Burma Business Roundup (Saturday, July 28)

By William Boot 28 July 2012

Thailand Emerging as Biggest New Investor in Burma

Several large Thai companies have announced plans to invest around US $900 million in agricultural and industrial infrastructure developments in Burma.

The plans were announced during a visit to Bangkok this week by Burmese President Thein Sein.

The biggest single investor outside the oil and gas sector is likely to be agribusiness giant Charoen Pokphand Group (CP) with proposals to develop rice and maize farms, milling plants and meat processing factories valued at around $550 million, according to CP Vice-Chairman Adirek Sripratak.

“[Burma’s] economy is growing since the government has opened the door for foreign investors. We believe that it will create business opportunities for us,” Adirek was quoted by The Nation newspaper as saying during a meeting with Thein Sein.

Siam Cement Group (SCG) said it has plans to build a $180 million cement factory, while the Saha Group aims to construct an industrial estate near Rangoon to cater for dozens of small-to-medium-sized manufacturing businesses.

The Mitr Phol Sugar Group is meanwhile researching proposals to acquire land for sugar cane production to feed a mill in central Burma.

These investment plans come on top of announcements earlier in July by Bangkok’s state oil and gas conglomerate PTT Group to invest between $2 billion and $3 billion in various energy-related projects, including a 150,000 barrels-per-day refinery, coal mines and petrochemicals.

These combined investments would make Thailand the biggest recent investor in Burma.

Burma Risks ‘Oligarch Culture’ with Rapid Growth

An expert with the Council on Foreign Relations in the United States has warned that Burma could face serious problems if it engages in fast economic growth with proper checks and balances.

The country could end up in the hands of a so-called Russian-style oligarchy of super-rich businesspeople without the development of an essential middle class, said council commentator Brian P. Klein.

He urged the Burmese government to avoid going down the path of oil-rich Nigeria where poverty and corruption are rampant.

“Rapid development financed from abroad can widen wealth gaps and enrich vested interests unchecked by governmental authority,” says Klein. “Ignoring the development of government institutions has been a well-trod path in the developing world.”

Unless the transition from pariah state to fledgling, albeit limited, democracy is well managed, [Burma] may end up dominated by oligarchs,” he added.

“A host of hard-to-control problems that only exacerbate social and economic inequality would follow. [Burma] has arrived at the crossroads where fast growth and balanced growth diverge.”

The council is an NGO engaged in the “free exchange of ideas.”

Gas Sales to Double by 2013 but Little Power to Burma

Natural gas sales to foreign customers raised around $800 million in the first quarter of the new financial year, according to Ministry of Commerce figures.

Most of the sales will have gone to Thailand from the Yadana and Yetagun offshore fields in the Andaman Sea, plus several smaller offshore projects.

However, the export earnings figure could almost double by the end of 2013 when two other large gas fields go into production—the Shwe project in the Bay of Bengal and the Zawtika block in the Gulf of Martaban to the east.

“Most of the gas from the Shwe and Zawtika developments is already pledged for export, so these new energy sources will not be available to fuel much-needed power plants in Burma,” energy industries analyst Collin Reynolds told The Irrawaddy in Bangkok.

“They will likely double the value of Burma’s gas exports based on current prices although we don’t know the terms of the Chinese agreement.”

China is buying the gas from two blocks in the Shwe field while most of the Zawtika gas will go to Thailand.

Blacklisted Zaw Zaw in Mysterious Singapore Deal

Controversial Burmese business figure Zaw Zaw is at the center of a mysterious Singapore company takeover deal.

A subsidiary of Zaw Zaw’s conglomerate Max Myanmar Group is reportedly engaged in a reverse takeover of a bed linen firm, Aussino Group, which is listed on the Singapore stock exchange.

Max Strategic Investments is seeking to buy Aussino for about $47 million as part of a plan to convert it into a vehicle fuel stations’ chain in Burma, said the Singapore news agency Channel News Asia.

No reason for the deal has been explained by either firm.

Zaw Zaw remains on a US government business blacklist because of his close association with the former military junta leadership in Burma.

Acquisition of Aussino would give Zaw Zaw new status in Singapore, say business observers, although it is unclear how his blacklisting in Washington would affect this.

Zaw Zaw recently announced that he was diluting his commercial involvement in plans by Thai construction company Italian-Thai Development to build a new port and industrial complex at Dawei on Burma’s southeast coast.

Australians Dominate Mining Conference in Rangoon

Australian firms dominated a three-day mining opportunities conference in Rangoon this week with 30 companies out of around 200 participating foreign businesses.

But the conference, hosted by Burma’s Ministry of Mines, failed to attract major international players such as Rio Tinto Group or BHP.

The conference to promote new mining ventures drew representatives from 22 countries, according to the Center for Management Technology, the Singapore-based organizers.

One of the biggest interests was gold prospecting.

“Australians were out in force during the three-day conference, with more than 50 representatives from 30 firms among the 200-plus companies attending the event,” the Australian newspaper Courier-Mail reported.

Australian firms participating included Global Resources Corp and Sterling Mining Group.

However, Canadian company Northquest said it was “very optimistic” it would obtain a license to explore for gold in central Burma, the Courier-Mail said.