Economy

Burma Business Roundup (June 22)

By William Boot 22 June 2013

South Korea Offers Loans Aid While Seeking Big Infrastructure Contracts

South Korea’s first major trade delegation, led by Finance Minister Hyun Oh-seok, visited Burma this week amid reports that the Korean government intended to triple its development aid and cheap loans to US$100 million.

Korean industrial firms are bidding to win contracts to help develop the planned new Rangoon airport at Hanthawaddy, said the Korean news agency Yonhap.

“South Korea plans to discuss signing an investment pact with [Burma],” the agency quoted government official in Seoul as saying.

The Incheon International Airport Corporation has already lodged a bid for a contract to work on the Hanthawaddy project.

Korean policy makers accompanying the Seoul finance minister intended to “discuss ways of sharing South Korea’s experience from the ‘Saemaul Movement,’ a government-led campaign that is credited with helping modernize the once rural Korean economy and overcome the country’s poverty,” Yonhap said.

The Saemaul Movement, or New Community Movement, was introduced in 1970 to transform South Korea’s poor agriculture-based economy and break the disparity in wealth between urban and rural communities—a situation similar to that in Burma today.

Vietnamese Firm ‘Finds Gas in Burma Waters’ of Bay of Bengal

Vietnam’s state-owned oil company has struck gas in its M-2 Block in Burmese waters of the Bay of Bengal, according to the industry magazine Upstream.

Few details have yet been disclosed other than that the find was made while PetroVietnam Exploration Production was drilling its first well in the 10,000-square-kilometer block southwest of Rangoon.

The reported find comes days before the Ministry of Energy is due to announce the winning bids for 30 other offshore blocks. The deadline for lodging tenders was June 14.

PetroVietnam’s discovery also follows an announcement that it had sold a stake in the M-2 Block to French company Maurel & Prom S.A. The size of the stake and the price paid has not been disclosed, but the oil website Rigzone said the two companies intended to “cooperate to share risks and opportunities in oil and gas exploration and production.”

PetroVietnam has held the M-2 Block since 2008 along with several partners that included Vietsovpetro, a Vietnamese-Russian joint venture, and Burma’s state-owned Myanma Oil & Gas Enterprise (MOGE), which has been frequently criticised for lack of transparency in its business dealings.

The Ministry of Energy said this week that the number of approved joint ventures between domestic and foreign companies in the oil and gas sector is now 145.

ILO Lifts Forced Labor Sanctions, but Claims of Army Abuse Continue

Trade and investment in Burma could be boosted by a decision of the International Labor Organization (ILO) to lift all sanctions against the country, the Naypidaw government said this week.

The ILO’s annual conference in Switzerland agreed to end the remaining sanctions, which were imposed 13 years ago amid forced labor allegations against the former military regime. The junta, led by Gen Than Shwe, had failed to give assurances that the practice would end—leading to an intensification of Burma’s international isolation.

The ILO said it was ending all sanctions in recognition of the social progress made in Burma since the Than Shwe regime handed power to President Thein Sein.

However, a number of international human rights groups say there is continuing labor abuse in Burma, especially in areas of military conflict where the Army is accused of forcing local people to act as porters.

Burma’s Rice Export Market Rivals Face Growing Sustainability Problems

Burma’s ambitions to challenge major regional rice exporters Thailand and Vietnam received a boost with a business risk report that said the rival countries faced mounting problems.

The rice industry in both Thailand and Vietnam was marred by corruption, government meddling and water irrigation problems, said Maplecroft Global Risk Analytics.

“In particular, significant government intervention in the rice sector to increase returns for producers has had an extensive effect in disrupting the export market [while] Measures being considered to address the problems caused will potentially adversely affect production levels into the future,” the Commodity Risk Report Rice study said of Thailand.

Similar government meddling in Vietnam “have substantially affected the export value of Vietnamese rice,” said Maplecroft.

Labor rights linked to rice production in Thailand and Vietnam were also a problem that potentially affected the reputational risks of foreign buyers.

“High numbers of inadequately protected illegal migrant workers in Thailand present reputational risks to sourcing companies, while regulation of occupational health and safety also remains poor,” the study said.

Burma, once the world’s biggest rice exporter before the industry was ruined by the political polices of Gen Ne Win in the 1960s, has been slowly raising its rice production in recent years but still lacks investment to modernize infrastructure such as milling plants.

Call for Burma and Thailand to Cooperate in Rising Exhibitions Industry

Thailand should collaborate more with Burma to face “challenging times” ahead in trade and business growth, the Thailand Convention and Exhibition Bureau’s (TCEB) exhibitions chief said.

The exhibitions industry within the 10 countries of Asean is growing and becoming more competitive, especially in the fields of transport, ICT, energy, education, culture and tourism, said Supawan Teerarat.

“[Burma] and Thailand are facing challenging times when collaboration, especially in trade relations development and technology, is crucial to secure sustainable business growth,” she was quoted as saying by TTR Weekly, a tourism industry magazine.

“Participation in trade shows organized in Thailand will help companies in [Burma] to network with Thai and regional stakeholders at both government and commercial levels. This will help [Burma’s] companies to increase their trading value through Thailand’s exhibition platform.”

Last month, the TCEB staged its first forum in Rangoon.

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