Burma Business Roundup (August 03)

By William Boot 3 August 2013

Indian State Bank Aims to Compete With China in Burma Loans

India’s state Export-Import Bank is planning to invest US$800 million in Burma in an effort to compete for business with neighboring China, said a Bloomberg report.

The money, in the form of loans, will be used to modernize the Rangoon-Mandalay railway line and finance a vehicle assembly factory for India’s budget carmaker Tata Motors.

“Exim Bank of India faces an uneven contest as China Development Bank, which has a loan book more than three times the size of the World Bank, and the Export-Import Bank of China offer cheap loans to snare business,” said Bloomberg.

The Indian bank’s executive director in Mumbai, David Rasquinha, was quoted as saying that China has been beating India globally on investments and has already loaned about $2.4 billion in Burma.

But in Burma it will be necessary for India to take a long-term view, Rasquinha told Bloomberg.

“The pie is so big [in Burma] that there’s room for all of us,” he said. “China has large amounts of money available and can lend at very low rates, but they can’t finance every single project.”

No other details of the Tata factory have yet been made public. Earlier this year Tata opened offices and a showroom in Rangoon.

Thai Oil Spill a Warning for Burma as Tourism, Energy Compete

Environment and tourism groups say the oil spill that has polluted holiday beaches in the Gulf of Thailand is a warning to Burma about the risks of two important industries trying to coexist.

The spill from an oil rig sent tens of thousands of gallons of thick crude oil onto pristine white beaches on the Thai holiday island of Samet this week, and is believed to have wrecked the island’s tourism business for the rest of this year.

It happened as Burma prepares to intensify the exploration of its offshore waters for oil and natural gas by licensing mostly foreign firms to develop 30 sea blocks covering tens of thousands of kilometers.

Burma’s coastal holiday resort industry is also just beginning to expand.

“From what happened [on Samet], we can say that this is a good example and alarming that we are not ready for such an incident,” Greenpeace Southeast Asia manager Ply Pirom told the Voice of America. “Especially if you look at PTT, which is one of the leading companies in Thailand and globally, they are seen to be not really well-prepared for such an incident.”

A PTT subsidiary was responsible for the Gulf of Thailand spill. Its sister company, PTTEP, already operates in Burmese waters and has bid for some of the 30 Bay of Bengal blocks now on offer.

The Samet oil spill is not the first major environmental disaster involving the publicly listed PTT, which is also state-owned, said tourism industry newspaper TTR Weekly.

“In 2009, another PTT subsidiary [PTTEP] was involved in the Montara oil spill, one of Australia’s worst oil disasters, in the Timor Sea,” the newspaper said.

Teak Wood Cutting Declines in Readiness for 2014 Export Ban

Burma plans to export 186,000 tons of teak wood this year—80,000 tons less than in 2012, according to the forestry ministry.

The reduction in output this year is part of the government’s efforts to conserve valuable forest timber, said Win Tun, minister for environmental conservation and forestry.

The cutting and export of other forest timber will also be reduced in the current financial year, said Win Tun, down to 787,000 tons, compared with 1.35 million tons in the 2012-13 financial year.

Burma has already decreed that the export of unprocessed teak and other timber will be stopped from April next year to help conserve the country’s forests.

Environmental NGOs have long protested that Burma’s forests are shrinking due to illegal logging, much of it to feed the Chinese wood industry.

According to Win Tun, action has been taken to curb illegal loggers.

From April next year, only wood products such as furniture will be legally exported.

Indonesian State Firm Bids to Operate Farms in Burma

Indonesia’s state-owned agricultural industries are bidding to operate farms and sell fertilizers in Burma.

The Pupuk Indonesia Holding Company (PIHC) and subsidiary Pupuk Sriwidjaja are “surveying the potential market” in Burma, reported The Jakarta Post newspaper.

“Should things go well, we want our state-owned companies to not only sell fertilizer but also manage their own plots of land in [Burma],” Deputy Agriculture Minister Rusman Heriawan was quoted as saying by the newspaper.

PIHC has already sold 40,000 tons of fertilizer and aims to sell 180,000 tons by the end of 2013 through dealings with the Myanmar Agribusiness Public Corporation, the newspaper reported.

“[Burma] has a promising market as they have millions of hectares [acres] of rice fields and good quality water for irrigation, with low yields due to poor fertilization,” Rusman told The Jakarta Post.

Internet Link Mended but Burma still Dependent on Single Router

The state company Myanmar Posts and Telecommunications (MPT) said disruptions to Burma’s Internet connections and speed were caused by a damaged cable, which has now been mended.

Disruption began in mid-July and MPT originally said the problem would take one month to repair. However, on Wednesday it claimed to have fixed the damage, blamed on a half kilometer of “leaking” at an underground cable near the Irrawaddy Delta city Pyapon.

Until new contract winners move into Burma to expand the country’s wireless and telecommunications system, there is only one Internet link with the outside world, MPT said.

MPT has signed one agreement with China Unicom to add at least one more Internet router into Burma, but no time frame for its installation has been announced.

The cause of the damaged line was not disclosed but it resulted in a 60 percent reduction in power, said MPT.