Burma Business Roundup (Oct. 26)

By William Boot 26 October 2013

India Must Do Better in Trade with Burma, New Delhi Minister Admits

India’s trade with Burma and other emerging economies of the Mekong region is “well below potential,” Commerce and Industry Minister Anand Sharma conceded this week.

“We need to do more. We have to look at not only increasing economic relations but deepening and diversifying the priority sectors which hold potential, like IT, agriculture, healthcare, oil and gas and textiles,” Sharma told a Confederation of Indian Industry meeting, according to a report by The Economic Times, an Indian daily.

The meeting was also attended by representatives from Burma, Cambodia, Laos and Vietnam.

India’s main exports to these countries are pharmaceuticals, machinery, vehicles, plastics and cotton with pulses, rubber, wood, and spices being the chief imports, the newspaper said.

Sharma said trade would improve once the so-called trilateral highway is completed. There are plans to try to complete a road system from Moreh in northeastern India, through Burma via Mandalay and Rangoon, and connecting with Thailand.

“We are presently working with the governments of Myanmar and Thailand to develop the trilateral highway which hopefully will be completed soon,” Sharma said.

However, reports from New Delhi and Thailand earlier in October suggested it would be 2016 before the “missing link” of the highway in Burma can be built.

Leading Belgian Textiles Firm Looks at Factory Plan for Burma

Belgian textiles and wood floor surfaces manufacturer Beaulieu International Group is reportedly negotiating to develop a factory in Burma.

Senior managers of the firm have had discussions with the Naypyidaw government’s Directorate of Investment and Company Administration to “discuss the legal requirements for setting up a labor-intensive business,” according to Eleven Media.

Beaulieu sources some of its materials from Asia but all its production factories are in Europe, including Russia, or the United States.

The firm specializes in producing furniture fabrics and wood floor trimmings such as parquet.

Much of the world’s wood for fashionable wood floor surfaces is sourced from Burma, but from 2014 a ban on raw timber exports comes into force. However, the ban will not apply to processed wood such as flooring and furniture.

Burma is one of the world’s biggest exporters of teak wood, but excessive legal harvesting of timber plus illegal logging is depleting the country’s forests, a Natural Resources and Environment Conservation Committee report warned one year ago.

Legal timber exports in the 2010-2011 financial year netted Burma US $600 million, according to government figures.

Wind ‘Farms’ Better Bet for Electricity than Hydro-Dams, Says Study

Burma’s energy shortages are being made worse by a reduction in the use of natural gas to fuel electricity generation and more reliance put on seasonally unstable hydropower systems, a report said.

“The share of gas used in power generation has fallen from 62 percent to 31 percent, primarily due to the fact that gas supplies are being targeted for lucrative exports to Thailand and China,” said Business Monitor International (BMI), London-based analysts.

One solution is to encourage the development of more renewable energy farms such as wind and solar, the BMI study said.

“The country faces a clear deficit in electricity generation and wind energy could reduce power shortages and help to diversify [Burma’s] energy mix. Disruptions to the power supply are one of the biggest hindrances for economic progress and foreign investment to [Burma],” it said.

Two Chinese energy companies, including hydroelectric projects giant China Three Gorges Corporation, have recently proposed building so-called wind farms to tap into renewable resources in the Irrawaddy Delta.

Feasibility studies by the Chinese firms indicate that up to 4,000 megawatts of power could be generated from wind turbines, said BMI, equal to Burma’s current total electricity generating capacity.

Thilawa SEZ Faces US Blacklist Hurdle, Worrying Japanese Investors

An agreement to finally get the Thilawa Special Economic Zone (SEZ) under way is due to be signed by the end of October, but reports say Japanese investors are worried about the direct involvement of a Burmese still listed on a United States’ sanctions blacklist.

The agreement between Myanmar Thilawa SEZ Holding (MTSH) and Japan Thilawa SEZ Company (JTSC) is ready for signing, Eleven Media reported.

However, the proposed chairman of a joint venture company to operate the SEZ, Win Aung, remains on the US blacklist.

Win Aung is also the chairman of the Union of Myanmar Federation of Chambers of Commerce of Industry.

Japanese businesses involved in the SEZ include the major international Marubeni, Mitsubishi and Sumitomo corporations, which have many links with the US and are concerned about the legality of Win Aung’s involvement, said Eleven Media.

Meanwhile, the Myanmar Ports Authority said this week extension work on the Thilawa port will begin early in 2014 with the construction of a new wharf.

But the authority’s managing director, Cho Than Maung, was quoted by Eleven Media as saying that settlement of land compensation claims at the site was still being negotiated with local farmers and residents.

Burma Travel Chief Urges Better Management as Bombs Deter Tourists

The recent bombings in Rangoon and other parts of Burma have led to a number of foreign bookings in city hotels being cancelled, hoteliers said.

Foreigners due to stay at the Park Royal and the Governor’s Residence in December and beyond have cancelled, the Myanmar Times reported.

“We need proper management to ease concerns about security or natural disasters when the incidents occur. That is very important,” Myanmar Travel Association secretary Naung Naung Han said.

The governments of Britain, France, the United States and Australia issued travel warnings, but did not advise against visiting Burma.

“Travel warnings could dampen the country’s progress in tourism as it confidently forecasts it could attract 2 million visits this year,” travel trade newspaper TT Weekly said in Bangkok. “The warnings also come just weeks before the tourism peak season begins, a six-month window of business opportunity for hotels, tour operators and airlines.”