Burma Business Roundup (Aug. 31)

By William Boot 31 August 2013

Japan Spreads Business Tentacles Across Burmese Businesses

Japan is widening its investments in Burma with moves into electricity generation, air transportation and agriculture.

An agreement has been signed between Rangoon’s Hlaing Tharyar Industrial Zone and Japan’s Ministry for Economy, Trade and Industry to help finance a 500-megawatt natural gas power station, said Eleven Media, quoting the zone’s chairman, Myat Thin Aung.

The ministry will provide technical aid for the power plant, and also for a much smaller 50-MW project to help fuel development of the stalled Thilawa Special Economic Zone on the outskirts of Rangoon.

However, it’s unclear who will actually build these power stations and when.

In the aviation sector, Japanese airline All Nippon Airways (ANA) will buy a 49 percent stake in local airline Asian Wings Airways, Reuters reported. ANA will pay US$25 million for the shareholding, Reuters reported.

Asian Wings was established in 2011 and currently flies only domestic routes but has plans to expand abroad, starting with services to Thailand in October, said Reuters.

ANA said earlier in August that it would begin operating daily flights between Tokyo and Rangoon from the end of September to meet rising demand from businesspeople and tourists. At present it operates direct flights between the two cities three times per week.

Meanwhile, Megumi No Sato of Japan is teaming up with Burma’s City Mart Holding Company in a joint venture to produce vegetables and fruit for sale in Burma. The venture will grow crops in the Pyin Oo Lwin area of central Burma, according to the Myanmar Investment Commission.

In Japan, Megumi No Sato is noted for supplying quality produce to supermarkets and helping farmers to establish steady incomes, said Eleven Media.

Hotel Rates for SEA Games Set by Ministry to Allay Inflation Fears

Hotel room rates have been set for the Southeast Asian Games (SEA), which Burma is hosting in December and is expected to involve thousands of athletes, media and spectators.

Hotels rates will range between US$55 and $150 a night, according to the travel industry magazine TTR Weekly, quoting Burma’s Ministry of Hotels and Tourism. The lowest set price will be for journalists covering the 11-day event, and the highest prices will be paid by spectators, TTR said.

The ministry set the rates following concerns among the participating countries that accommodation prices would be speculatively inflated for the event, said TTR.

The SEA Games take place from Dec. 11 to Dec. 22. Reports have suggested that up to 5,000 athletes and supporters from 11 countries could put a severe strain on Burma’s facilities.

The games will take place in Naypidaw, Rangoon, Mandalay and Ngwe Saung beach in Irrawaddy Division.

The Japan International Cooperation Agency (JICA) has offered to provide technical assistance for the games.

Siam Cement Factory at Moulmein to Feed Demand From Thailand

Major Thai infrastructure component supplier Siam Cement is planning to start construction soon of a US$388 million cement production factory in Burma, according to a report.

The plant will be at Moulmein on Mon State’s southeast coast. It will have an annual production capacity of 1.8 million tons and could be in operation by the middle of 2016, said Reuters, quoting company officials.

Siam Cement is also expanding into Indonesia and Cambodia to cater to Southeast Asia’s developing economies.

Although some of the new Burma production will supply the Burmese market, the Moulmein factory is expected to export cement across the border into Thailand.

Siam Cement is one of Southeast Asia’s two biggest cement producers. It is 30 percent owned by Thailand’s Crown Property Bureau, an investment agency controlled by the Thai royal household.

Multimillion Dollar Loans from Tokyo to Revamp Burma’s Broken Roads

The Japan International Cooperation Agency (JICA) will provide about US$900 million in loans for road renovation and other infrastructure enhancement in Burma, said World Highways magazine.

The loans are separate from financial aid, which is also being provided for infrastructure development at the Thilawa Special Economic Zone.

“Currently, JICA is working on a master plan to develop [Rangoon], including more than 70 programs that include renovation of the city’s public transportation system,” said World Highways this week.

The magazine quoted an unnamed JICA official as saying about $900 million of loans for infrastructure projects are in the pipeline for Burma.

“Of the total loan, $380 million will be allocated for the Thilawa Special Economic Zone project, which covers the construction of roads, bridges, drinking water and electric power generation,” the magazine said.

Bangladesh to Resume Dhaka-Rangoon Flights after Six-Year Break

Direct flights linking the Bangladeshi capital and Burma’s commercial center Rangoon will restart in November.

The resumption, after a six-year break, follows an agreement signed in Dhaka this week between the Civil Aviation Authority, Bangladesh (CAAB), and Win Swe Tun, deputy director of Burma’s Department of Civil Aviation, Bangladeshi media reported.

Biman Bangladesh Airlines, the national airline, stopped flights between Dhaka and Rangoon in 2007 because of what it termed economic losses.

CAAB said Rangoon was now more commercially viable and would serve as a stopover on routes between Dhaka and Bangkok and Kuala Lumpur.