Plans for the Dawei special economic zone have inched ahead after the Myanmar government agreed to borrow 4.5 billion baht from Thailand to finance the construction of a 132-kilometre road from Dawei's proposed deep-sea port to Ban Phu Nam Ron in Kanchanaburi.
Transport Minister Arkhom Termpittayapaisith, who led a Thai delegation to meet Myanmar officials last Friday, said the Myanmar government agreed to a lending facility with an interest rate of 0.1%, a 10-year grace period and repayment in 20 years.
The Thai government initially offered the loan in 2015.
The Thai cabinet already endorsed the loan plan, but road construction was delayed as the new Myanmar government asked to re-study the plan.
Mr Arkhom said work on the long-delayed Dawei development project will continue. Myanmar and Thailand first signed a memorandum of understanding to develop the area in 2008, with an aim to transform Dawei into Southeast Asia's largest industrial and trade zone.
Two years later, Myanmar granted a 60-year concession to SET-listed Italian-Thai Development Plc (ITD) to develop a deep-sea port, industrial estate, and road and rail links to Thailand's Kanchanaburi.
ITD then withdrew from the agreement in 2013 citing financial difficulties, before re-signing the concession agreement in 2015.
Premchai Karnasuta, president of ITD, said recently the company is ready to restart construction of the Dawei project over the next few months if the Thai and Myanmar governments approve a continuation of the megaproject at a joint meeting on Feb 10.
ITD signed an agreement in August 2015 to start developing the first phase of the megaproject, which covers 18,000 rai, with an initial investment budget of US$1.7 billion.
Of the 18,000 rai, 12,000 rai has been slated for an industrial estate for light industry as demanded by the Myanmar government, which wants to focus on creative jobs for local workers.
Some $500 million will go towards a 450-megawatt gas-fired power plant.
ITD also plans to invest in an additional coal-fired power plant once the Dawei industrial zone is fully developed.
An additional $500 million will be spent on a petrochemical plant and oil refinery to serve demand at Dawei.
Mr Premchai said the company has already invested $200 million in the initial phase of the project, which includes roads in the industrial estate, a small port, water facilities, electricity, a township and the cost for land expropriation for road construction from the Thai border to the Dawei project.