Burma Business Roundup (Saturday, Feb. 16)

By William Boot 16 February 2013

Dawei Port Plan ‘Falls Asleep’ as Japan Spurns Thai Appeals

The much vaunted Dawei port and industrial development project for Burma’s southeast coast has “fallen asleep” because of miscalculations, lack of interest from Japan and inadequate planning, an investment research and analysis company said.

Hong Kong-based Inside Investor said evidence had emerged that the big project envisaged by the Bangkok construction firm Italian-Thai Development and backed by the Thai government has “stalled because of financing uncertainties and a potential miscalculation of the return on investment.”

Inside Investor’s comments follow an admission made by Thailand’s government that the Dawei project faced “uncertainties” after Bangkok said last December that serious work could begin in the first half of this year.

“Thailand’s Office of Transport and Traffic Policy and Planning has said it will have to conduct a new feasibility study on several aspects of the project as Japan disagrees on Italian-Thai’s planning of the location of the port and infrastructure details,” said Inside Investor, which provides bespoke advice to business investors across Asia.

“There is also missing information from the [Burma] government, for example to calculate utility rates which potentially affects the time in which a return on investment can be made,” Inside Investor said.

Thailand’s Transport Minister Chadchat Sittipunt, who chairs the Thai-Myanmar Joint Coordination Committee for Dawei, was quoted by the Bangkok Post on Feb. 12 as saying there were serious problems preventing the project proceeding. It could be another whole year before Japan made a firm commitment, he was quoted as saying.

The coordination committee was established last November. In December Thai Prime Minister met Burma’s President Thein Sein for the second time on the issue and visited the Dawei development site. In January, Yingluck met Japan’s Prime Minister Shinzo Abe and said Tokyo had “reaffirmed” interest in Dawei.

EU Steps up Trade Links with Burma Businesses

The European Union is negotiating to establish a chamber of commerce in Rangoon with Burmese business groups in order to increase two-way trade, said the Directorate of Investment and Company Administration.

The EU last year suspended all economic sanctions against Burma and recently opened a representative office in Rangoon. The Brussels-based 27-country bloc has also pledged aid totaling US $200 million for the financial year up to June, mainly to be spent on health and farming improvements.

Before sanctions halted all trade, Burma exported clothes and other textiles and processed fish products to several EU countries.

Brussels has said it is planning to grant Burma membership of its import tax concessions program—known as the generalized system for preferences—aimed at helping the economies of least-developed countries.

The EU wants to establish a joint Burma-EU Federation of Chambers of Commerce and Industry, said the Naypidaw directorate office.

Shan State Dam and Mine Plans Alarm Farmers in Thailand

Plans for a hydroelectric dam on the Kok River and an adjacent coal mine project in Burma’s northeast Shan State are causing alarm across the border in Thailand.

Thai farming communities in Chiang Mai Province say a dam will undermine water levels on the Kok inside Thailand on which they rely, and a coal mine would generate pollution.

The Kok River flows out of Burma through northern Thailand to empty into the Mekong, which is also being affected by dams being built upstream in Chinese and Lao territory.

“More than 100 villages comprising some 13,000 families working on [48,000 acres] of farmland in Chiang Mai’s Mae Ai and Chiangrai’s Muang and Chiang Saen districts will be affected,” the environmental NGO Salween Watch quoted an unnamed Thai agricultural official as saying.

The Kok dam is planned by United Wa State Army and will employ Chinese engineers and construction teams, according to Salween Watch.

“Hydropower and mine projects inside Wa-controlled areas have been given the green light by Naypyidaw,” the NGO said.

Japanese Freight Giant Establishes Rangoon Subsidiary

Major international sea freight carrier Mitsui OSK Lines—part of the giant Mitsui Group industrial conglomerate—is to expand services to and from the Port of Rangoon and establish a local subsidiary called Myanmar MOL Limited.

The shipping firm already offers a freight link between Rangoon and Singapore via local partner Ever Flow River Forwarding, but would now explore other opportunities in the country.

“The establishment of our wholly-owned subsidiary in [Burma] is another indication of our continued commitment to the [Burma] market bringing us closer to our customers,” a Mitsui statement this week said.

Mitsui has one of the biggest commercial freight fleets in the world and includes bulk carriers such as oil tankers and specialized liquid natural gas transportation.

Japanese companies are at the forefront of plans to expand Rangoon’s port and develop an adjacent industrial zone in Thilawa.

Singapore Car Distributor Revs up for Rangoon Business

Major Southeast Asia car and spare parts distributor Jardine Cycle & Carriage Limited of Singapore is to open a showroom and service center in Rangoon.

The Myanmar Investment Commission said it had approved plans for a joint venture between Jardine and local company Automobile Century.

Despite its name, which is linked to its century-old history, the Singapore company focuses on sales of top-end private vehicles. It’s the regional distributor for Mercedes-Benz, Toyota, Honda and Kia.

The arrival in Rangoon of Jardine Cycle & Carriage, which is also involved in property investment, comes as demand for cars increases in Burma’s main commercial city.

Earlier this month, Japan’s Suzuki Motor Corporation announced it would reopen its Rangoon production plant in May to build pickup trucks. The factory, which has been closed since 2010, will start by producing 100 vehicles a month.

Almost 130,000 cars were imported into Burma in the 15 months up to January this year. Almost half of them were second-hand, said the government customs office.