Japan-backed special economic zone in Myanmar is front runner for alternative production hub
External factors blamed for driving foreign companies out of China to other Asian countries
Supplied: Thilawa Special Economic Zone
Rising labour costs and tighter environmental regulations are attracting Japanese and other foreign firms to the outskirts of Yangon with countries like Vietnam and Myanmar seizing up as serious contenders for foreign trade.
Such infrastructure like the Thilawa Special Economic Zone (TSEZ) is proving to be a success.
Since its operation in 2015, 105 companies have moved into the zone or signed contracts, with 90 firms under full foreign ownership and 13 foreign-Myanmar joint ventures.
President of Myanmar Japan Thilawa Development Ltd (MJTD) Tomoyasu Shimizu, the operator of the economic zone said more than half of the total developed area of 5.83 million square metres is already occupied.
Colliers International said with its international standard infrastructure, clear and transparent lease process and access to the port, TSEZ is proving to be a success.
"It's average industrial land price of USD 80 per sq meter is relatively reasonable compared with Thailand's USD 98 per sq meter and Indonesia's USD 198 per sq meter," Colliers stated.
Colliers International added that the latest data from Directorate of Investment and Company Administration (DICA) shows that manufacturing continues to be one of the top three sectors for Foreign Direct Investment (FDI).
"With the growing number of both domestic and foreign investments in manufacturing, the demand for industrial zones with high quality infrastructure is expected to increase even further."
Colliers said that investors and manufacturers should develop partnership with the government to gain economies of scale thereby spurring increased productivity, rapid innovation and new business formation.
Currently, there are 54 Japanese companies in the zone, 15 from Thailand, eight from South Korea and six from Taiwan, according to MJTD. The tenants are companies from industries ranging from building materials, packaging and food and beverage.
Shimizu believes TSEZ has emerged as an alternative destination over Vietnam, which is also experiencing soaring labor costs.
The MJTD has developed Zone A of 4.05 million square metres and the first to third phases of Zone B with a combined land area of 2.24 million square metres. The zone is expected to grow as work on the fourth phase of Zone B is due for completion in 2020.
Sources: Colliers International Myanmar, Bangkok Post, Marine Traffic, Myanmar Times, Eleven Myanmar
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