Burma Business Roundup (Saturday, Jan. 19)

By William Boot 19 January 2013

Kachin Warplanes Possibly Russian MiGs Bought for $500 Million

The warplanes and helicopter gunships being used by the Burmese military in Kachin State are Russian or Chinese made.

While some reports suggest the planes may have been old Chinese craft, they could also be part of a batch of 20 Russian MiG-29s bought at a cost of more than US $500 million in early 2011, according to a Flight International magazine report. That purchase doubled the Burmese military’s Russian-made fleet, complementing older planes previously acquired from China and the former Yugoslavia.

With strict economic sanctions in place by the European Union, the US and other Western countries until 2012, the Burmese military relied on China, Russia and eastern Europe, notably Poland and Belarus, for military hardware.

The most modern craft, plus Mi-35 helicopter gunships, have been supplied by Russia’s state-owned Rosoboronexport company, which in 2011 also provided spare parts and training, said Flight International.

The use of offensive weapons—purportedly bought for Burma’s external defense—comes as Russia calls for the cancellation of all economic sanctions which are currently only suspended.

It also coincides with efforts by Singapore to sell weapons to Burma, dressed up in proposals to “strengthen mutual cooperation,” including military infrastructural development and training, said the state-run New Light of Myanmar newspaper.

Russian Foreign Minister Sergei Lavrov on a visit to Naypyidaw on Jan. 16 said Moscow and Burma would “soon be signing a cooperation agreement and setting up a business council,” the Russian news agency RIA Novosti reported.

MOGE to Offer 18 Onshore Blocks for Oil, Gas Hunt

In a surprise announcement, the controversial state Myanmar Oil & Gas Enterprise (MOGE) is to offer 18 development blocks for licensing to foreign firms partnering Burmese businesses.

However, all the blocks on offer will be onshore with no indication when potentially lucrative offshore gas blocks will be put up for licensing.

Plans to invite bids for blocks last year were put on hold—despite two major industry promotional conferences on Rangoon—after concern was voiced by major Western oil companies about the continuing involvement of MOGE.

The state agency is regarded as tainted with close association with the former military regime which struck numerous secretive deals on offshore gas sales, notably the huge 200 billion cubic meters in the Shwe field in the Bay of Bengal.

MOGE is selling most of the Shwe gas to China but the terms of the deal have never been made public.

Aung San Suu Kyi last year led a chorus of calls, including the US government, calling for MOGE’s reform or disbandment.

Industry analysts say that so far onshore oil and gas finds have been low key and developers believe the real prizes are under the sea.

MOGE has given no timetable for the 18-block sale.

Telcoms Mobile Service Licenses on Offer to Foreign Firms

Two licenses for national telecommunications services will be put up for bidding in the first half of this year, the Ministry for Communications and Information Technology announced on Jan. 16.

The tenders will be open to foreign as well as domestic firms.

The ministry said in a statement the government wanted to “make the telecommunications services available to the public at affordable prices, and to give the public the capability of choice.”

The government has set an ambitious target to expand mobile telephone penetration in Burma to up to 80 percent of the population by 2016 from the current level of less than 10 percent.

Foreign firms are being invited to bid because “their experience in other countries means they are more capable,” AFP quoted a ministry official as saying.

Several foreign businesses have already established a presence in Rangoon. This week they were joined by Taiwan’s leading smartphone maker HTC which opened a shop to sell mobiles with Burmese-language characters.

Burma-Laos Mekong Bridge Offers Land Trade Link with Vietnam

China or Vietnam are likely to provide the funding still needed for construction of the cross-Mekong River bridge planned to link Burma and Laos by road.

The Vientiane and Naypyidaw governments agreed this week to hold a ground-breaking ceremony in February to initiate the bridge’s construction—but it could be years before construction.

“It will then take some months to work out financing and announce a tender bid process to appoint a construction company,” reported the Bangkok-based travel and tourism magazine TTR Weekly. “Realistically, the bridge could be ready in 2018.”

The bridge is earmarked to cross the Mekong at Xiengkok in Laos’s Luang Namtha border province into a remote corner of Burma’s troubled Shan State.

The two countries say it will increase trade and travel between the two countries, long isolated by war and politically inward-looking regimes. However, with a desperately poor rural population of only 6 million, Laos—the same size as France—has little to offer Burma.

But a bridge would improve land links with Vietnam, which is starting to invest significantly in Burma, and also provide a route into Burma for other areas of China.

The newest bridge across the Mekong a little further downstream, linking Laos with Thailand between Chiang Khong and Houay Xay, will cost about US $47 million and is being 50 percent financed by China.

Malaysians Beat McDonalds to the Burger Draw

A Malaysian firm has beaten the ubiquitous McDonalds in being first to start a chain of fast-food shops in Burma.

Marrybrown of Kuala Lumpur said it had formed a joint venture with a Burmese firm to open 20 outlets over five years. The first will be in Rangoon “in the near future,” Malaysian news agency Bernama quoted managing director Nancy Liew as saying on Jan. 17.

Marrybrown serves fried chicken, burgers and Malaysian-style spicy rice dishes and noodles.

“We see high demand for our products [in Burma],” Liew said.