Business

Burma Business Roundup (Saturday, June 15)

By William Boot 16 June 2012

Suu Kyi Accuses Burma’s State Oil & Gas Agency of Shady Business

Opposition leader Aung San Suu Kyi has urged foreign oil and gas companies thinking of investing in Burma not to deal with the state oil agency MOGE—the Myanmar Oil and Gas Enterprise.

She said MOGE was a shadowy business and had so far failed to account for its activities.

MOGE was for years an agent of the military regimes which ran Burma before recent political reforms and made secret agreements, notably a major deal with China to buy all the gas from the Shwe field in the Bay of Bengal.

“The [Burmese] government needs to apply internationally recognized standards such as the IMF code of good practices on fiscal transparency,” Suu Kyi told the annual conference of the International Labour Organization in Geneva on June 14.

“Other countries could help by not allowing their own companies to partner MOGE unless it was signed up to such codes,” she was quoted by Reuters as saying.

Her attack on MOGE comes as the Ministry of Energy prepares for a second promotional forum this year for potential foreign companies considering investing in the oil and gas sector.

A forum in March drew scores of business representatives and the next one in early September will include the announcement of a new round of bidding for exploration licenses for more onshore blocks.

Until now, MOGE has been a silent state partner in all contracts involving foreign firms.

“A lack of transparency has led to all kind of suspicions and that sets up trouble for the future,” Suu Kyi said in Geneva. “I would like to see a sound efficient energy policy in Burma.”

Australia Offers to Help Draft Mining Safety Regulations

As the Burmese government prepares to woo foreign investors into the country’s mining sector, Australia has offered to help draw up new mining laws which protect the environment and land rights.

Australian Foreign Minister Bob Carr told President Thein Sein that Camberra could provide guidance along the line strict rules system.

Australia is one of the world’s biggest mining countries—digging out coal, gold, zinc, uranium, copper, nickel, iron ore and precious stones.

Burma also has gold, copper, zinc and gems, making it a potentially attractive destination for big mining firms.

“Without [a regulatory framework] the country could be despoiled with ‘wild west’ activity, mercury spills, land subsidence, miners buried alive,” Carr told the Sydney Telegraph newspaper after his visit to Burma last week.

Carr also met Aun San Suu Kyi who told him she’s “afraid of a reckless rush of investment and development.”

A three-day mining “summit” for foreign investors organized by the government is being organized in Rangoon on July 23-25.

Thousands of self-employed gold miners have been protesting for the past two weeks over contractual rights in mines around Yamethin, north of Naypyidaw.

India Steps up Banking Links for Businesses

More Indian banks are planning to set up offices in Burma to help Indian investors planning a move into the country.

Kolkata-based state-run United Bank of India already has a representative office in Rangoon, and now Bank of India and the Export Import Bank of India (Exim) are planning to do the same, India’s Business Standard reported.

“The proposed [Exim] representative office in [Burma] would provide support to investments by India companies and also extend advisory services. However, it would not do banking business in that country,” the newspaper said.

Exim Bank, India’s export credit agency, has already extended seven lines of credit, with an aggregate value of US $247 million, to Myanmar Foreign Trade Bank.

Earlier this month, it agreed a line of credit worth $500 million to be used for irrigation, rail transportation, electric power and other infrastructure.

Uncertainty over Sanctions Suspensions Worries Investors

Many big Western companies are showing reluctance to move into Burma because sanctions lifted by their governments in Europe and North America have only been suspended and not abolished.

“US executives in particular complain of mixed signals from the Obama administration which, they say, is urging business to invest in Myanmar while warning of penalties should they break disclosure and licensing rules,” reported a survey by the Financial Times of London.

The uncertainty has been highlighted by the sudden outbreak of deadly ethnic unrest in southwest Arakan State.

“US companies talk about vaguely framed warnings from Washington, particularly around business activity that could affect human rights or touch on conflicts in ethnic areas, that have left them unclear about what they can and cannot do,” said the newspaper.

Japan Calls for Speedier Relaxation of Banking Rules

A leading Japanese government official has voiced concern about the “extremely slow” redevelopment of Burma’s finance sector.

There needs to be an easing of regulations soon, said Daikichi Monma, the Japanese Finance Ministry’s deputy director-general of the International Bureau.

“I hope that relevant authorities in Myanmar, including its central bank, will soon set a course for the financial sector” to ease banking rules, said Monma.

“At present, foreign banks are under strict rules by [Burma]. They can only set up a representative office and are not licensed to do primary operations such as lending, financing, opening bank accounts, accepting deposits or foreign exchange dealings,” reported Japanese news agency Kyodo.

At present, Mizuho Corporate Bank, Sumitomo Mitsui Banking Corporation and Bank of Tokyo-Mitsubishi UFJ have established representative offices in Rangoon.

Loading