Burma Business Roundup (Saturday, Aug. 4)

By William Boot 4 August 2012

World Bank Urges Faster Economic Reform

A senior World Bank official has urged the Burmese government to quicken the pace of economic change or risk disaffection from a newly enfranchised electorate.

“I think whenever you have an economy in transition, the biggest risk is whether they will go fast enough and deep enough on the reform,” said the bank’s Vice-President for East Asia and the Pacific Pamela Cox.

“If the people don’t see the benefits from the reforms, then I think we will see a difficult situation,” she added during a press conference as the bank returned to Burma this week to open a new office in Rangoon since it halted lending in 1987.

Cox said evidence from the opening up of Eastern Europe after the collapse of communism in 1989 showed that those countries which reformed fastest and deepest “grew and prospered the most.”

The World Bank will not waive outstanding debts owed by Burma since military junta days but it hopes to smooth the way forward for settlement and planned to present an interim strategy by October for helping the country’s economic revival, Cox said.

In the meantime, proposals were being drawn up for approval by the bank’s board of aid up to US $85 million specifically to assist in road building, schools and similar infrastructure improvements.

US Congress Renews Burma Import Ban

The United States has extended a ban on imports from Burma for one more year despite a recent decision to allow US businesses to invest in the country.

American companies can also export goods to Burma.

The seemingly contradictory decisions, imposed on President Barack Obama’s government by the US Congress, are meant to push the Burmese government to implement more human rights reforms, according to Congress leaders.

However some observers think a continued import ban will undermine job prospects as the Burmese economy seeks to open up to modernization. Obama has the power to cancel the import ban if he thinks sufficient progress has been made by the Burmese government.

In the last full year before the import ban came into force, 2002, the US bought Burmese goods worth $356 million.

Exports to Burma from the US last year were less than $50 million—a fraction of the trade with neighbor Thailand in 2011 which was worth $36 billion.

Burma-Thai Ministerial Meeting over Dawei

Government ministers from Burma and Thailand are to meet in the middle of August to consider how to push forward the stalled special economic port zone proposed for the southeast Burma coastal town of Dawei (Tavoy).

Bangkok construction giant Italian-Thai Development (ITD) has the main contract from the former Burmese military government to develop a port-industrial complex around Dawei, but a lack of partners and funds has left the project in limbo for the past year.

ITD’s development plan includes Middle East-sourced crude oil transshipment—for piping on into Thailand—a steel factory and a petrochemical plant on the pristine white sands coast. However, a block imposed by the Naypyidaw government earlier this year on a large coal-fuelled electricity plant to power the enterprise dismayed some potential investors, such as Thailand’s state-owned oil and gas company PTT Group.

The Dawei plans have been further underlined by ITD’s Burmese partner, the Max Myanmar Group, announcing it is drastically reducing its involvement to focus on other business elsewhere.

“The Thai government is keen for this port project to get started because it offers scope for a major sea route short-cut for oil and other energy related imports,” said energy industries analyst Sar Watana in Bangkok.

“The Thais want to link Dawei by road with Bangkok and the Thai capital’s main port at Laem Chabang and this would cut the present journey time round Singapore by days. The Burmese will be seeking to gain some benefits like infrastructure improvements to a region which has been very isolated and underdeveloped.”

New Energy Planning Body Mooted

A new national energy planning committee is forecast to be established to coordinate Burma’s long-term energy policy.

The planning body is expected to be unveiled at an oil, gas and electricity conference planned for Rangoon on Sept. 3, said media reports quoting the former director-general of the Ministry of Energy Soe Myint.

The three-day gathering, the second in the energy sector this year, will also see the announcement of new offshore and onshore oil block licenses.

It’s understood that a new long-term strategy planner body will examine ways of connecting energy fuel exploitation with Burma’s pressing need for more electricity generation and consider privatizing the country’s small oil refineries.

However, the controversial Myanmar Oil and Gas Enterprise (MOGE) is expected to continue to have a role in awarding new oil and gas exploration and production contracts and to have a stake in profits.

The state-owned MOGE has recently been criticized by both the US government and opposition leader Aung San Suu Kyi for its links with the former military junta and a lack of accountability.

More Foreign Airlines to Begin Rangoon Services

Five more foreign airlines are to start flying to Rangoon soon, expanding the total number to 18, and a major European airline is seeking approval for direct links.

The five new lines, starting in October, are All Nippon Airways of Japan, KAL of South Korea, EVA of Taiwan, Dragon Air of Hong Kong and Qatar Air, said a Transport Ministry statement. All Nippon stopped flying to Burma 12 years ago.

In addition, a German airline is negotiating to start direct flights. So far, all the airlines resuming or starting up services to Burma are Asian.