Burma Business Roundup (June 29)

By William Boot 28 June 2013

Mobile Phone Use Will Be ‘Rapid,’ Telenor License Winner Promises

One of the winning bidders for mobile telephone service licenses, Telenor of Norway, has compared the challenge it faces in Burma with its move into Pakistan, where it invested US$2 billion eight years ago.

Pakistan was like Burma then, with very low mobile phone network penetration, Telenor chief executive Jon Fredrik Baksaas told Bloomberg business news agency.

“The growth factor will be pretty significant since we all start from zero,” said Baksaas. “We’ll see a rapid buildup in penetration.”

At present only about one Burmese in 10 has a mobile phone, making Burma one of the least wireless phone-connected countries in the world.

Telenor and the Qatar company Ooredoo were this week named by the government as winners of a much anticipated bidding race for two licenses.

As a backup, the France Telecom SA-Marubeni Corporation joint venture bid has been named “in case one of the winners doesn’t fulfill final requirements,” according to Bloomberg.

Singapore Bids to Join Oil, Gas Business Bonanza in Burma

A Singapore electronics company has formed a joint venture with Burma’s Ruby Dragon firm to pursue business opportunities in the budding oil and gas exploration and production industry.

WE Holdings and Ruby Dragon have formed WE Dragon Resources, which will be based in Singapore.

“[Burma] promises immense opportunities. The country has been actively wooing foreign investors so as to unlock the potential of its huge oil and gas reserves, and we believe that we are well-placed to benefit from this trend,” WE Holdings said in a statement reported by Singapore’s The Straits Times.

Although the venture will initially seek to acquire support service contracts, it also hopes to eventually bid to acquire oil and gas development projects, the newspaper reported.

Burma’s petroleum industry is expected to expand greatly once the winners of bids for 30 offshore and onshore development blocks are announced by the Ministry of Energy. The bids deadline was mid-June.

Thai Plan for Big Coal-Power Plant at Dawei Not Practical, Says Expert

Renewed proposals by Thailand to build a huge coal-burning power station at Dawei on Burma’s southeast coast “lack practicality,” an industry professional said.

The Electricity Generating Authority of Thailand (EGAT) was reported by Bangkok newspapers to want to build a 1,800-megawatt station primarily to supply electricity to Thailand.

The Naypyidaw government has previously blocked Thai plans for a 4,000-megawatt coal-fueled plant at Dawei on environmental grounds.

“Apart from the issue of why Burma would agree to such a project to feed Thailand’s power needs when Burma itself is desperately short of electricity, there is the much bigger matter of fuel supply,” Collin Reynolds, a power industry consultant in Bangkok, told The Irrawaddy.

“There is no coal in the Dawei area or on the Thai side of the border. EGAT has proposed importing coal from Indonesia or Australia, but to do this would involve transhipping it on the Gulf of Thailand and transporting it overland or shipping by sea the long route via Singapore. This all seems to lack practicality.”

Original Thai plans for a major oil processing port and petrochemicals center at Dawei included a 4,000-megawatt coal-fueled power station—more than Burma’s entire electricity generating capacity at present.

Public opposition to coal burning plants within Thailand has thwarted efforts by EGAT to develop such projects at home.

Japanese Fined for Breaking Financial Sanctions Against Burma

A Japanese bank has been heavily fined by the United States for engaging in financial transactions with Burma during the economic sanctions era.

Burma was one of several countries alleged by the state of New York to have been the subject of numerous illegal “laundering transactions” between 2002 and 2007 by the Bank of Tokyo-Mitsubishi UFJ.

New York State’s Department of Financial Services fined the bank US$250 million, claiming the value of illicit financial activity totaled more than $100 billion.

The department alleged that the bank deliberately hid evidence of transactions with Burmese, Sudanese and Iranian customers.

New York State has not disclosed how much of the laundered finance involved Burma, nor which businesses or individuals were involved.

Russia-Burma Military Cooperation ‘Stepped Up’ Following Moscow Visit

Burma and Russia have “stepped up” defense relations following a visit to Moscow by senior Burmese military chiefs, Russian media said.

The Naypyidaw authorities have “showed interest in military-technical cooperation with Moscow, particularly in Russian weaponry and training specialists in military schools,” the Itar-Tass news agency said this week following a visit to Russia by Burma’s Commander-in-Chief Min Aung Hlaing and other senior officers.

The report did not say whether Burma plans to buy more weapons but the agency noted that the Burmese military currently uses MiG-29 and Mi-17 and Mi-24 aircraft.

“[Burma] has Russia’s Pechora air defence systems in its service [and] at least 150 officers and students from [Burma] study at Russian military schools,” said Itar-Tass.

China has been Burma’s main weapons supplier but military equipment has also been bought in the past from Poland—before it joined the European Union—along with Ukraine and Belarus.