embankment issue, some observers believe the closing is a muscle-flexing tactic by Burma’s military regime, designed to demonstrate to DKBA leaders that Naypyidaw controls their income source, thereby forcing the DKBA to join the BGF.

Closing the border is apparently not the only method the junta is using to send a message to the DKBA. Standing in a Mae Sot compound that holds his stockpile of inventory, a trader pointed across the river to Shwe Koko, the riverside headquarters of DKBA Special Battalion 999, which is commanded by Chit Thu.

“Burmese troops are now posted at the checkpoint the DKBA had controlled for many years,” he said.

And on Aug. 6, Karen sources told The Irrawaddy that junta troops had seized the gate controlled by the DKBA and raised Burma’s national flag.

The regime’s message may be getting through. Although no official announcement has been made, sources said that both Chit Thu and Gen Kyaw Than, the DKBA commander-in-chief who also has substantial interests in cross-border trade, have agreed to join the BGF. Once the DKBA transforms into a member of the BGF the border will be reopened, the sources said.

The SEZ was originally conceived as part of a broader, multilateral vision that included an Asian highway running from India to Vietnam. In 2001, the Asian Development Bank said in a report that by 2004 it will be possible to travel an all-weather multi-lane road from Burma through Thailand, Laos and into Vietnam, “made possible by the East-West economic corridor.”

One purpose of the highway is to bring a steady flow of trade through the SEZ, and in addition to all the other elements in play, the rate of progression of the SEZ may depend on whether that vision moves forward.

Currently, a twisting dirt road is the only option for the thousands of migrant workers travelling from Myawaddy to Rangoon. It is so narrow and dangerous that the Burmese government has to alternate the direction of traffic flow each day. And despite the optimistic pronouncements on the MOC website, the SEZ for the most part lies dormant. 

“Most of them [the warehouses] are empty at the moment,” said Moe Swe of the Yaung Chi Oo Association, a Mae Sot-based labor rights group. “There are big flashy signs, but no one has bought anything yet.”

A local Thai official expressed frustration at Burma’s delay and the junta’s inability to “get their act together.” He said the main problem is the lack of infrastructure on the “other side, which can’t even manage their electricity properly.”

Despite the cabinet approval and construction having started, many believe that Burma is still far from being able to launch an efficient and profitable SEZ.

“We have seen these announcements many times before, so I’m not holding my breath,” said Sean Turnell, a Burma economics expert.  

Copyright © 2008 Irrawaddy Publishing Group |