New economic zone lures foreign interest but stirs local ire
The Thiwali Special Economic Zone is attracting investment but it has also sparked controversy over land rights issues and compensation
Looking north from Myint Win’s farm, across rice paddies and past bamboo huts, a massive new industrial development on the outskirts of Myanmar’s biggest city gleams in the distance.
The buildings sprang up during the first phase of developing the Thilawa Special Economic Zone (SEZ), a 6,200 acre (2,500-hectare) industrial project that is a joint venture between the governments of Myanmar and Japan and some private consortia.
The factories that have been built produce everything from children’s toys to clothing, medical supplies and electronics.
For developing nations like Myanmar – which emerged from decades of economic isolation in 2011 when the military stepped back from direct control of the country – special economic zones are a way of attracting foreign investment and creating jobs.
Next month the second phase of the US$1.5 billion development begins on a site of around 2,000 hectares that includes Myint Win’s farm.
Myint Win, whose family has lived on the land for four generations, and hundreds more like him, will be relocated from the site, which lies about 25 kilometers southeast of Yangon.
Although work is meant to start in a few weeks, the 53-year-old farmer said he has not been told what will happen to him.
“This has been going on for a long time and until now there is nothing concrete they have shown us,” he told the Thomson Reuters Foundation in an interview at Phalan village, on the site of the next phase of the SEZ.
Land rights campaigners say local residents are often kept in the dark about development plans and lose their livelihoods and access to services when they are relocated.
But the developers say villagers are well compensated, provided with new, better housing, and given the chance to get work in new industries brought to a nation that has crumbling infrastructure and is seeking foreign funding.
Myanmar has three planned SEZs, including Thilawa, that are supported by the ruling National League for Democracy (NLD), which won an historic election last year to form the country’s first democratically elected government in more than half a century.
The Thilawa SEZ will be the first to be built and operational. The smaller, first phase is 90 percent complete and factories started opening on August 12, with another 25 to follow soon.
Foreign investment into the first phase stands at US$760 million. Investment into Thilawa accounted for 12.5 percent of total investment into Myanmar in the 2014-15 fiscal year and 3 percent of total exports, the developers have reported.
A recent special report by Myanmar’s Eleven Media Group found the Thilawa SEZ had attracted investment from up to 13 foreign countries, including Japan, Singapore, China, Thailand, the United Arab Emirates, Panama, Malaysia and South Korea.
But the project got off to a bad start. Construction started in 2013 but the first phase was beset with controversy after involving the relocation of nearly 70 families to Myan Yar Thar, 2.5 miles (4 kms) away.
Many residents said the compensation they received was not enough. The Thilawa site had been earmarked for industrial development under Myanmar’s junta government in 1996 and people relocated from the land were compensated a reported 20,000 kyat (US$16) per acre.
“As with all such projects, there are always lessons to be learned. Government capacity to handle these large projects is seriously lacking”
The junta’s industrial project was scrapped and those who had been moved away then returned. But Thilawa’s new developers say the site already belonged to the government because of the junta’s deal, and offered compensation only for crops grown on the land, not for the land itself.
Residents said the employment training they received as part of their relocation package failed to prepare them to compete for jobs in the SEZ, leaving only low-paid jobs open to them, such as clearing rubbish or working as security guards.
A lack of clean water was another problem, they said.
Daw Sanda, a member of the Thilawa SEZ Management Committee (TSMC), a government entity monitoring development of the zone, said the complaints were unfounded.
She said the compensation given in phase one was sufficient for villagers to build new and better homes. Daw Sanda added that many were in debt before they moved, and that they were given financial assistance by the authorities.
She said there was employment to be found in factories in the area that did not require a skilled labour force and training would be provided to staff.
Deeper wells had been dug to address a shortage of water in Myan Yar Thar and a water supply system that will make tap water available was being developed, she added.
“(It) will be completed in no time,” she told the Thomson Reuters Foundation by email.
Although there have been complaints about the first phase of the development, Vicky Bowman, head of the Myanmar Centre for Responsible Business, said it “should be recognised that this is actually the most advanced, transparent and comprehensive resettlement process which has ever occurred in Myanmar”.
“But as with all such projects, there are always lessons to be learned,” she said. “Government capacity to handle these large projects is seriously lacking.”
Takashi Yanai, chief executive of the company developing the project, Myanmar Japan Thilawa Development (MJTD), said the company believed it had a “responsibility to ask the Myanmar government to implement such acquisition and resettlement work without violation of human rights.”
MJTD was ready to “listen to the voices of the people at any time and, if necessary, we will deliver the voices to and discuss with the Myanmar government to find the solution,” Yanai said in an email.
Land rights campaigners remain sceptical, however.
“If the second phase of Thilawa goes forward in its current state it gives a green light to irresponsible and harmful investment,” Katherine McDonnell, legal advocacy coordinator at Earth Rights International, told the Thomson Reuters Foundation.
Aye Khaing Win, a 30-year-old mechanic who was relocated to Myan Yar Thar in 2013, said villagers were poor before they moved but they were able to support themselves and were happy.
“Even though before I lived in a small house of bamboo, lit by candles, my family did not have any worries,” he said. “Now, everyday, I have all these pressures. I can’t find happiness here.”
The first phase of the SEZ has been hailed as a success by a private local consortium, Myanmar Thilawa SEZ Holdings, one of the stakeholders in the public-private partnership that carried out phase one in the development of Thilawa SEZ.
According to its annual report, released last month, the total planned investment in the first phase is expected to reach US$1 billion by 2018, with 40,000 new jobs created.
It also expects the special economic zone to process exports worth US$350 million by 2018.
But last month villagers travelled to Tokyo to present their concerns to Thilawa SEZ investors, including the main conduit for Japan’s overseas development aid, JICA.
JICA told the Thomson Reuters Foundation that it would not comment on whether it will invest in the second phase.
A spokesman for the company said in an email that the relocation of residents for the first phase was “conducted in accordance with JICA social and environmental guidelines.”
Around 4,000 people live or work on land which will be developed for the remaining phases of the Thilawa SEZ, Earth Rights International said.
U Mya Hlaing is one of them. The 70-year-old farmer, who also leads the community-based Thilawa Social Development Organisation, said consultations ahead of the second phase relocation had been inadequate.
He said the community wanted a resettlement plan that would protect their livelihoods and ensure decent healthcare and education.
His organisation would contact businesses to tell them not to invest in the Thilawa SEZ, he added.
“If they do not agree we will not give them our land,” U Mya Hlaing said.
(Editing by Katie Nguyen, Belinda Goldsmith and Ros Russell)