The cabinet on Tuesday approved a wide-ranging economic partnership with Japan that will be signed during Prime Minister Prayut Chan-o-cha's official visit next week.

When Gen Prayut met with Japanese Prime Minister Shinzo Abe in Myanmar last November, he called on his Thai counterpart to restore a civilian-led government - but the political difference has not prevented railway contracts and other economic talks. (Photo courtesy of Government House)

The draft memorandum of understanding (MoU) features cooperation in the long-awaited multibillion-dollar Dawei megaproject, a new rail network and trade and investment promotion.

Deputy government spokesman Sansern Kaewkamnerd said Japan had agreed at the recent meeting between Thailand, Japan and Myanmar to take part in the Dawei project and possibly offer soft loans for construction of a 138-kilometre road linking Dawei and the Thai border.

Japan has also agreed to hold an equal partnership in Dawei SEZ Development Co (DSEZ), a special-purpose vehicle (SPV), to run the project.

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DSEZ replaced Italian-Thai Development Plc (ITD), which had received the original concession from the Myanmar government in November 2010.

In June 2013, Thailand and Myanmar agreed to set up DSEZ with an equal shareholding and initial investment of 12 million baht, far below the 100 million baht proposed earlier. The company is registered in Thailand.

The countries also agreed to set up SPVs to manage the port, road and rail links, power plants, waterworks, industrial estates, telecommunications and a township. SPVs will be registered in Myanmar.

In November 2013, Thailand and Myanmar officially agreed to push the ambitious scheme forward by signing three MoUs.

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The first MoU covered the framework agreement of the Dawei concession and its transfer to DSEZ from ITD.

The second MoU concerned revocation of the concession between ITD and Myanmar, while the third involved a warranty that new investors in the port and roads were legally obliged to pay the 6 billion baht already invested by ITD.

Mr Sansern said Japanese Prime Minister Shinzo Abe had also pledged to support Thailand's overall infrastructure development with Japan's advanced technology and vast know-how and experience of such projects.

He said the MoU would also include a 1.435-metre standard-gauge railway development on three possible routes: Bangkok-Chiang Mai, Bangkok-Kanchanaburi-Sa Kaeo, and Mae Sot-Mukdahan.

Both parties agreed rail transport had immense significance for development of the Thai economy and enhancing connectivity within the region.

They also reaffirmed their economic cooperation and emphasised the importance of deepening economic relations including through operation of the Japan-Thailand Economic Partnership Agreement.

The main issues to be strengthened include goods and services, human resources development and competitiveness for small and medium-sized enterprises.

During Gen Prayut's visit to Japan from Sunday to Tuesday, the Thai Chamber of Commerce, the Federation of Thai Industries and the Thai Bankers' Association will also sign an MoU with the Japan External Trade Organization to promote Thai businesses in Japan.

The prime minister is also scheduled to meet with the Japan-Thailand Business Forum, Keidanren (Japan Business Federation) and major Japanese investors in Thailand.

Mr Sansern said Keidanren chairman Eizo Kobayashi and vice-chairman Toshiyuki Shiga, who led a Japanese business delegation to meet Gen Prayut Tuesday, had reaffirmed their confidence in Thailand's political stability and confirmed Japan would not move its production bases out of Thailand.

They also showed their intentions to continue their investment in Thailand.

Gen Prayut asked Japan to expand their production in Thailand, invest more in garments and jewellery and transfer high technology to Thailand.

He assured Keidanren that the government was ready to support economic policies to promote their investments in Thailand through tax privileges, infrastructure development and deregulation.