‘Phuket of Myanmar’ seeks MIC approval

The US$1.2 billion LuxDream Island project is branded “the next Phuket” and will feature a high-end marina, luxury hotels, a theme park and a casino.

The plan may seem incongruous with the serenity of Myanmar’s Myeik Archipelago. But the island dream looks set to become reality, as Singaporean Zochwell Group prepares to sign a Build, Operate, Transfer (BOT) contract with the Tanintharyi Region Government next month.

The Myeik Archipelago is a group of more than 800 islands in the Andaman Sea, off the southern tip of Myanmar. The islands are home to the Moken, or “sea gypsies” and are almost untouched by tourism.
The area had five hotels and motels with a total of 196 rooms by the end of 2014, according to the Ministry of Hotels and Tourism. But this is set to change.

In 2012, Gareth Chin, Zochwell’s chief commercial officer, was looking for business opportunities in Myanmar, and was introduced to Kawthoung, the city at the southernmost point of Myanmar.
Following preliminary studies on Salon Island, or LuxDream as it appears in investment literature, he met with U Htay Aung, Union minister for hotels and tourism, who wrote a letter to connect Zochwell Group to the chief minister of Tanintharyi Region, according to Mr Chin.

Salon is another name given to the Moken people in Myanmar. The island is 697 acres in size, located around 20 minutes by boat from Kawthoung jetty.

“Several farmers who were living on the mainland used the island for planting crops including coconut, cashew nuts, betel nuts, corn and rubber. So we have spent the past two years negotiating compensation,” said Mr Chin.

Almost all the farmers have now been compensated, he said. Those who have not accepted the terms will keep their land and, for now, the development will go ahead around it.

The land was previously classified as farmland, which Zochwell changed to commercial land under Myanmar law. “This was not a problem as the project had already been approved in principle by the regional government,” said Mr Chin.

“We are going to sign the land lease and the Build, Operate, Transfer terms with the chief minister [of Tanintharyi region] in the next month, as soon as the Attorney General’s Office approves the agreement. After that, we will seek Myanmar Investment Commission approval.”

Zochwell will rent the island under standard BOT terms of 50 years, with an option to extend the contract twice, by 10 years each time, said Mr Chin.

However, U Hlwan Moe, assistant director of the Ministry of Hotels and Tourism in Myeik, said he did not know about the project.

“We oversee all of the islands in the Myeik Archipelago. They need to get approve from our department, but we haven’t had any information yet,” he said.

The entire project will cost an estimated $1.2 billion. Phase one will include development of the marina, a golf course to be designed by former US golfer Jack Nicklaus’s company, Nicklaus Design, and a clubhouse.

Zochwell has approached companies including ONE°15 Marina Club and Resort, a Singapore listed firm which operates the Sentosa Island marina in Singapore, according to Mr Chin. ONE°15 Marina is exploring the possibilities of developing and managing a marina on the island, he said.

Zochwell is also in talks with Jumeirah Hotels & Resorts, according to Mr Chin. The hotel operator is most famous for its “7 star” Burj Al Arab Jumeirah hotel in Dubai.

Neither Nicklaus Design, ONE°15 Marina Club and Resort nor Jumeirah Hotels & Resorts responded to requests for comment. However, Singaporean architect Ong & Ong confirmed that it was working with Zochwell on the design.

“We have signed an MOU and are working on a masterplan for the whole island,” said Andy Goh, Ong & Ong’s chief consultant in Myanmar. “We will start with the design for the marina and the hotel.”

Furthermore, the island will feature a casino. While these are not legal in Myanmar, it is possible to gain a licence for an offshore establishment. The Andaman Club Resort, on an island near to Salon Island, has had a casino in operation since 1996.

The LuxDream Island casino has already been approved in principle, though still requires MIC approval, said Mr Chin.

Assuming the project gains MIC approval, the initial phase will begin at the end of 2015, he said.
“We are in the process of choosing contractors, operators and investors. We will manage the island in the same way that Sentosa Development Corporation (SDC) manages Sentosa Island in Singapore. We will lease it from the government, divide it up, and sub-lease sections of it to independent investors.”
The SDC describes Sentosa, which means peace and tranquility in Malay, as follows: “Once a modest fishing village and military base, it has since been transformed into one of Asia’s leading leisure and lifestyle destinations.”

Several islands in Myeik, too, have long been used by Myanmar’s military. “The island immediately west of Salon Island is a naval base. It’s well located, as it will help protect us from monsoons,” jokes Mr Chin.

Prospective partners from Singapore, Thailand and China have conditionally agreed to invest, and are now waiting for MIC approval, said Mr Chin.

“We are getting ready to open this project to Myanmar investors soon,” he said.
Zochwell will develop the marina, which Mr Chin hopes will become a major destination on the global yachting route.

“Many people with yachts want to do a round-the-world tour. In this region, they pass through Singapore, then Malaysia and Phuket. But all four marinas on Phuket are fully booked and the government won’t issue any more licences as capacity is to the brim,” he said.

“The next stop on the map is the Nicobar Islands [in the Eastern Indian Ocean]. Currently only larger boats can make this trip directly from Phuket. But with a marina in Myanmar, smaller boats could stop at our island before moving on.”

He plans to include immigration facilities on Salon Island, so that it can become a gateway to Myanmar, said Mr Chin.

“In a later phase, we will build an 800-metre bridge to the mainland via another island, where there is already a causeway to the mainland. We will need to work with the Ministry of Transport to ensure we don’t block the waterway,” he said.

The project will be developed according to responsible tourism guidelines, said Mr Chin. “The Myanmar government wants to avoid the sort of pollution and damage that has happened in Phuket.”
Last year, Flora & Fauna International (FFI) proposed establishing a Marine Protected Area (MPA) in the Myeik Archipelago, as the area has a unique biodiversity, which is under serious threat.

The FFI carried out studies over two years in collaboration with the Ministry of Environmental Conservation and Forestry (MOECAF), the Department of Fisheries and the navy, according to an October 2014 statement. The parties are now discussing the best ways to protect the area. The region is also on UNESCO’s tentative list of nominations for World Heritage Sites.

“We will have to prepare an EIA [environmental impact assessment] before our MIC application, and to do whatever is proposed by the government,” said Mr Chin.

Furthermore, he suggested that a research centre could be built on Salon Island, for academics and scientists to study the Myeik Archipelago “before it disappears”. Zochwell has been talking to the National University of Singapore, among other potential partners, to find out whether this is feasible, he said.
Zochwell is not the only company with ambitious plans for the region. Myeik Public Corporation plans to develop island resorts in the archipelago – on Kunthee Island, East Sula Island, Langan Island and Tanintharyi Island, according to a 2014 article in state-owned newspaper The Global New Light of Myanmar.

The projects are likely to include hotels, a golf course and amusement parks, according to the article.

Zochwell Group began doing business in Myanmar in 2012. In addition to Salon Island, the company has several ambitious projects including a chain of “boutique, three-star hotels” in Yangon, which will go by the brand Equiloft, a mix of “exquisite” and “loft”.

The group is also building a small-scale residential development in Dawbon township, Yangon, and has cement batching plants in Yangon and Bago, with another to be built in the Thilawa Special Economic Zone (SEZ).

Finally, the group is in talks with several Norwegian companies about a gated community project in Yangon for Norwegian expats, which would include facilities including a clubhouse, a gym, a spa, restaurants and a school.

Source: Myanmar Times

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