Construction of Thilawa Special Economic Zone B will begin this November on 700 hectares of land, an official responsible for the project said.
Development of the second stage of the country’s first economic zone will begin with infrastructure including roads, electricity and water, Myint Zaw, general manager of Myanmar Japan Thilawa Development Ltd said in an interview with the Myanmar Times.
“We will implement Zone B in phases. Once one phase is complete, we will start on the next one,” he said.
Meanwhile, the smaller Zone A is around 90% complete, with US$760 million in foreign investment committed to the project across 400 hectares of land. The project is located to the south of Yangon.
More than 70 investors from 16 countries have signed to build factories and create 15,000 jobs, Myint Zaw said, while four more companies are at the negotiating stage.
The rental fee for land in Zone B has been set this year at $80 per square metre, he added. Land can be rented for almost 50 years, with the option to extend the lease by an extra 25 years.
“That is this year’s rate. We cannot say what it will be next year. All land can be leased from now until 2064, with the option to rent for 25 more years for an additional fee,” he said.
He said 12 factories have launched operations, 25 more are due to open soon, and 30 factories will be built at the end of the rainy season.
With existing levels of investment, manufacturing capacity can reach up to $241 million dollars a year, he said. The company expects total investment into Thilawa to reach $1 billion in a few years and the value of annual production to rise to $350 million.
The special economic zone is a joint venture between Myanmar and Japan – each government has a 10% stake while a consortium of nine local companies called Myanmar Thilawa SEZ Holdings (MTSH) controls 41% and a Japanese private-sector consortium controls the remaining 39%.
The government will focus on approving export-oriented industries and import substitution companies to help reduce the growing trade deficit, Myint Zaw said.
“Reducing the trade deficit will help to support the currency and may also bring down inflation to some extent,” he said. “As we are a country with rapid economic growth, our trade deficit will increase unless we can develop our export industries.”
The government proposed a 24 trillion kyat ($20.28 billion) budget for the 2016-17 financial year, including a 3.9 trillion kyat deficit – around 1 trillion kyat lower than the previous year.
Myanmar enjoyed a modest reduction in its trade deficit for the first quarter – the deficit was $945.7 million compared to $1.11 billion in the first quarter of 2015-16.
Myint Zaw said the provision of international-standard infrastructure will be crucial to securing foreign investment into Thilawa.
“We are competing with other Asian countries such as Vietnam, Philippines and Thailand for business from international manufacturers,” he said.
Investment into Thilawa accounted for 12.5% of total investment into Myanmar in fiscal year 2014-15 and 3% of total exports, MJTD previously said.
In the same financial year, foreign investment was worth more than $8 billion and exports came to $12.52 billion, according to data collected by the Planning and Finance Ministry.