Myanmar building economic zone in Rakhine to boost trade with Bangladesh

The Myanmar authorities have said the construction of an economic zone on the outskirts of Maungdaw Township in northern Rakhine state is expected to start when the 'current situation in the area calms down'.

A regional minister told the Myanmar Times that the zone is dedicated to promoting trade, manufacturing and services and it would also benefit 'local residents' in the area with the jobs created by the project.

“When the economic zone is completed, it will be much more convenient. It will create jobs and result in more development. It can reduce conflict,” State Minister for Finance, Revenue, Economics and Planning U Kyaw Aye Thein added.

"The first phase of the zone will emphasise trade with Bangladesh, while subsequent development will expand into the manufacturing, financial and services sectors, including banks, factories and other industries in the area," he said.

"The project will also facilitate regional economic development. Importantly, with more opportunities for employment made available, ethnic minorities from other states are also expected to move to the region."

Maungdaw economic zone, located in Kanyin Chaung, will commence its construction within this fiscal year when the region has stabilised, Thein told The Myanmar Times.

"This economic zone is not to be confused with the Special Economic Zones (SEZs) which are governed by the SEZ Law. The zone in Maungdaw is expected to focus on trade with Bangladesh as well as manufacturing, finance and services industries, but will not be designated as a SEZ."

Myanmar has been exporting marine products and agriculture products to Bangladesh via Maungdaw trade camp since 1995, and the former enjoys a trade surplus with 90 percent export and 10 percent import, Maungdaw Border Trade Association chair U Aung Myint Thein told The Myanmar Times.

According to the statistics from the Myanmar Ministry of Commerce, Maungdaw border trade volume in 2016-17 fiscal year amounted to $5.95 million. For the current fiscal year, until June 2017, the volume reached $2.61 million, but with no imports for Myanmar.

The absence of import from Bangladesh is due to regional instability in Maungdaw. It is also partly because Bangladesh imports can enter the Myanmar market via Sittwe border trade camp, the newspaper reported.

Sean Bain, a legal consultant for the International Commission of Jurists in Myanmar, is quoted by the Times as saying that "establishing the SEZ at Maungdaw would not be a right move".

“Problems with the legal framework for SEZs and the human rights abuses associated with them are well documented. It is hard to imagine a more inappropriate site for the development of another SEZ given the ongoing conflict, overall insecurity and appalling human rights situation in the area,” he said.

The project’s aim, according to Myanmar Times, is to "foster economic growth, create jobs and promote regional stability based on long-term economic development." according to the regional

“There are some difficulties regarding the security conditions in Maungdaw. But we plan to initiate the development of the zone in Maungdaw Township, including the provision of security and other rights.

“First, we will build a trade zone in Kanyin Chaung with full security [protection]. Afterwards, we will do so for Maungdaw Township.

“In the long run, we expect to achieve economy-based stability. We will start the project during this fiscal year.

“When the economy will improve [in the future], no one will make trouble. That is human nature. Therefore, we will have to push the implementation of the economic zone project at the earliest opportunity,” Maungdaw Border Trade Association chair U Aung Myint Thein said.

According to the Times report, the Maungdaw project originally began in October 2015 under U Thein Sein’s presidency, with K600 million ($443,000 or Tk 35.75 million) from the Union government and K400 million from a consortium of private businesses.

Under the new National League for the Democracy-led government, the project will continue under a public-private partnership between the Rakhine State government and a consortium of private companies.

"Public-private partnerships (PPP) between a government agency and private-sector company can be used to finance, construct and operate projects, such as public road networks, transport systems and night markets."

In 2017-18 fiscal year, a total of K2.2 billion ($1.625 million or Tk 131 million) comprising K1.5 billion ($1.1 million or Tk 89.37 million) from the state government and K700 million ($517,000 or Tk 41.7 million) from the consortium will be used for the construction of the zone.

The site will cover 50 acres of land initially and arrangements are underway for the state government and the consortium of businesses to sign a MoU. There is no timeline for the signing of the MoU yet.

When complete, Maungdaw economic zone will occupy 100 acres of land in Kanyin Chaung, which is not far from Maungdaw centre. It is understood that the zone is located by a river, which has sufficient depths to accommodate marine vessels.

According to a local media report in February this year, two jetties along the river have already been constructed.