Embedded Enclaves? Initial Implications of Development of Special Economic Zones in Myanmar.

June 25, 2020

The success of SEZs in practice relies on their embeddeness with the surrounding economy. While Thilawa SEZ has made some positive attempts to create local jobs, transfer knowledge, and strengthen the country’s industrial infrastructure, there are limits to the positive external benefits flowing from SEZs in Myanmar.


The long and bumpy taxi ride sticks in my memory - from my hotel room adjacent the little airport to the site where Kyauk Phyu Special Economic Zone (SEZ) is planned to be located.


Around 2 kilometers before our destination, the taxi became stuck in sand. Soon the inhabitants of a nearby, small fishing village rushed over and helped us free the car out from the sand trap.


 Farming and fishing are the main livelihoods in this quiet, rural area in the Rakhine State.


The taxi driver could not take me any further and informed me that he would wait for me there. For the remaining kilometers of sandy path, I hitched a lift on the scooter of a local teenager who finally dropped me off at a little harbor.


I remember observing two young men working and inspecting their nice, but simple wooden boats, and asking myself if these proclaimed SEZs will have positive and sustainable impacts for the people of Myanmar?

Why is the government of Myanmar proposing to establish SEZs and how can they have a sustainable effect on Myanmar’s population?

Firstly, SEZs are geographically delimited areas in a country that are subject to differing business rules as otherwise applicable in the national territory. The establishment of SEZs forms a key element of Myanmar’s industrialization plan and is expected to act as an important catalyst for growth, helping to increase exports and further reduce the trade deficit.

Moreover, its goals include the generation of jobs and the reconnection with the international community, while undertaking a democratic transition and simultaneously attempting to accelerate economic reforms.


The Myanmar government intends to develop three SEZs, in Thilawa, Dawei and Kyaukpyu in cooperation with the governments of Japan, Thailand, and China, respectively. However, two of the three planned SEZs continue to face delays. Consequently, my research focuses on Thilawa SEZ.

Despite the fact that SEZs are often perceived as enclaves of industry having little effect on the national economic landscape, their success in practice depends largely on their interdependence with the surrounding economy.
Therefore, the purpose of my research is to initially apply the embeddedness concept to SEZs and therewith attempt to discuss probable implications of SEZs.


Thilawa clearly benefits from a strategic location next to two port terminals as well as its proximity to Yangon - Myanmar’s economic epicenter. Nevertheless, so far the zone is poorly embedded in its immediate surroundings.
The development of SEZs entails a number of weaknesses when assessed on their ability to enhance economic development, mainly because the quality of employment opportunities created is low and the quality of sustainable and lasting development, in general, is questionable.

Although initial findings suggest that Thilawa SEZ has made some positive attempts to create jobs, transfer knowledge, and strengthen the country’s industrial infrastructure, there are some limits to positive external benefits flowing from SEZs in general.

In the short term, industrialization will have a limited impact on the living standard of the general population, especially if SEZs manage only to generate unskilled low‑paid jobs and it remains questionable whether the possible economic growth is sustainable.

Consideration of the embeddedness concept proves helpful in gaining a more nuanced understanding of the interlinkage processes involved with SEZs in Myanmar.

Sina Hardaker

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