Burma Business Roundup (Nov. 9)

By William Boot 9 November 2013

Asian Bank Offers US$60 Million to Help Burma Cut Electricity Wastage

As Burmese people protest against sharp increases in the price of electricity, the Asian Development Bank (ADB) has offered the country a cheap long-term loan of US$60 million to reduce power losses through dilapidated transmission equipment, local media report.

The minister for electric power, Khin Maung Soe, admitted that up to 18 percent of electricity is lost during transmission, The Myanmar Times newspaper reported.

The bank loan is recommended by the ADB to be used to build new power transmission infrastructure in areas outside Rangoon and Mandalay, which should lead to a significant reduction in electricity losses, Khin Maung Soe said.

The loan would be repaid over 24 years at 1.5 percent interest, the minister reportedly told Parliament.

Burma has an overall electricity generation capacity of only 4,000 megawatts, compared with 30,000 megawatts in neighbouring Thailand, which has a similar sized population.

Much of the electricity distribution network is confined to a corridor between Rangoon and Mandalay.

Thailand Bids to Speed Up Planning and Finance for Dawei Port Project

The Thai government has stepped up efforts to restart stalled plans for a major industrial port and oil transhipment terminal at Dawei on Burma’s southeast coast.

Thailand’s Minister of Energy Pongsak Raktapongpaisal led a top-level team to Naypyidaw on Thursday in an attempt to “settle issues” between the two countries ahead of a scheduled meeting in Bangkok later this month of a bilateral negotiating committee on Dawei, said The Bangkok Post newspaper.

Pongsak was accompanied on his visit by officials from Thailand’s National Economic and Social Development Board as well as from the finance and interior ministries.

The Bangkok Post said the Thai government was anxious to resolve planning and financing issues before the Thai-Myanmar Joint Coordinating Committee meets in Bangkok.

The huge US$50 billion project has been stalled since the chief developer, which was awarded a licence by the former military regime in 2008, announced that it lacked the funds to go it alone. Bangkok-based Italian-Thai Development company (ITD) is seeking Japanese investors to help.

President Thein Sein’s government also blocked plans by ITD to power the port with a massive 4,000 megawatts electricity generating station fueled by coal.

Burma’s Economic Growth Rising Fast, but So Is Inflation, Says Bank

Burma’s economy rebirth is moving faster than happened in Eastern Europe after the end of the Iron Curtain and the Soviet Union in the 1990s, the World Bank said.

Burma’s economic growth rate this year is expected to be a high 6.8 percent, but inflation is also rising rapidly—doubling in the 2013-14 financial year to 5.6 percent compared with 2.8 percent in the previous year, said the bank in a new report presented to international media in Bangkok.

However, Burma remains near the bottom of a world ranking on ease of doing business, positioned at 182 out of 189 countries, said Ulrich Zachau, director of the bank’s Bangkok office.

“There are many factors playing a role. [Burma] has taken the first very important step and passed the foreign investment law. It does make foreign investment in Myanmar [Burma] better than it was before,” Zachau was quoted by The Nation newspaper as saying.

“Of course many things are still needed to be done. It is a huge agenda of economic reform and there remain some concerns as there remain in other countries.”

Bids Deadline Nears for Burma’s Offshore Oil and Gas Block ‘Jewels’

Final bids from major international oil companies for one or more of the 30 offshore exploration and development blocks in Burma’s coastal waters are expected in the run up to a cut off deadline of Nov. 15.

More than 60 firms are qualified to bid for the blocks after being short-listed earlier this year by the Ministry of Energy and the Myanmar Oil and Gas Enterprise (MOGE).

“The greatest draws for the largest companies are the 19 deep water offshore fields being offered,” said London’s Financial Times. “These far offshore assets, accounting for almost four-fifths of [Burma’s] deep water licences, are among the country’s energy crown jewels, analysts say,” the paper reported.

“This is an unusually blind auction because the government does not have the technical capacity to assess the geology.”

The Financial Times described the blocks as particularly attractive because of “surging demand from China, South Korea, Thailand and Japan” means gas prices are high.

The winners of the bids may not be announced until the first quarter of 2014.

Japan to Invest in Rubber Production in Burma for Export Markets

Japanese rubber producers have reached a provisional agreement with Burma on the manufacturing and export of the commodity, said the Myanmar Rubber Planters and Producers Association (MRPPA).

A memo of understanding was signed with the Japan Rubber Manufacturers Association and the Rubber Trade Association of Japan.

The agreement calls for Japanese companies to invest in manufacturing plants in Burma and for high quality rubber to be exported to Japan, said Eleven Media.

The first investment will focus on developing quality rubber plantations in Mon State that will be capable of competing in international markets, MRPPA secretary Khine Myint said.

The Japanese investors will soon carry out an assessment of the current state of the rubber business in Burma.