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02
The Thilawa Special Economic Zone: A Model for Growth in Myanmar

An Industrialization Model for a New Urban Development Plan

Mr. Masahiko Tanaka
Chief Representative, JICA Myanmar Office

Japan's aid to Myanmar is channeled through JICA. Comprising a large amount, the offered aid is divided into types of support for “improved wellbeing of Myanmar's people,” “capacity building of people who underpin the economy and society and creation of relevant systems,” and “development of infrastructure and systems necessary for supporting sustainable economic growth.” The very first initiative for “supporting sustainable economic growth” was the Thilawa Special Economic Zone (SEZ). Organizing the project is a Myanmar- Japan joint venture company with the name of Myanmar Japan Thilawa Development Ltd. (MJTD), of which the Myanmar side (public/private sectors) owns 51% and the Japan side (Mitsubishi Corporation, Marubeni Corporation, and Sumitomo Corporation) owns 49%. After the project's establishment in 2013, JICA decided to invest in it in April 2014. Mr. Masahiko Tanaka, chief representative of the JICA Myanmar Office, had the following to say about the significance of this ambitious project.

“The Thilawa SEZ is a brand new urban development scheme. Planned under this framework are a residential area, universities, and research institutions, as well as an industrial park.”

JICA is expected to play three different roles in the project. First, it will use yen loans to develop electricity, water supply, ports and harbors, roads, and other types of infrastructure. Second, it will push the project forward as one of its stakeholders through investments in MJTD, which is in line with the Japanese government's intentions. Third, it will provide the Thilawa SEZ Management Committee, an executive organ of the Myanmar government for this project, with guidance on how to apply the SEZ Law that they have established. “In terms of both hardware and software, JICA has never been involved in any project this deeply,” continued Mr. Tanaka.

Artist’s rendition of the Thilawa SEZ

What could have prompted them to take such a big chance with Myanmar?

“Myanmar and Japan have long enjoyed a friendly relationship. The year 2014 marked the 60th anniversary of the establishment of diplomatic relations between the two countries, and Myanmar used to ship rice to Japan before World War II. When the entire Japanese population was starving in the postwar era, Myanmar sent us rice practically for free. When Japan was restored to the family of nations with the signing of the San Francisco Peace Treaty, Myanmar was the first to offer its support. In fact, Myanmar was the first country that agreed to accept Japan's offer for war reparations.”

We must never forget kindness of the people of this country.

“After the military administration seized power in 1988, one country after another imposed economic sanctions and pulled out of Myanmar. However, JICA decided to stay to continue offering humanitarian aid in the fields of health, education, and human resource development. When President Thein Sein placed the country under civil administration in 2011, the natural decision was to resume our full-scale support.”

In the Thilawa SEZ, there are plans to develop a standard of infrastructure comparable to that of advanced countries, invite foreign investments, and create jobs to set a model for other projects in the country to emulate. Of the three SEZ projects currently under development in the country, the one in Thilawa – Myanmar's main artery near Yangon, is being promoted under the lead of the Japanese government at the request of Myanmar's government. “Thilawa is a futuristic city. Ideally, we expect the city to be ‘smart’ in terms of the environment as well. By presenting a future model that they should aim for, we hope to cause a ripple effect throughout the country.”

These passionate words from Mr. Tanaka's lingered in our minds.

Expectations for the Thilawa Industrial Park

Mr. Takashi Yanai
President and CEO, MJTD

The Thilawa SEZ covers a total development area of 2,400 ha. The Phase 1 construction work of a massive industrial park has already begun in the advanced development area (Zone A Area: approx. 400 ha) for scheduled completion in 2015. Penta-Ocean Construction Co., Ltd. took the order for Phase 1 site development work, and KUBOTA was chosen as a subcontractor to build water intake/supply installations, a water purification plant, and a sewage treatment plant. It was decided that ductile iron pipes would be used for intake and supply of water, and KUBOTA's proprietary technology would be introduced to the water purification plant and sewage treatment plant for low running costs. We visited Mr. Takashi Yanai, president and chief executive officer of Myanmar Japan Thilawa Development Ltd. (MJTD), which is the primary organization responsible for this development project. Having opened a number of industrial parks outside of Japan, Mr. Yanai is a business pro who is currently on loan from Sumitomo Corporation, one of the investors in MJTD. We asked him what distinguishes the Thilawa SEZ from other conventional industrial parks in Myanmar. “Most of the industrial parks here did not have access to electricity or water supply and were nothing but leveled land. Here in Thilawa, however, we have everything. This is exactly what we think of in Japan when we talk about an industrial park.” As of January 22, 2015, a total of 34 enterprises from nine countries around the world, including Japan, Myanmar, the U.S., Thailand, Sweden and Australia, decided to start operations in the park. It's not only nationalities, but also sectors that vary greatly, with sewn products, electronic equipment, pharmaceuticals, beverages, and other businesses represented. One unique tenant is a wheelchair manufacturer, and also on the list are construction materials manufacturers, who have joined in an apparent bid to tap into the booming construction market in Myanmar. Three companies are scheduled to start operations by the summer of 2015. Mr. Yanai told us about commonalities shared by companies seeking opportunities in Myanmar.

Billboard showing the Thilawa SEZ Zone A Area. Kubota is listed as one of the subcontractors.

“There are two types. One looks at this country as a production center, while the other sees it as a promising market. None of the existing ‘industrial parks’ here have sufficient infrastructure, and so they ended up hosting many sewn products businesses. Featuring an innovative industrial infrastructure, the Thilawa Industrial Park is capable of responding to the specific needs of tenant businesses from many different sectors. If you are considering this country as a market for your business, on the other hand, I have to say that there are still many rules that they need to develop. That said, if you are determined to develop this market, you could become a de-facto standard in the country. So, if you're willing to take the chance, this is the place to be,” he said with a smile.

Still, Mr. Yanai admitted that he had not been confident that he could bring the project to a success when he first started because he saw barely any chance of coming out ahead. Over the course of several meetings with government officials, however, it suddenly occurred to him that he was on to something.

“The success of any project depends entirely upon the commitment of project managers. That's all it takes for any project to come to fruition.”

Having a wealth of experience in similar projects, Mr. Yanai is a man who certainly has the ability to perceive the key to success.

The Thilawa SEZ project is significant in another way, too, as it will virtually serve as a litmus test to predict how the Myanmar and Japanese governments can join hands together in the future. In Myanmar, people take it for granted that the time for completion is always extended, due in part to the country's rainy seasons. If they can stick to the original construction plan all the way through, the Japanese companies can make their presence felt by people in Myanmar and the rest of the world.

“Once the industrial park opens here, I hope to make KUBOTA's water treatment plant accessible to the public so that people can come and have a look around. That way, we can let them know what Japanese businesses can do. As such, it is essential that we make this an absolute success,” said Mr. Yanai firmly.

Everything is for the sake of Myanmar and Japan. “Team Japan” is wasting no time in getting things done through a united effort.

In the surrounding wilderness, pastured cattle look on from the bushes.

About the Thilawa Special Economic Zone (SEZ)

  • A project to develop an industrial park, commercial complex, and other facilities in the Thilawa SEZ, approximately
    23 km southeast of central Yangon
  • Development area: Approx. 2,400 ha (about the same size as Shinagawa Ward, Tokyo)
  • Advanced development area: Approx. 400 ha land (Zone A Area) will be developed first.
  • Developer: Myanmar Japan Thilawa Development Ltd. (MJTD), a Myanmar-Japan joint venture company MJTD was established in 2013 with a 51% stake held by the Myanmar side (public/private sectors) and a 49% stake held by the Japan side (Mitsubishi Corporation, Marubeni Corporation, and Sumitomo Corporation). In April 2014, the Japan International Cooperation Agency (JICA) decided to invest in the project. Sales of SEZ land to investors began in May 2014. (Source: JICA data)

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