Economy

Burma Business Roundup (Saturday, March 23)

By William Boot 23 March 2013

‘Huge Potential’ for Burma as a Regional Port Transhipment Hub

Burma is one of two countries in Southeast Asia “ripe” for port investment, a sea transport conference in Hon Kong was told.

The country has “huge transhipment potential” as Asia continues to grow will other regions of the world stutter along economically, shipping analyst Rajiv Biswas told the conference.

Indonesia needs heavy investment over the next decade and Burma is a “new opportunity” especially as transhipment hub, said Biswas, chief Asia economist for economic forecasting specialists IHS Global Insight.

However, Burma’s port growth may inevitably linked with China.

“Emerging Asia will continue to be the fastest growing economy over the next decade. In 10 years’ time the size of the Chinese GDP will surpass the EU and the US. Over the next 10-15 years the impact of China will be truly substantial,” Bizwas said.

China is bidding to turn the sleep island of Ramree on Burma’s central coast, home to its crude oil transhipment terminal now nearing completion, into a major export port for its landlocked Yunnan Province.

Two pipelines being built through Burma will carry oil and gas to Yunnan and China has signed a preliminary agreement to build a dedicated railway line from its southwest province to Ramree’s Kyaukphyu port. Burma’s government also has plans to promote Ramree as a Special Economic Zone (SEZ).

Another SEZ attached to Dawei on the southeast coast has also been declared as part of efforts by Thailand to build a transhipment port and oil refining, storage and manufacturing, but investment partners are still being sought.

Baht and Yuan to Qualify for Direct Swap into Kyat

From the end of this month two more foreign currencies can be exchanged directly for Burmese kyat.
The Thai baht and Chinese yuan will join the euro and the US and Singapore dollars in being accepted by Burmese banks and official money exchange shops inside the country.

Up to now, visitors from the neighboring Thailand and China have had to bring US dollars with which to buy kyat.

The change reflects the fact that Thailand and China are Burma’s biggest trading partners, and have also been supplying increasing volumes of tourists and business visitors, said the Bangkok-based travel website TTR Weekly.

“The move will facilitate trading business and will also help promote economic relations and eliminate obstacles for import and exports,” said TTR Weekly.

“The currencies are widely circulated in border towns between [Burma], China and Thailand, but not in other places.”

Foreign Investors Put Off by Land Rackets ‘Linked to Government’

Potential foreign investors in industrial development in Rangoon and other key growth areas of Burma are being deterred by exorbitant land prices inflated by government-linked speculators, a BBC World Service report alleged.

The speculators have acquired the land after being tipped off of impending developments.

Some plots in Rangoon which were US $27,000 per acre now have a price tag on them of 400 million kyat ($453,000) or more, according to an analysis on the BBC’s Burma Service.

“Foreign investors do not like high prices to lease or to buy. These things are hindering our national development,” Burmese businessman Myint Soe was quoted as saying.

“I notice them [foreigners] complaining that these high prices are hindering their investment process,” said Myint Soe, who has himself rented land in a Rangoon industrial zone in Rangoon for his manufacturing business.

“The land is [often] owned by those from the circle of the authorities and their families, and former generals,” the BBC program quoted Burmese researcher Sithu Aung Myint, who has been investigating the issue. “This is not only for the industrial zones. These problems can also be seen in new towns that are being developed.”

There was evidence of corruption, Sithu said. “What I learned is that they [insiders] received information on some plots of land ahead of time, that the authorities are going to have industrial zones or new towns in certain areas, so they went ahead of time and got them at a cheap price.”

Burma’s 13th Border Crossing Boosts Trade Prospects

Thailand is to steal a march on China by opening a fifth border trade crossing with Burma—while China has only four official trade points.

The new crossing, from April, will be at Mawtaung in southeastern Tenasserim Division.

The opening, drawing in commercial links with southern Thailand and possibly northern Malaysia, will be Burma’s 13th—five with Thailand, four with China, two with India and two with Bangladesh.

Thailand is rapidly moving ahead of the others in trade volume, which in 2012 was officially logged at a value of US $4.5 billion.

This does not take into account much unofficial trading between Burma and Thailand.

China also has a porous border across the length of its Yunnan province.

Security Warning if Plans for Hydro Dam Proceed on Salween River

A river protection NGO in Karenni State has warned of possible security risks if the authorities push ahead with new plans to dam the Salween River for electricity generation which will be mostly exported to Thailand or China.

The state’s chief minister, Khin Maung Oo, has said the Burmese military will guard the dam site at Ywathit while consultants from Norway and Sweden assess the environmental impact of damming the river.

“If the project is transparent and carried out in accordance with local people’s wishes, then the government would have no need to worry about security and no one would cause problems,” said the Love Salween Group. “If not, the same security problems will arise as with the Moe Bye dam and Lawpita hydropower station, and now with the Letpadaung copper mining project in central Burma.”

The Ywathit dam could deliver 4,000 megawatts of electricity capacity—more than the whole of Burma’s present grid capacity.

Thailand’s minister of energy said recently Bangkok needed to consider importing electricity from neighboring countries to resolve a looming domestic power shortage. Thai companies including the state Electricity Generating Authority of Thailand are financing hydro dams in Laos.

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