Burma Business Roundup (July 20)

By William Boot 20 July 2013

Naypidaw in US$100 Million China Deal to Build Train Factories

China and Burma have signed a US$100 million agreement to jointly build railway rolling stock.

Ninety percent of the money will be covered by loans from Chinese state banks to finance construction of at least two factories to build diesel locomotives and passenger carriages, said the Chinese news agency Xinhua.

Technical expertise will be provided by the China National Machinery Import and Export Corporation (CMC), the Chinese partner in the deal with Burma’s Ministry of Rail Transportation.

Burma’s railways and rolling stock are dilapidated from years of neglect.

This agreement comes just a few weeks after Japan financed and carried out a feasibility study on modernizing the more than 600 kilometres railway route between Rangoon and Mandalay. At the time Burma’s deputy minister of railways, Thura Thaung Lwin, said Japanese companies would be awarded the modernization contract.

Some media reports have said factories under the Chinese loans deal will be built in Mandalay and Naypidaw.

Beijing has previously signed an agreement with the Naypidaw government to build a freight railway route from the China’s Yunnan Province through Burma to the Bay of Bengal coast at Kyaukphyu, Arakan State.

South Korea Exhibits its Manufacturing Skills in Trade Show

South Korea is to make another big push to promote its manufacturing businesses in Burma.

A four-day exposition of Korean companies and their products and services will be held in Burma between July 26 and July 29. Exhibitors will include electronics equipment manufacturers, cosmetics, furniture, textiles and home ware.

However, the Korea Expo 2013 will not be held in Burma’s main commercial city Rangoon. Instead, it will take place in the capital Naypidaw.

This was one of the agreements made when Seoul’s Finance Minister Hyun Oh-seok visited Burma in June at the head of South Korea’s first major trade delegation.

Korean industrial firms are bidding to win contracts to help develop the new Rangoon airport at Hanthawaddy. They include the managers of Seoul’s Incheon International Airport Corporation.

South Korea made a late start in showing interest in Burma since the political and economic rejuvenation over two years ago and ranks way behind China, Thailand, Japan and Singapore in investment.

However, government figures reveal that trade between Burma and South Korea in 2012 grew to a value of US$573 million.

‘Serious Gaps’ in Rules for US Business in Burma: NGO

There are “serious gaps” in the rules established by the US government that require American companies to comply with when doing business in Burma, a human rights group said.

Even though Washington lifted economic sanctions, US firms must report their business activities in Burma to the US State Department in order to try to ensure transparency and the avoidance of still-sanctioned individual Burmese businesspeople.

The first US companies this month published their Burma investments, including business activities in oil and gas extraction. More are expected to reveal their activities later in the year.

“The first reports demonstrate both the usefulness of these reports, as well as some of the weaknesses in the US requirements,” said Jonathan Kaufman, Legal Advocacy Coordinator with Earth Rights International (ERI), a US-based human rights NGO.

“However, serious gaps remain in the rules. Even Hercules Offshore – which provided the most detailed report – is not disclosing the names of its Myanmar suppliers and subcontractors,” ERI said in a statement. “This makes it difficult for civil society groups to monitor its investments for the serious human rights, environmental, or other abuses the rules are designed to prevent.”

Hercules Offshore Inc has worked with Thailand’s gas explorer PTTEP which has links with Burma’s controversial state-controlled Myanmar Oil and Gas Enterprise (MOGE).

Muse in Shan State Tops Cross-Border Trade as China Takes Lead

Burma’s land cross-border trade totalled US$894 million in value in the April-June quarter, according to the latest government figures. Two thirds of the trade was with China.

Border trade is climbing as the number of permitted crossings increases – now 15 with China, Thailand, India and Bangladesh.

The biggest two-way trade in the quarter was with China via Burma’s border town of Muse in Shan State, logging more than $600 million, according to the Chinese state news agency Xinhua.

Overall trade was split almost 50-50 between exports and imports.

The biggest single Burmese export commodity group in the quarter was agricultural produce.

Imports were mostly raw material and finished factory products.

ASEAN Pushes for ‘Creative’ Tourism in Burma to Protect Culture

Burma is to be included in “creative” multi-country tourism packages to be promoted by the Association of Southeast Asian Nations (ASEAN) linked to protection of cultures and the environment.

“Our new focus is on experiential and creative tourism that respects environment and culture,” said the director general of Burma’s Ministry of Hotels and Tourism Myanmar, Aung Zaw Win.

He is also chairman of the ASEAN Tourism Product Development Working Group.

“Today’s travellers are more sophisticated and interested in experiences with immersion in local ways of life,” Aung Zaw Win said.

He made no mention of the fact that Burma still does not permit visitors from ASEAN other nine member countries to travel to the country without first obtaining a visa. ASEAN is pushing for visa-free travel within the bloc by 2015 when it also becomes an integrated economic area, and aims to permit free movement of labor.

A study in June by Norway and the Asian Development Bank forecast that Burma could be attracting 7 million tourist visits a year by 2020.