Burma Business Roundup (Saturday, Jan. 12)

By William Boot 12 January 2013

Continuing Shortages Will Make Hotel Room Rates Rise ‘Sharply’

Plans are reportedly being drawn up to set aside 200 acres (81 hectares) of land for new hotels in Rangoon’s Dagon Myothit district but shortages will make room rates increase “sharply.”

The plans are being prepared by the Ministry of Hotels and Tourism and discussions are taking place with company representatives from Japan, Vietnam and Singapore, said the Chinese officials news agency Xinhua.

Burma has seen a big increase in both business and tourist visitors in the past year but infrastructure to cater for them has not kept pace.

“The increase in demand for hotels in [Burma] is expected to outpace the addition of new supply in the coming years, causing rates to rise sharply,” said Travel Daily Asia on Jan. 8.

“A government-implemented US $150 cap on room rates was introduced last year to help curb rate rises, but it is only applicable to lead-in rooms sold to travel agents and tour operators, and is due to expire at the end of March 2013.”

There are only 11 four and five-star standard hotels and 13 three-star hotels in Rangoon, according to Travel Daily Asia quoting government statistics for 2012.

Travel Daily Asia named the US hotel group Best Western as being among “several major international brands” eying investment in Burma.

British Spitfire Planes Could Net Burma $60 Million

Former British World War II Spitfire fighter planes believed to be buried near Rangoon could provide Burma’s state treasury with at least US $60 million.

That’s the estimated resale value of 36 planes thought by a British explorer to be stashed in crates buried in the grounds of Rangoon’s international airport, according to The Times of London.

Each of the planes—shipped to Burma at the end of the war but never used—is estimated to be worth at least $2.4 million to collectors. On this basis, they would have a combined value of $86 million and 70 percent of this would be awarded to Burma under an agreement reached with Briton David Cundall, who has spent 17 years on the trail of the missing planes.

He is now in Rangoon preparing to start excavations with a specialist recovery team.

“These planes are reputed to be rare Mark XIV Spitfires, packed into crates in Birmingham in 1945, shipped to Rangoon in Burma and hidden in haste by American soldiers when the Nagasaki atom bomb ended the war,” The Times reported on Jan. 5.

Only a few of this model still exist in museums and private collections worldwide.

Cundall said he had evidence that up to 124 “missing” Spitfires shipped to Burma are hidden in the country, possibly spread over three sites, according to The Times.

Malaysian Firm Plans Coal-Fueled Power Plant for Mandalay

A Malaysian construction firm is drawing up plans to build two electricity generating plants in the Mandalay area. One of them would be coal fueled.

Kuala Lumpur-based Mudajaya Group Holdings told the Malaysian Stock Exchange this week it had signed a memo of understanding with Burmese state authorities to draw up development plans. Mudajaya said it would be partnered by the Malaysian philanthropist Koon Yew Yin.

No details on the size of the power plants or their likely cost were given, and there have already been questions raised about viability.

“Country risk in Myanmar is the key risk, we believe. This is especially so with regards to the government’s willingness to honor its contracts,” Alliance Research Sdn analyst Jeremy Goh was quoted as saying by The Edge Malaysian business newspaper on Jan. 10. “Although no longer under military rule, Myanmar is far from a proper democratic society.”

The MoU comes as Burma’s electricity shortages forced the introduction this month of severe power supply restrictions to businesses in the Rangoon region, due to lower supply from hydrodam projects.

Hong Kong Investors Should ‘Choose Burma for New Factories’

A Hong Kong business expert has called on Chinese enterprises and entrepreneurs in the former British colony to invest in building industrial parks in Burma to replace aging ones in southern China.

“With the increase of production costs and the scarcity of land and labor in the Pearl River Delta region [of southern China adjoining Hong Kong] it should be the time for Hong Kong, its government, trade associations and firms, to consider building new offshore industrial parks,” said the head of the China Business Centre in Hong Kong, Thomas Chan, writing in the official China Daily newspaper.

Chan proposes Burma because other Southeast Asian countries have become too expensive or are “too small and too backward.”

“This leaves only [Burma], the second largest economy in terms of land size after Indonesia, which is also the poorest country in the region with the lowest wage level even when compared with Cambodia.

“Unlike Cambodia and Laos, the other two poor countries in the region, [Burma] is resource rich for natural resources like natural gas, gems, timber and agricultural production of rice, pulses, fisheries and livestock,” said Chan.

Hong Kong businesses have financed much of the industrial development in China’s heavily industrialized Guangdong Province adjoining Hong Kong.

Tokyo Promises 2015 Deadline on Thilawa Industrial Park

Japanese government-backed corporations have undertaken to complete 25 percent of the new Thilawa industrial zone on the edge of Rangoon by 2015.

Japan won the lucrative contract worth hundreds of millions of dollars in competition with South Korea because it promised to achieve the 2015 target, said the Wall Street Journal.

“To win the contract, Japan has promised … to create an industrial hub on a 2,400-hectare (5,900-acre) greenfield site on the outskirts of Yangon in time for the next presidential election,” the paper said.

Japan is anxious to gain a firmer business foothold in Burma because of pressures from rivals, it said.

“Southeast Asia has traditionally been a stronghold for Japan, but Tokyo’s dominance is now under challenge from China and South Korea. The US has also pushed aggressively into Asian markets as it seeks to increase its exports,” the Wall Street Journal reported on Jan. 7.

Inroads into Burma have been sweetened with promises by the Tokyo government to cancel Burma’s debts to Japan of US $5.8 billion.