The conflict-ridden Thai-Burmese border has long been associated with drug smuggling, arms-dealing and human trafficking and other illicit trades. Now a new investment initiative aims to bring bilateral border trade above ground through the establishment of export-oriented special economic zones (SEZs) in the two countries' hinterlands.
The two sides agreed last month in Mandalay to finalize a long pending agreement, which in the first phases will open the way for Thai agribusinesses to cultivate millions of acres of land tax-free in Burma's border areas. The ambitious plan to turn battlefields into marketplaces has the tacit backing of the Asian Development Bank (ADB), but at the same time has come under heavy criticism from rights organizations.
The initiative is the outgrowth of the multilateral Economic Cooperation Strategy (ECS), which was first launched in 2003 by former Thai prime minister Thaksin Shinawatra with the aim of increasing trade investment between Thailand, Burma, Cambodia and Laos, and has been continued by Thailand's new ruling military junta.
Plans to construct a formal border trade zone at the Burmese town of Myawaddy, directly across from the Thai town of Mae Sot, as well as two industrial zones, one at Pa'an in Karen state and another at Moulmein in Mon state, have been in the planning stages for several years and are now reportedly on course to begin groundbreaking this year.
The Myawaddy zone, which will be the first built, will become Burma's second-largest border trade zone, lagging only the Muse 105 Mile Border Trade Zone in northern Shan state across from the southern China town of Ruili. Thailand is expected to finance nearly all of the project's construction through grants and loans to Burma's government, consistent with Thailand's aim to use the ECS as a vehicle to establish itself as a regional donor country.
A feasibility study, conducted by the Industrial Estate Authority of Thailand and Burma's Ministry of Industry-1, was completed last July on the proposed Myawaddy, Pa'an and Moulmein SEZs. The study claimed that there were positive responses from potential Thai and Chinese investors, although there were still outstanding concerns holding back large-scale investments, particularly concerning the lack of basic infrastructure.
Both governments have a strategic interest in developing the border areas. One chief aim of establishing SEZs will be to create local jobs and hence curb the massive influx of illegal migrant workers into Thailand. Estimates of the number of migrant Burmese workers in Thailand run as high as 2 million, some who possess proper working papers, but many not. Thai manufacturers have long tapped cheap Burmese labor to beat down costs, but the Thai government has simultaneously deemed the large number of undocumented workers as a potential security and public health threat.
With large parts of the border area across from Thailand's western Tak province now under the control of the ruling State Peace and Development Council (SPDC) or their proxy Democratic Karen Buddhist Army (DKBA), contract farming ventures have recently sprouted in border areas ahead of the new agreement. The DKBA is a breakaway faction of the still insurgent Karen National Union and has struck a separate peace with the military regime.
Those ventures at first seemed to be local initiatives brokered privately between Thai agribusinesses and ethnic Burmese businessmen or DKBA military commanders, but have since been formalized by the Thai and Burmese governments involving huge tracts of land.
A memorandum of understanding (MoU) first signed between the two governments in December 2005 and made operational last month will pave the way for Thai contract farmers to manage and cultivate more than 7 million hectares of land in Burma for sugarcane, oil palm, cassava, beans and rubber.
Also under the agreement, four areas of Karen and Mon states are designated for contract farming. The most northerly area consists of 20,000 hectares across the border from Tha Song Yang in Thailand. A second area of 40,000 hectares is in the area of Ko Ko and Rai villages just north of Myawaddy. A third area, also along the border, is an area of 40,000 hectares around Waley village across from the Thai district of Pho Pra. Further west is the fourth area in a 200,000-hectare triangle formed by the towns of Kawkareik, Kya In and Kyaikdoe. The contract farms in these areas are all overseen by the state-run Thai National Economic and Social Development Board.
In addition to the current MoU, Thai officials were quoted in the Thai media as saying after the ECS meeting in May they were working to finalize yet another bilateral agreement on contract farming in other undisclosed border areas. Curiously, negotiations for another agreement come as some Thai investors under the original deal are already protesting about the original scheme's implementation and taxation.
Thai investors who invested in farms to grow maize, mung and castor beans on 6,475 hectares of Burma's land across from Mae Sot, Mae Ramat and the Pho Pra district of Tak province were allowed under the original MoU agreement to export their products to Thailand duty-free. However, the Thai investors allege that tariffs have been levied by Burma's officials and some have threatened to pull out of the project altogether if the taxes are not repealed.
Forcible evictions
More controversially, land targeted for Thai contract farms is often already under cultivation by small-scale subsistence farmers, many from ethnic minority groups that have long occupied the areas. A recent report by the Karen Human Rights Group (KHRG) detailed the methods the SPDC has used in the past to forcibly evict villagers from their land to clear the way for large-scale commercial farms.
KHRG and other rights groups claim that land is frequently confiscated, access roads are built with the use of forced labor and the farm projects are often subsidized with money extorted from local villagers. Villagers are often forced to work on the farms and plantations for minimal or no pay, the rights groups allege. Specifically, ethnic Shan farmers near Muse along the Chinese border have protested an increase in land seizures in 2006, including a 15,000-hectare area for a contract rubber plantation.
The soon-to-be-built SEZs and the contract farms are connected by a third even more controversial project: the Asia Highway. The highway is a part of a road system first envisioned by the United Nations Economics and Social Commission for Asia and the Pacific in 1959 that once completed will crisscross all of Asia. The section of the highway that runs through Burma's Karen and Mon states is known as Asia Highway 1 and cuts across the country's southeastern region linking Myawaddy to Moulmein on the coast and then runs northwest to central Burma where it joins the rest of the highway system.
The highway is also part of the ADB-backed East-West Economic Corridor (EWEC) linking Vietnam, Laos, Thailand and Burma. The development initiative envisions a road link from the Vietnamese port of Danang on the South China Sea, through
Laos and Thailand and across Burma to a planned deep sea port at Moulmein as part of an Economic Cooperation Program. The new route will cut 3,000 kilometers off the 4,000 kilometer route that cargo ships currently take around Singapore to reach the Indian Ocean.
The Thai government has agreed to provide the financing to Burma to construct or rehabilitate the 200 kilometer section of road from Myawaddy through Moulmein and on to the northern Thai town of Thaton through a combination of US$100 million worth of soft loans and grant assistance. Parts of the road are to be upgraded from one lane to two or four lanes, while at least one section will follow a completely new route. Under the agreement, Burma will supply the machinery and construction materials as well as provide security against the threat of possible ethnic insurgent group attacks.
The initial 18 kilometers over the Dawna mountain range from Myawaddy to the town of Thinganyinyaung were completed last year by the Thai Sor Chiangrai Construction Company for an estimated $30 million, which was financed by the Thai government. A survey team from the PSV Consultant Group is currently conducting a survey of the next 40km section from Thinganyinyaung to Kawkareik.
This new section does not follow the previous route and must be built anew and the Thai government has provided a $14 million grant for the construction of this section. Recent outbreaks of fighting in the area have forced the company to ask the SPDC to provide security for the surveyors. According to the ADB's plan, a second route is planned that will branch off at Myawaddy and head south to the town of Kya and then northwest to Mudon and Moulmein. This 100km route will also be paid for through a soft loan provided by the Thai government.
Tacit assistance
All of these projects are very much a part, either expressly or implicitly, of the ADB's EWEC project. Although there is very little, if any, direct ADB involvement in the Burmese portion of the project, the bank encourages the project and provides cash in the form of so-called "technical assistance" grants to allow SPDC officials to attend meetings and seminars around the region in relation to the project.
The ADB also supports other regional projects that feed into the Burmese portion of the EWEC, although the bank has not dispensed any direct loans to Burma since 1986 due to concerns of state-sponsored human rights abuses in the country. The ADB may now claim that it has no direct involvement in the Burmese portion of the EWEC project, but a look through the ADB's development matrix on their website shows that the multilateral lender is interested in ensuring that the Burmese end of the project is properly and speedily developed.
Two of the larger projects scheduled as joint ventures between the Industrial Estate Authority of Thailand and Burma's private sector include the development of so-called "special border zones" in Mae Sot and Myawaddy. Although the ADB is not funding the projects directly, it has taken the role through ADB-funded conferences and seminars to encourage the project among its member counties and includes it in its Greater Mekong Sub-region development plans.
The projects aim to create facilities for the export and import of goods, temporary storage, processing and value-adding facilities and the re-export to Thailand of agricultural products and raw materials, especially wood and precious stones.
The Mae Sot project is estimated to cost $30 million, while another $400,000 has been proposed for an initial feasibility study. The Myawaddy zone, meanwhile, is expected to cost as much as $10 million. Other projects that are envisioned and feed into the larger designs are a $100,000 regularization of agricultural products between Burma and Thailand and a $500,000 fish processing project in Moulmein. The agricultural project which is aimed at Karen and Mon States aims to increase the volume and efficiency of Burma's agriculture.
Other projects envisioned for the corridor, most of which involve all four countries, include an extension of telecommunications services at the western end of the EWEC into Burma, the financing of small and medium-sized enterprises, cross-border electronic data exchange, the development of sub-regional marketing facilities, the institutionalizing of traditionally informal trade, the standardization of trade documents and an EWEC trade and investment information system. Other than the $2 million telecommunications project, most of the other projects are smaller scale, entailing hundreds of thousands of dollars each.
Human-rights and environmental group Earth Rights International (ERI) says that while the ADB may not be directly involved in the project, the technical assistance provided by the ADB allows the SPDC to be added to forums where the project is discussed and funding sought. By supporting other projects within the EWEC framework, they argue the ADB is implicitly encouraging other countries in the region, chiefly Thailand, to invest in the Burmese end of the project. ERI is one of several international organizations that have called for the Asia Highway project to be reviewed or even halted.
For the villagers who are living in the area of the EWEC project, the issue of who is actually funding and supporting the project is not as important as how they are going to cope with losing their land and being forced to work on the projects.
A recent report by KHRG entitled "Development by Decree" has heated up the debate about how beneficial the development plans will really be to local villagers. The KHRG claims, and backs up with interviews with villagers throughout Karen state, that the SPDC regularly forces villagers to give up their land to make way for development projects, to work without payment on the construction of the projects, and to work without pay to maintain the projects.
The increased security presence in the targeted areas, the rights group alleges, also brings on its own abuses as villagers are forced to work at military camps, act as porters for the soldiers and are extorted for food and money. The fear of groups like ERI and KHRG is that development projects done under the banner of the EWEC and the ECS will not benefit the villagers the projects allegedly aim to, but rather will only line the pockets of Thai and Burmese bureaucrats and businessmen and through suspect means bids to maintain the ADB's flagging regional relevance.