Dec 27, 2011

Italian-Thai Seeks Japanese Loans for Myanmar Deepsea Port

Italian-Thai Development Pcl expects to sign loan agreements next year valued at $12.5 billion to develop a deepsea port, industrial complex and power plants in Myanmar, Chairman Premchai Karnasuta said.

Japan Bank for International Cooperation will likely provide most of the funding for the port, road and railway links in Dawei, less than 300 kilometers (186 miles) west of Bangkok, Premchai told reporters. Officials at the Tokyo-based JBIC office were not immediately available to comment, said a spokeswoman who declined to give her name.

“We expect to get partners and funding for the project next year,” Premchai said in Bangkok today. “It will help reduce logistics costs and relieve congestion in the Malacca Straits.”

Thailand’s government has backed the project in Dawei to provide an alternative route for exporters, including Japanese companies that use the country as a manufacturing base, to ship goods to Europe and the Middle East. Italian-Thai, the nation’s biggest construction company which won a contract from Myanmar to develop the port last year, has emphasized the port’s potential to connect land routes throughout the region.

Italian-Thai expects to win construction contracts valued at 400 billion baht next year, not including the Myanmar projects, up from 170 billion baht this year, Premchai said. The company’s shares gained 0.5 percent to 3.72 baht today. The stock has declined 20 percent this year, compared with a 0.02 percent drop in the benchmark SET Index.

Land Sales

Italian-Thai plans to complete a 132-kilometer road from Dawei to the Thai border within three years, Premchai said. The company expects to gain income from selling 50,000 rai (80 square kilometers) of land, an area equivalent to about a 10th of Singapore, and serving as the main contractor on infrastructure projects, he added.

Of the loans Italian-Thai plans to secure next year, $3.5 billion will be for the port and roads, $2 billion for a railway and $7 billion for two power plants, he said. Japan would seek to help finance the project provided it can reach a deal on Myanmar’s “huge” outstanding debt, Kimihiro Ishikane, a deputy director of Asian affairs at Japan’s foreign ministry, told reporters in Bali on Nov. 16.

South Korea’s SK Engineering & Construction Co. has shown interest in oil and gas projects in Dawei, Somchet Thinaphong, managing director of Dawei Development Co., an Italian-Thai unit, told reporters at the same event.

Steel Mill

Italian-Thai is still seeking partners and financing for an integrated steel mill, an oil, gas and petrochemical complex, and fertilizer plants, Premchai said. It signed an initial agreement last month with Ratchaburi Electricity Generating Holding Pcl to develop coal-fired power plants in Myanmar with a combined capacity of 4,000 megawatts.

Italian-Thai was founded in 1958 through a partnership of business executives from Italy and Thailand. It oversaw the construction of Bangkok’s main international airport and elevated train line and operates in about a dozen countries around Asia.

Source: Bloomberg Businessweek