A new deep-sea port and special economic zone in Tavoy, southern Burma, will bring much-needed infrastructure to the military-ruled country and be a boon to regional trade, but will also present serious risks to the local population and environment, according to experts.

The multi-billion dollar project, which will be financed by the Bangkok-based Italian-Thai Development Public Company, will cover an area of about 260 square kilometers (100 square miles) and affect more than 30,000 people from 19 villages in Yephyu and Longlon townships, near Tavoy, the capital of Tenasserim Division.

Local sources say that even though preparatory work on some parts of the project has already begun, residents of the area still haven't been told how the plan to build what is expected to become Southeast Asia's biggest special economic zone will affect them.

Villagers in the area say they are worried about where they will be relocated to and how they will be compensated for the loss of their land, but don't expect to have any choice in the matter. “If they order us to move, we can't resist,” a villager from Nabule, in the project area, told The Irrawaddy.

Italian-Thai will reportedly spend US $8.6 billion on the new mega-project, which will combine a deep-sea port, industrial estate and trans-border route with sea, road and rail links with Thailand.

The proposed industrial estate will contain a power plant, a steel mill, an oil refinery, a petrochemical complex, a fertilizer plant, a shipbuilding and maintenance yard and a variety of light- and medium-industry factories, as well as a pipeline linking Tavoy to Pu Nam Ron in Thailand’s Kanchanaburi Province.

There will also be residential and commercial developments, including a tourist resort and a recreation complex, according to a PowerPoint presentation prepared by Italian-Thai that is widely circulating on the Internet.
 
The 10-year project was signed in Naypyidaw on Nov. 2 of last year, five days before Burma held its first election in 20 years. Now groundwork for the first phase of construction—the road to Thailand, a water reservoir, a water and waste-water treatment plant and the 4000 MW coal-fired power plant—have been initiated and are due to be completed within five years.
 
The idea to create this massive new economic zone first started to gain traction in 2008, when the foreign ministers of Thailand and Burma signed a memorandum of understanding (MOU) on the sidelines of a meeting of Association of Southeast Asian Nations (Asean) foreign ministers in Singapore. It received a further boost late last year during a visit to Naypyidaw by Thai Prime Minister Abhisit Vejjajiva, who signed an agreement on the project with his Burmese counterpart Thein Sein on Oct. 11.

However, there are still hurdles facing the project, largely due to the involvement of Burma's Western-sanctioned military regime. The Asia Development Bank (ADB) has declined to support the project, despite the fact that it will connect with the three economic corridors of the ADB's Greater Mekong Sub-Region development plan, which aims to create links between the economies of mainland Southeast Asia and China. Thailand's Kasikorn Bank has also rejected Italian-Thai's bid for financing, and the support of major shipping companies and manufacturers is also doubtful. However, according to a report by the International Herald Tribune, Italian-Thai has received backing for the project from a private bank that it would not name.
 
Meanwhile, Thailand's Minister of Industry, Chaiwut Bannawat, will lead a delegation of Thai business representatives on a fact-finding mission to Burma from Jan. 18-22 to seek information on the Burmese regime's investment policy and its framework for development of the Tavoy project, according to reports by The Nation, a Bangkok-based English-language daily.

While the Thai investors seem confident of the project's eventual success, other observers are less sure about its prospects, at least in terms of bringing any real benefit to the local economy.

Sean Turnell, an expert on the Burmese economy at Macquarie University in Sydney, Australia, said he was cautiously optimistic about the project. “Longer term, and come a reasonable government in Burma that was genuinely concerned with economic development, Tavoy could become the sort of infrastructure the country needs. But even such longer-term benefits presuppose such a government will emerge,” he said.
 
In a properly governed economy, the increased efficiencies from such a facility would pay dividends that would accrue to the country hosting it, the Australian economist also noted. “In Burma such dividends will flow not into the country's economy as such, but to the regime and its business associates,” he added.
 
The International Herald Tribune reported that the project includes a profit-sharing agreement with the Burmese junta, but executives from Italian-Thai said they could not divulge details. Meanwhile, business sources in Rangoon told The Irrawaddy that one of the regime's closest cronies have already been awarded huge contracts related to the Tavoy project. He is Max Myanmar owner Zaw Zaw, who accompanied Burma's top general on a tour of the Shenzhen Special Economic Zone in China last year. Zaw Zaw, chairman of Myanmar Football Federation, is on US sanctions lists, and favored business associate of junta head Snr-Gen Than Shwe and is especially close to former Lt-Gen Thiha Thura Tin Aung Myint Oo, the Secretary 1 of the ruling junta and chairman of the regime's Trade Council.

With some of Burma's top businessmen already on board, the project has also attracted the attention of other local business people hoping to cash in on what looks like a potential goldmine. Residents of villages near the project area, most of whom make a living by farming or fishing, say that there has been a sudden influx of outsiders, including not only Thai employees of Italian-Thai, but also Burmese from other parts of the country trying to snap up properties ahead of the coming rush.
 
“There are lots of people coming and going all the time, many of them hunting for houses and land to buy,” said one resident of Maungmagan, a village well known for its attractive beach.

He said people are trying to acquire houses and plots of land in his village because it is not located inside the project area. In that area, he said, nobody is interested in buying property because they know that it could soon be taken away from them.
 
In Tavoy, a city of around 150,000 inhabitants, residents told The Irrawaddy that land and house prices have doubled or tripled in recent months as businessmen, most of them close to the military regime, look for places to open banks, hotels and other businesses. One local business owner said that an acre of land in downtown Tavoy suitable for building a hotel is now worth as much as 1.5 billion kyat ($1.8 million)—three times what it would have cost before.

The Tavoy project is also expected to increase tourism in the region, especially in southern Tenasserim's Mergui archipelago. One proposal that has been put forward is to extend the reach of the project by 300 miles (483 km) to include the archipelago's pristine islands, which are already famous for their white sand beaches, crystal clear water and abundance of marine life.
 
While foreign investors consider the potential for future spinoffs from the Tavoy project, Burma's domestic media has focused mainly on its possible impact on the country's economy. Most reports have highlighted how Tavoy will become the region's biggest and most modern seaport, providing a shortcut between Europe and mainland Southeast Asia and possibly transforming Burma's economy the way that Shenzhen marked China's first step along the way to becoming an economic superpower.

What Burma's heavily censored domestic media has not mentioned, however, is the cost of this project for those who will be most directly affected by it. This cost, say observers who have been watching this project take shape, will be measured not only in the loss of land by farmers currently working their fields in the area, but also in the long-term environmental degradation it is expected to cause.

Local officials have told The Irrawaddy that many farmers continue to grow seasonal crops in the project area, but others who worked at rubber plantations are already gone, forced to leave to make way for companies that are increasingly moving in to claim land that has sustained local people for generations.
 
According to locally based researchers, Kaung Myat Co, Ltd, a Burmese logging company, recently seized 2,000 acres of land in the area, while Hein Yadanan Company confiscated 500 acres belonging to villagers living in Myatta, near the region where the deep-sea port project will be built.
 
Saw Eh Na, one of the researchers, said that the villagers were not compensated for the loss of their land, and most now have no means of making a living. He added that the land confiscation was likely related to the sea-port project. “The companies will plant rubber that they can sell to companies in the industrial zone that will be built in the Dawei port area,” he said.
 
Sources also said the trade route that will be built from Tavoy to Thailand also crosses several plantations belonging to Myatta village residents, meaning that many more villagers fear they will soon be forced off their land.
 
Environmentalists are also worried. They say that the planned project will damage the region's coastline and its relatively untouched wilderness areas. Fueling their concerns is the fact that no environmental impact assessment has been carried out and that the project does not include any environmental conservation plan.
 
“The construction of a deep-sea port and industrial zone on the Tenasserim coast will severely affect the biodiversity along the coastal region,” said a Burmese marine biologist from the Marine Science Association of Myanmar, speaking on condition of anonymity.
 
Another scientist who has studied the the region's unique, life-supporting ecosystems echoed these concerns: “Mangrove forest and coral reef are very important places for a wide range for aquatic species. They are necessary environments for the life and reproduction of those species. Without them, aquatic animals can no longer exist. As a result, biodiversity will be ruined.”

Especially sensitive, he said, are the 601 species of coral reefs that have reportedly been found in the Mergui archipelago, which comprises over 800 islands.
 
Referring to the lack of strong regulations and good governance to protect the environment, an official from the Forest Resource Environment Development and Conservation Association (FREDA), a leading Burmese environmental NGO based in Rangoon, also warned of long-term costs.

“Fuel wastes from ships and petrochemical waste from the factories will become an environmental problem that is quite difficult to tackle,” the official said.
 
None of this is likely to stop the Tavoy project from going ahead, however. As Matthew Smith, a senior consultant at EarthRights International (ERI), an international environmental and human rights group, has noted, “The well-being of the population and the environment simply haven't been prioritized under military rule, especially when business interests come into play.” 

This was amply illustrated recently when a court in Kachin state awarded villagers evicted from the Hugawng Valley Tiger Reserve just 80,000 kyat ($96) per acre for land confiscated by the Yuzana Company, which in 2006 was granted 200,000 acres in the reserve to establish sugarcane and tapioca plantations. This was the same amount that was originally offered to them by Yuzana, which is owned by Htay Myint, who is on the US sanctions blacklist and soon to become a sitting member of Burma's Parliament after winning a seat in Tenasserim Division as a candidate for the regime-backed Union Solidarity and Development Party.

Many observers believe, however, that it is precisely this disregard for environmental and human rights protections that makes the Tavoy project so appealing to Thai investors. They note that the shift to Burma comes as Thailand imposes stricter environmental regulations in the wake of findings that residents of Map Ta Phut in Rayong Province had an increased risk of cancer due to air and groundwater pollution from the country's largest industrial port. 
 
However, shifting to Burma carries its own dangers, say activists.

“Investors face serious material and reputational risks, despite the regime's propaganda, and what Asian companies investing in these projects aren't thinking about is the possibility of serious liabilities in courts of law for complicity in abuses in Burma,” said ERI's Matthew Smith.

Ba Thant in Tavoy and Aung Thet Wine in Rangoon contributed to this report.