THAILAND is seeking a guarantee that 75 percent of goods produced by Thai-owned factories at the planned Myawaddy industrial zone will be sold inside Myanmar, an official from the Ministry of Industry (1) said last Monday.

As the goods are produced inside Myanmar, a short distance from the Thai border town of Mae Sot where a number of factories are poised to make the move across the border, selling the goods inside Myanmar would effectively be a tax break for the companies which would not be required to pay import tariffs.
The issue will be discussed this Friday and Saturday when a delegation from the Industrial Estate Authority of Thailand is scheduled to take up negotiations with the government in Nay Pyi Taw.

U Myat Thin Aung, president of the Myanmar Industrial Association, told The Myanmar Times that Thai investors would also be given a tax exemption on raw materials imported for use in the production of finished goods at the Myawaddy zone – an incentive unique to that industrial zone.

Dr Maung Aung, an economist at the Research Institute of Yangon said that Myanmar needed to attract more foreign investment of this sort or risk losing Thai business to other countries in the regions, such as Cambodia, Laos or Vietnam.

The decision to establish the industrial zone along the Thai-Myanmar border is one of the objectives of Ayeyawady-Chao Phraya-Mekong Economic Cooperation Strategy (ACMECS), which was initiated after the Bagan Summit – attended by Thailand, Cambodia, Laos and hosts Myanmar – in November 2003.

“Thailand is interested in investing in Myanmar mainly because of an abundance of attractive resources here, such as raw materials and low labour costs,” Dr Maung Aung said.

The Myawaddy industrial zone is expected to focus mainly on food processing and producing household goods.

Now was a critical time to make any necessary adjust-ments to the feasibility study of the zone, both for the sake of attracting foreign investment and protecting domestic industries, Dr Maung Aung said.

A final decision on whether Thailand will gain the right to sell 75pc of goods from the Myawaddy zone in Myanmar is expected after the August 18-19 meeting in Nay Pyi Taw.

In the 2005-06 financial year, 40pc of Myanmar’s exports, worth about US$1.4 billion, were exported to Thailand. A large part of the trade deficit Thailand carries with Myanmar is due to its natural gas imports.