The Neighbouring Countries Economic Development Cooperation Agency (Neda) is about to approve a long-awaited road construction project linking Thailand and the Dawei deep-sea port in Myanmar.
The move came after the Myanmar government finally approved borrowing of up to 4.5 billion baht in credit facility from Neda, the biggest loan the Thai agency has ever extended, to finance building the road with a length of more than 100 kilometres.
Neda will charge Myanmar a low interest rate of 0.1% in accordance with the cabinet's resolution, said newly appointed presdent Perames Vudthitornetiraks.
Myanmar must now submit a loan application with Neda for consideration, he said.
The road connecting Thailand's Ban Phu Nam Ron in Kanchanaburi province and the Dawei deep-sea port in Myanmar is crucial to promote investment in the first phase.
The Thai government agreed to offer the 4.5-billion-baht loan to Myanmar to finance the road construction in 2015, but the project had been delayed as Myanmar asked to restudy the plan.
Myanmar and Thailand first signed a memorandum of understanding to develop the area in 2008, with the aim of transforming 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, road and rail links.
ITD withdrew from the agreement in 2013 citing financial difficulties, before re-signing for the first phase of the megaproject, which covers 18,000 rai, with an initial investment budget of US$1.7 billion (52.9 billion baht).
The first phase consists of a 27-sq-km industrial estate, a liquefied natural gas receiving terminal, telecom landlines, a power plant, a small port and reservoir. Of the total space, 12,000 rai has been allocated for an industrial estate covering light industry.
ITD also has plans to invest in an additional coal-fired power plant once the Dawei industrial zone is fully developed. An additional $500 million is targeted for a petrochemical plant and oil refinery to serve demand at the facility.
Mr Perames said Neda wants to extend loans to Laos to fund building a road along the Mekong River to connect Uttaradit's Phu Du with Laos' Vientiane.
The road, worth almost 2 billion baht, would shorten the distance between Thailand and Vientiane by 200km, reducing travel time by two hours. The loan details including interest rate are expected to be finalised within the next few months before the cabinet, he said.
Neda focuses on providing credit facilities to neighbouring countries' projects that accommodate Thai travel, said Mr Perames.