Burma Business Roundup (Saturday, Nov. 17)

By William Boot 24 November 2012

Rangoon Economic Zone Faces Delay

Japanese industrial conglomerate Marubeni has warned that plans to develop the Thilawa Special Economic Zone in Rangoon by 2015 might be impossible to achieve.

Marubeni’s chief executive Teruo Asada said this week there had been a delay in carrying out a feasibility study and suggested that Burmese politics and bureaucracy were hindering the plans.

The Marubeni Corporation, Mitsubishi Corporation and Sumitomo Corporation have signed an agreement with the government and the Federation of Chambers of Commerce and Industry to build the port, which includes a gas-fueled power station.

But asked in an interview with the Wall Street Journal whether the project could be achieved by 2015, Asada said: “I don’t know, to be honest. The results of the feasibility study will come out next year. It seems to have been delayed by three months.

“In terms of communication and other matters, there are some things like the political system or bureaucracy that haven’t fully developed yet. So I think there are situations in which we’re not communicating fully.”

Asada told the US business newspaper that some Japanese development plans in Burma were being held back due to financing uncertainties and pending guarantees from the Japanese government.

“We know what sort of structure would work to finance a project on our own. [Burma] doesn’t have solid laws for this kind of thing… If we depend on yen loans or grants, some projects may not be able to move forward,” Asada said.

Among projects reportedly planned to be included in the Thilawa zone is a Suzuki Motor Corporation car factory, although again no details have been announced.

Asean Single Market ‘Delay’ Helps Burma

Plans to launch Association of Southeast Asian Nations (Asean) economic community along the lines of the European Union at the beginning of 2015 appear to have been delayed—taking the pressure of Burma’s chairmanship of the bloc.

Reports emerging from summit talks of the on Nov. 18 suggest that the launch is being put back from January 2015 until the end of that year.

It will be Burma’s turn to chair Asean in 2014, and a key task will be ensuring that all ten member countries are moving along toward the community start-up.

However, there are already suggestions that some countries will not be ready and there might have to be a two-track beginning with more advanced economies pressing forward first.

The AEC—Asean Economic Community—envisages tariff-free cross-border trading and unrestricted movement of labor among other things.

“This concerns not only matters of politics but also fostering economic integration and better social and cultural understanding,” said the chief of the Singapore Institute of International Affairs Simon Tay in a commentary in Singapore’s Today newspaper.

Oil Refineries ‘to be Privatized’ to Raise Production

Burma’s small state-owned oil refining industry is to be privatized to improve and expand its capacity, media reports say.

The country’s three refineries are old and no longer able to produce gasoline and diesel at their original capacities, the Ministry of Energy was quoted by the Emissary Broadcasting Corporation this week.

Meanwhile, Burma’s fuel oil demands are rising as the economy starts to grow, forcing more expensive imports to be sought.

The country’s three refineries are at Thanlyin in Rangoon, Chauk and Mann Thanpayarkan. They are currently producing only around half of Burma’s demand, said the ministry, as more vehicles are imported.

Moves to sell the Thanlyin refinery could happen as early as December, according to Eleven Media Group quoting an unnamed official in the ministry’s planning department.

Burma Land of Opportunities Kiwi PM

New Zealand’s Prime Minister John Key held talks with President Thein Sein during a visit to Burma this week to discuss “lots of opportunities” and offer some financial assistance.

“If you roll the clock forward ten years’ time, most of the leaders I talk to around the region think [Burma] will be an increasingly important market,” Key told Fairfax New Zealand News.

He said New Zealand businesses were interested in Burma’s agricultural sector and potential service industries. The major New Zealand dairy products firm Fonterra already does business in Burma and is among companies looking to expand.

The New Zealand government is planning to provide US $6 million in assistance to develop a model dairy farm in Burma, the New Zealand Herald reported.

Key attended a business opportunities meeting in Rangoon and also went to Naypyidaw where he invited Thein Sein to visit New Zealand in the near future to further discuss business development opportunities.

Nuclear Inspection to ‘Help Economic Incentives’

President Thein Sein has signed an agreement to permit the International Atomic Energy Agency (IAEA) to “more efficiently and effectively provide assurance of the absence of undeclared nuclear materials and activities in Burma,” the Institute for Science and International Security (ISIS) said this week.

“ISIS has for several years assessed evidence and suspicions of undeclared nuclear activities in Burma including cooperation with North Korea,” the ISIS report said.

The decision by Burma is “extremely positive” and the international community should congratulate the government for action which will help “garner economic and political incentives” for the country, said the ISIS.