Burma Business Roundup (Saturday, May 11)

By William Boot 11 May 2013

New Thai Firm Wins $275 Million Solar Energy Plant Deal

A newly established company in Bangkok with no previous power industry experience has provisionally secured an agreement with Burma’s Ministry of Electric Power to build the country’s first solar energy plant.

Green Earth (Thailand) Company Limited has signed a memorandum of understanding (MoU) to build a large solar “farm” at Minbu near the capital Naypyidaw. Green Earth said the project would eventually have an electricity-generating capacity of 210 megawatts and cost US $275 million.

The MoU was signed in Bangkok with Deputy Minister for Electric Power Aung Than Oo.

Green Earth Managing Director Supasit Skontanarak was quoted by Bloomberg business news agency as saying the project could be completed inside two years. However, Supasit said his company needed to raise development capital and was looking for joint-venture partners.

Green Earth said it is also in discussions with Burma’s Ministry of Electric Power on an agreement for a second solar-power project, to be sited near Rangoon or Mandalay, which would have a generating capacity of 200 megawatts.

Large solar plants, using sun-absorbing photovoltaic panels laid out in rows, need a lot of land and must be located with access to the electricity transmission grid.

Many of the world’s biggest solar-panel manufacturers are in China.

Thein Sein’s ‘Lackluster’ Response to Religious Violence Bad for Business

Growing religious violence in Burma threatens to blunt foreign investment in the country, a business risk assessment report said.

“[Burma’s] reforms have led to the suspension of a number of sanctions from the US and EU, opening the door to foreign investment in a way that had not been possible before. However, on-going political and sectarian violence continue to shed doubts on the government’s willingness to implement social reform and grant the equal protection of human rights,” said the report by assessors Maplecroft of Britain.

It said there was a perception abroad that the Naypyidaw’s response to the violence was inadequate.

“The government’s lackluster response to calls from domestic and international stakeholders to stop the violence produces concerns that the situation will continue to get worse in the short to medium term,” the report said.

Special Trade Promotion Team for Seven Countries, but Key Man Quits

The government is to dispatch senior officials to seven countries plus Hong Kong to promote trade and investment.

The officials, from four Naypyidaw ministries, will be attached to Burma’s embassies in China, India, Japan, Singapore, South Korea, Thailand, Hong Kong and Belgium for contacts with the European Union.

Nine deputy directors or managers from the ministries of commerce, planning, finance and energy will be involved in the trade push, Ministry of Commerce spokesman Toe Aung Myint told Burmese media.

The plan aims to help the government reach its target of increasing international trade and investment by 20 percent in the current financial year.

The Ministry of Commerce is undergoing a restructuring and is to be given assistance from advisers from the World Trade Organization, said Toe Aung Myint.

However, this comes against the background of the resignation of a leading reformist minister from the government due to complaints from “conservative politicians” opposed to rapid change, reported the Financial Times of London.

Soe Thane, a President’s Office minister with close ties to President Thein Sein, resigned as chairman of the Myanmar Investment Commission, which approves foreign investment projects.

The resignation “raised fresh questions about President Thein Sein’s ambitious reform agenda and unsettled investors,” said the newspaper on May 8.

Soe Thane was “a key figure in a small group of so-called super ministers in the president’s office,” said the Financial Times. He is being replaced as commission chairman by Finance Minister Win Shein, it said.

Thais and Chinese are Burma’s Largest Visitor Groups

Most visitors to Burma are from Asia and the biggest nationality groups are Thai and Chinese, said an Asean travel and tourism report.

It said 16 percent of tourists visiting Burma came from Thailand and 12 percent from China.

Despite the growing numbers, tourism contributed only 0.2 percent of Burma’s gross domestic product in 2011, said the study, compared with an average 4.6 percent for the 10 member countries of Asean, the Association of Southeast Asian Nations.

This could change if the government succeeds in attracting 3 million tourists per year by 2015, compared with about 1 million in 2012.

However, Burma’s tourism infrastructure is so far failing to keep up with visitor numbers, according to the Bangkok-based travel trade magazine TTR Weekly.

“Delays in granting hotels operating permits causes operational headaches and add to administration costs for hoteliers opening properties in [Burma],” said TTR.

“Hoteliers say there are properties that can welcome tourists, but are still waiting for approval and essential documents from government departments to allow them to open.”