Burma Business Roundup (June 8)

By William Boot 8 June 2013

Tourism Plan Envisages 7 Million Visitors a Year by 2020

Burma could be inundated with more than 7 million foreign tourists a year by 2020—or 700 percent more than this year—according to proposals put forward in a joint study by Norway, the Asian Development Bank (ADB) and Burma’s Minister for Hotels and Tourism.

The planners said Burma could cope with such a surge without overburdening the country’s rickety infrastructure. Minister Htay Aung said it could be achieved “without threatening our unique cultural heritage or endangering pristine environments.”

The ADB said the massive expansion of Burma’s tourism industry, still trying to cope with inadequate accommodation and transportation, would cost US$500 million to implement but would create 1.4 million jobs and generate revenue of $10 billion.

“Tourism will be a pillar of [Burma’s] economy, and it has the potential to create meaningful job opportunities for the country’s people,” said Stephen Groff, an ADB vice president.

Small Businesses Make Do With Diesel Energy Until October Power Surge

Small businesses outside the main industrial estates in the greater Rangoon area might have to manage without mains electricity until October when new generating capacity is supposed to become operational, the Ministry of Electric Power said.

The ministry said it could only guarantee daily supply from the grid—for a maximum five hours—to large firms inside designated zones until new capacity totaling 1,360 megawatts at six new power plants now under construction is available.

The extra capacity to supplement Burma’s meager national electricity grid could be available from October, said Nyan Tun Oo, a Rangoon Division ministry official.

In the meantime, many businesses have to reply on power from diesel generators which are adding to operating costs and end user prices for goods. Much of Burma’s diesel has to be imported because of inadequate supply from the country’s three small refineries.

Burma’s run-down electricity grid, which operates mainly in a Rangoon-Mandalay corridor, has a capacity of less than 4,000 megawatts.

Lack of electricity is repeatedly cited as a major problem for potential investors in Burma.

Global Chemicals Giant Eyes Burma for Investment in Asia Drive

Burma is being eyed as a potential operating base and future market by the world’s largest chemicals production conglomerate, BASF of Germany.

The firm said it is targeting the Asia-Pacific region for expansion of its production processes by 2020.

“To achieve this, BASF plans to invest 10 billion euros [US$13.1 billion] together with its partners by 2020 to further develop its local production footprint in Asia Pacific,” the company said in a statement.

BASF manufactures plastics, agricultural fertilizers and dyes, among many other industrial products, and is also investing in oil and gas exploration.

Asia-Pacific is the fastest growing market for the chemicals industry, it said.

BASF has major operational bases in Malaysia and China and smaller units in several more of Burma’s neighbors, but it said it now planned to explore the potential for investment directly in Burma, Cambodia and Laos.

Thailand’s Dawei Port Dream ‘Should Be Abandoned’ as Unworkable

A senior analyst-academic in Bangkok has described Thailand’s ambitions for creating an oil transhipment port and petrochemical and industrial estate at Dawei on Burma’s southeast coast as a pipe dream that should be abandoned.

“The back-to-back visits last month by Prime Minister Yingluck Shinawatra to Japan, immediately followed by Prime Minister Shinzo Abe in [Burma], should signal once and for all that Japanese capital for Dawei development is not forthcoming. It is time to pull the plug on Dawei,” said Thitinan Pongsudhirak, the director of the Institute of Security and International Studies at Chulalongkorn University.

“The [Thai] authorities need to look for an alternative port development strategy inside Thailand.”

The multibillion dollar Dawei dream, proposed by Bangkok construction firm Italian-Thai Development, envisages a land bridge to link the Thai capital’s industrial hinterland on the Gulf of Thailand coast with the Andaman Sea and access to the Indian Ocean.

But Thitinan said logistics are lacking, human resources “challenging,” and finance non-existent, and to cap it all the sea around Dawei is not deep enough to accommodate large ships at anchorage or in port.

Indonesia Offers Expertise to Reduce Burma’s Electricity ‘Leakages’

Indonesia’s state-owned electricity firm Perusahaan Listrik Negara (PLN) has said it will help Burma to improve the efficiency of the country’s electricity distribution system. Poor maintenance has meant that a quarter of electricity generated inside Burma is lost in leakage.

PLN director Harry Hartoyo said his firm has offered to provide training and development programs to try to reduce the power losses to below 20 percent within two years.

The leakage problem was highlighted by Asian Development Bank vice president Stephen Groff at the World Economic Forum meeting in Naypyidaw on Thursday when he called for an improvement in the power grid.

But Groff estimated it would take five years for Burma to improve and expand the system sufficiently to meet today’s actual electricity demand.

PLN’s assistance team, being drafted via cooperation links in the Association of Southeast Asian Nations (Asean), would focus first on Rangoon, Hartoyo said.

The firm which operates power plants as well as transmission grids in Indonesia, said it was also interested in examining potential for joint ventures to build now power stations in Burma.

China Says Burma Oil Pipeline Is Complete, but Faces Protests at Home

Contrary to local report within Burma, the official China media this week quoted the China National Petroleum Corporation (CNPC) as saying its controversial oil pipeline through the country had been completed.

Earlier reports said the oil line would not be finished until late this year. A sister natural gas pipeline running alongside from the Bay of Bengal at Kyaukphyu into China’s Yunnan Province is currently undergoing operational trials, CNPC said.

CNPC has faced widespread protests about land confiscation and forced removal of rural communities along the length of the 900-kilometer pipelines. Now, it is facing protests from Chinese residents in the Yunnan capital Kunming who are opposed to the construction of a refinery and petrochemicals plant, which is meant to be fed by the Burma oil pipeline.