Burma Business Roundup (Saturday, May 19)

By William Boot 19 May 2012

Energy Ministry Plans Second Oil and Gas Trade Show this Year

The Burmese government is to hold a second promotional trade show for the oil and gas industry. The first one was held in late March in Rangoon and now a follow-up “summit” is being prepared for September.

Since the March event, billed as “Gearing Up for the Emerging Oil & Gas Opportunities,” the Ministry of Energy has announced that a new batch of onshore exploration licenses will be offered in August, and offshore block licenses before the end of the year.

However, despite the March show attracting scores of representatives from more than 30 countries, only nine of 18 onshore exploration blocks offered in 2011 have so far attracted bids.

Under new rules, all foreign oil and gas firms starting up in Burma must take on a Burmese partner.

Among issues to be addressed by the Energy Ministry in September will be an infrastructure “road map” for oil and gas development, including the provision of pipelines, ports and fuel storage terminals, said the Center for Management Technology (CMT).

Singapore-based CMT is the co-organizer of the trade shows with the Energy Ministry.

“It’s curious that the Burmese government is planning another promo show so soon after the March event,” Bangkok-based energy industries analyst Collin Reynolds told The Irrawaddy. “It rather suggests an air of desperation to bring in new investors because so far the big Western companies have stayed out.”

Firms Warned of Risks in Investing in Institutionally Weak Burma

A business risk assessment company has warned potential investors in Burma that the lack of institutional infrastructure poses a threat to safe investment.

“Despite the growing but cautious enthusiasm amongst investors for an imminent return to Myanmar [Burma], businesses need to be aware that significant operational and strategic risks are likely to persist in the short term,” the report by British risk assessors Maplecroft said.

“[Burma] will need to prioritize capacity building and infrastructure development in order to provide an attractive investment framework for foreign companies,” the report said.

Maplecroft said decades of isolation and military rule had “left the country’s infrastructure and institutions underdeveloped.”

The assessment coincides with a business guide from the British embassy in Burma warning British companies to beware of endemic corruption. “Anyone doing business in the country is likely to encounter or hear of corruption in one form or another. Practices such as facilitation payments, bribes and the giving and receiving of expensive gifts in order to develop business relationships are still a problem in certain places,” says the advisory.

“Our advice to companies encountering corruption is simple—don’t get involved.”

The guide is in response to the number of British company representatives arriving in Rangoon looking for business opportunities since the European Union suspended its economic sanctions against Burma last month.

China Offers Medical Aid with Trade as Competition Grows

Faced with rising international competition after years of being Burma’s dominant foreign partner, China is sending doctors and nurses along with trade delegations seeking to woo new business.

The “First China-Myanmar Brotherhood Tour” included representatives from 40 Chinese firms, plus medical teams to offer eye cataract surgery, and laptop computers for ten schools in Rangoon, said the official Chinese newspaper China Daily.

The medical teams were sent from China’s neighboring province of Yunnan and the business-social welfare tour, which ran for 10 days until May 16, was organized by the China Foundation for Peace and Development, said the newspaper.

Call for Skilled Expatriate Burmese to Return Home to Help Revival

The Naypyidaw government is urging skilled Burmese who went abroad to escape past draconian military regimes to return home and help rebuild the country.

The Thein Sein government said it wants to encourage people from the professions who are working abroad to use their skills in Burma, AFP reported. Doctors, technicians and businesspeople knowledgeable in international practices are especially being sought.

The call for skilled Burmese to return home contrasts with a tentative agreement made in April with Thailand to export as many as 200,000 unskilled Burmese workers.

Burma is negotiating to supply the workers to help alleviate high unemployment at home. The Thais say it’s to ease a labor shortage in Thailand.

Thailand already has at least two million Burmese workers, many of them illegal migrants who have fled poverty and repression at home.

Koreans and Japanese Compete for Stock Exchange Contract

South Korea is vying with Japan to win the contract to develop an independent stock market in Burma.

After President Thein Sein’s visit to Japan during which Tokyo canceled several billion dollars of debt, it looked like the Japanese had got the deal.

The Japanese financial services firm Daiwa Securities and the Tokyo Exchange are due to visit Burma before the end of this month to sign an agreement to get an exchange up and running by 2015.
But after the visit to Burma this week by South Korean President Lee Myung-bak there could be competition from a consortium led by the Korea Stock Exchange.

Lee pressed the issue with Burmese officials while at the same time undertaking to resume a development loans program which it had suspended in 2005, the news agency AFP reported.

Senior officials of the Korea exchange have quietly visited Naypyidaw recently.

Both the South Korean and Japanese exchanges are keen to expand abroad and they see the emerging economy of Burma as an attractive stepping stone.

Daiwa Securities quietly operates the little known, and little used, Myanmar Securities Exchange Center in Rangoon.