Burma Business Roundup (July 6)

By William Boot 6 July 2013

Japan is gearing up to make Burma the new sweatshop of Asia, said a report by The Economist citing the case of Famoso Clothing, which is closing its factories in China and moving operations to Rangoon.

Famoso is part of Daiei Ready Made Clothes Corporation, based in the Japanese city of Nagoya, and makes men’s suits for the Japanese market and others.

Until recently, most of its production was at three factories in China, where it employed thousands of workers.

“Three years ago two of the factories in China were closed and the plant in [Rangoon] was rebuilt at a cost of US$7 million to become the company’s new Asia hub,” The Economist reported.

“The company’s last Chinese factory will close within a year and the [Rangoon] operation will triple its output, from 170,000 suits a year to half a million,” the magazine quoted Famoso managing director Kazuto Yamazaki as saying.

The reason for the switch is simple, said The Economist: Famoso can hire Burmese workers for US$100 per month—just 25 percent of what it has been paying its Chinese workforce.

Famoso’s factory is in Mingaladon Industrial Park in Rangoon. This month it will beginning shipping its first consignment of suits to Britain for the famous Marks & Spencer chain.

Burma Gems Auction Makes Record Sales worth US$2.6 Billion

Burma’s latest gems auction sold items valued at a record US$2.6 billion in total, according to the Myanmar Gems Enterprise.

The auction, held over the last two weeks of June in Naypidaw, attracted more than 7,000 visitors, more than half of whom were from abroad, said Myanmar Gems Enterprise’s deputy director, Aung Kyaw Moe.

The auction was the first to be held in a year, reportedly due to a disruption of jade mining in Kachin State because of armed conflict.

It featured jade, pearls, rubies and sapphires.

“Out of over 10,000 jade lots, over 300 gems lots and over 200 pearl lots displayed for sale under open tender and competitive bidding systems, over 8,000 jade lots, over 100 gem lots and almost all the pearl lots were sold,” said the Chinese news agency Xinhua, quoting Myanmar Gems Enterprise officials.

Yunnan Refinery Fed by Burma Oil Pipeline to Go Ahead Despite Protests

A planned giant refinery in China’s Yunnan province to be fed by the Chinese oil pipeline built through Burma will proceed after an environmental impact assessment (EIA) said there were “acceptable” risks of pollution from it.

The 10-million-tons-a-year refinery at Anning near Kunming was the subject of two mass street protests by Chinese residents in May objecting to its construction on health and safety grounds. The plant will also produce petrochemicals.

The protests forced developer China National Petroleum Corporation (CNPC), which also financed the pipeline through Burma, to publish the EIA report—a rarity in China.

“CNPC said pollution discharge from the factories would be processed according to environmental guidelines,” reported the independent Beijing business magazine Caixin.

China’s National Energy Administration had earlier refused to publish the EIA, saying such studies were confidential. However, China has experienced an increasing number of petrochemical-linked accidents, the most recent in June at a CNPC facility in Dalian in the northeast, where at least six people were killed in explosions and fires.

The Yunnan refinery is due for completion in 2015. It will be fed by crude oil piped up from a new transhipment terminal on the Bay of Bengal at Kyaukphyu. CNPC said it will provide 53 percent of Yunnan’s future fuel oil needs.

‘Poster Boy’ Serge Pun Forges Burma’s Most Valuable Company

Yoma Strategic Holdings has become the most valuable company in Burma, with the value of its shares on the Singapore Stock Exchange zooming to US$870 million in recent weeks.

Yoma is part of the SPA Group run by Serge Pun. The group includes 30 operating companies with 4,000 employees.

“When global markets went into a funk, Yoma’s shares held steady, reaffirming investor confidence in Myanmar’s future and Pun’s ability to harness it,” said the US business magazine Forbes.

Forbes this week described Pun as Burma’s business “poster boy” because of his successes since returning to live in the country after real estate forays in Hong Kong and elsewhere in East Asia.

One of Yoma’s biggest ventures in Rangoon is a partnership with Hongkong and Shanghai Hotels to create a five-star hotel under the famous Peninsula brand in the heritage building that formerly housed the Burma Railway Company.

Carlsberg to Brew Beer in Burma by End of 2014, Partner Says

The first Carlsberg beer will be brewed in Burma by the end of 2014, according to the Danish giant’s local partner Myanmar Golden Star Breweries (MGS).

The two firms signed a joint venture agreement earlier this year and work has already begun on a new brewery, MGS said this week.

In addition to the Carlsberg brand, the new brewery will also produce a new Burmese-brand beer. A name has not yet been chosen, said MGS chairman Thein Tun.

Burmese at present drink on average less than four liters per year compared with 25 liters annual per capita beer consumption in Thailand and 30 liters in Vietnam.

The Carlsberg-MGS partnership also plans to export Burma-brewed beer.

Skin Whitening Creams Taken off Burmese Shelves in Health Scare

Japanese cosmetics maker Kanebo is recalling its skin whitening creams on sale in Burma and other Southeast Asian countries because of complaints about skin discoloration.

The firm admitted the problem might be connected with a chemical formula it created called 4HPB, but did not disclose what ingredients are in the formula.

The recall follows warnings in the United States by that government’s Food and Drug Administration that some skin whitening products contain potentially dangerous levels of mercury and other harmful heavy metals.

Whitening creams are especially popular among young women in Asian countries with darker skin because of societal notions that paler skin is more attractive. The creams have recently become fashionable in Rangoon.