Burma Business Roundup (Saturday, June 2)

By William Boot 2 June 2012

Dutch Firm is Latest to Win Oil and Gas Exploration License

Barely four weeks after the lifting of EU sanctions against Burma, a Western European firm has obtained an exploration and production license for a new onshore block.

Jubilant Energy of the Netherlands is taking a 77.5 percent share in Block PSC-I located 125 km northwest of Rangoon in the Irrawaddy Delta.

Under the terms of new block awards since the reform government came to power, all foreign investors in oil and gas must take a local partner.

Jubilant’s Burma partner is Parami Energy Development Company, a new oil and gas support services business. It will hold the remaining 22. percent.

The block was awarded during Burma’s first onshore bidding round in mid-2011, while European Union economic sanctions were still in force, but confirmed only on May 28.

Jubilant Energy is based in the Netherlands but is listed on the London stock exchange AIM for smaller developing businesses.

It is already exploring and developing oil and gas prospects across Burma’s western border in the Tripura, Manipur and Assam states of northeastern India, where it has concessions in several blocks.

Jubilant said the PSC-1 block is geologically and tectonically similar to its Indian operations. The firm said first work on the PSC-1 block will include reprocessing historical seismic data and the acquisition of new 3D seismic data before any drilling operations take place.

The Energy Ministry said recently it will offer a new group of onshore licenses in August, plus offshore block licenses before the end of the year.

A business conference in Rangoon last week was told by the Energy Ministry that 23 offshore blocks would be made available for bidding at an unspecified date. However, the ministry is planning a second oil and gas promotion show this year, to be held in September.

India-Burma Trade Value Tipped to Double by 2015

Trade between Burma and India is forecast to double over the next few years as Indian businesses backed by the New Delhi government embark on bigger trade links.

“Bilateral trade relations are growing [and] through the India-ASEAN free trade agreement, both countries are hoping to double trade by 2015,” the Confederation of Indian Industry said this week.

That would mean raising two-way trade to an annual value of US $2.6 billion. At present, India is ranked as Burma’s fourth-largest trading partner behind China, Thailand and Singapore, but is only 13th in terms of investment value.

The trade forecast follows a confederation delegation visit to Burma with Indian Prime Minister Manmohan Singh.

The delegation was made up of senior executives from major Indian industrial conglomerates, including telecommunications-to-property development group Bharti Enterprises, oil company Essar and carmaker Tata Motors.

“There is scope in energy, oil and gas exploration, infrastructure, manufacturing, agriculture, telecom, banking, tourism, healthcare and professional services,” the confederation was quoted by The Hindustan Times as saying.

Thai Firm Plans Rangoon Industrial Park for Consumer Products

Thai retail goods conglomerate Saha Group is planning to build an industrial park in the greater Rangoon area to cater for what it believes will be a consumer boom in Burma’s largest city.

Saha operates three industrial parks in Thailand, within which dozens of small factories produce a wide range of consumer products which Saha then markets.

Chairman Boonsithi Chokwatana said his company had already done a feasibility study for a park in Burma and estimated its development at about US $94 million.

“We’re interested in investing in Yangon as the city has big potential for consumption,” Boonsithi told Thai newspapers.

Goods envisaged for production in the industrial park include clothing, processed food and cosmetics.
Moving into Burma is part of Saha’s strategy of preparing for Asean’s tariff-free trading community by 2015, Boonsithi said.

Thailand ‘Threatened’ by Loss of Burmese Workers and Rise of Burma’s Economy

Burma could draw investment away from Thailand, Cambodia and Vietnam to become Southeast Asia’s low-cost manufacturing base over the next 15 or so years.

And its geographical position makes it an ideal location to sell those products, especially clothing and footwear, to both China and India, says The Economist newspaper.

“Countries like Cambodia, which has carved out a niche for itself in the low-cost textile business, could suffer, as could Vietnam. But no country will have to adjust to the new reality more than [Burma’s] immediate neighbour, Thailand,” said The Economist.

“There is much speculation about how many of the 2 million Burmese immigrants who work in low-wage jobs underpinning the Thai economy will return home. They may be unskilled by the standards of a sophisticated economy like Thailand’s, but what they have learned overseas could make them invaluable to a revival of [Burma’s] economy.”

Thai businesses have had it “too easy” with access to so much cheap labor, the paper quoted a Thai economist as saying.

Little Room at the Inn if Naypyidaw Bids to Attract Tourists

Burma’s isolated and off limits capital of Naypyidaw is to be opened up to foreign tourists, according to media reports.

The new city, inexplicably built at great cost in the middle of nowhere by the former security-obsessed military junta, has failed to attract the business investment which Rangoon is now enjoying.

“[Burma] will turn the new administrative capital of Naypyidaw into tourist site in a bid to attract more tourists to the country,” said the Chinese news agency Xinhua quoting Burmese media. “Ordinary foreigners were denied access except for those with business visas or for investment purposes.”

However, visitors might face accommodation problems. According to the official website of Myanmar Tourism Promotion Board there is only one available hotel, the Golden Guest Hotel. It has 16 rooms.