Burma Business Roundup (Saturday, Nov. 10)
By William Boot 10 November 2012
Insurance and Accounting Giants Eye Burma Market
Major international accounting and financial services company PricewaterhouseCoopers International has established an office in Rangoon amid forecasts that global insurance businesses are preparing to enter Burma.
Pricewaterhouse, also known as PwC, has returned to Burma as a “vote of confidence in the reforms that we have witnessed in the past year,” said PwC Singapore Executive Chairman Designate Yeoh Oon Jin. “[Burma] has great potential for sustained growth due to its unique location between China, India and Southeast Asia.”
Meanwhile, insurance business giants Prudential, AIA Group and Manulife Financial Corporation are preparing to move into Burma, according to Reuters financial services agency.
They see potential for providing cover for an “impending boom in construction projects,” said Reuters.
Based on economic data and comparisons with adjacent countries, Burma could generate US $1.6 billion per year in insurance premium revenues, it said. This would put the country on a level with Vietnam although only 10 percent of the Singapore insurance market.
Gross domestic product per capita in Burma is not far short of US $1,000—the threshold at which individuals begin buying insurance, said Reuters.
Confusion over Thai Government Role in Dawei Industrial Plan
There’s renewed confusion about the financing of a port-industrial development at Dawei on Burma’s southeast coast.
The Thai government declared on Nov. 8 that it could not become directly involved in spending on the multibillion dollar project.
This declaration came one day after government ministers from Thailand and Burma met in Bangkok supposedly to coordinate the start-up—and contradicts an earlier statement by Bangkok that it would put forward infrastructure money.
Thai Prime Minister Yingluck Shinawatra intervened in July with calls for joint action between the two governments after the project had lain dormant for a year.
Yingluck intervened after the chief developer, Bangkok construction firm Italian-Thai Development (ITD), had said it did not have the funds to go it alone.
“The government has already made it clear to Italian-Thai Development Plc, the project developer, that the government cannot directly support the project,” Thai Prime Minister’s Office Minister Niwatthamrong Bunsongphaisan told The Bangkok Post. “What the government can do is facilitate investment in the project.”
However, Somchet Thinaphong, the managing director of ITD’s subsidiary Dawei Development Company, said in a Nov. 8 statement: “We’re just waiting for money to be provided by the government in accordance with the memorandum of understanding signed in July.”
The Burma-Thailand ministerial meeting in Bangkok on Nov. 7—attended by Burmese Vice President Nyan Tan—established planning committees concerned with electricity, roads, port construction, water, a railway and a target date of April for construction to begin.
The Thai government repeated ITD’s claims that foreign investors have “expressed their interest in supporting the project” but failed to name any.
German Airline Starts Direct Flights to Rangoon as Links Grow
A European airline has begun operating direct flights to Rangoon for the first time since European Union sanctions were lifted earlier this year.
Frankfurt-based Condor, the biggest holiday charter flights company in Germany, began a weekly
service on Nov. 7 making it the 19th foreign airline to fly to Burma’s since political and economic reforms began.
“The operation to [Rangoon] by such a prestigious airline as Condor Airlines with it worldwide network will contribute significantly towards the development of tourist and business travel to and from [Burma],” said Win Swe Tun, deputy director general of the Myanmar Department of Civil Aviation.
So far most of the airlines returning to establish a presence in Burma have come from the Asia-Pacific region.
Two services, Dragon Air and Myanmar Airways International, are preparing to start direct flight to and from Hong Kong.
A new Burmese private budget airline, Shwe Myanmar Airways, is due to begin services in January.
EU to Grant Preferential Trade Deal to Burma
Burma is to get preferential trade status with the European Union in addition to development aid for 2013 in excess of US $100 million.
The deals follow a visit to Burma by the European Commission President Jose Manuel Barroso.
Preferential trade is usually granted to low-income countries, and Burma has been named on a list of countries to benefit from low or zero import tax on goods.
A revised preferential trade scheme is due to come into force on Jan. 1, 2014, which will focus on helping the poorest countries, said an EU statement.
The only restriction in Burma’s case will be a continuing ban on the sale of weapons to Burma by EU countries.
Thai Investment Ignites Controversy with Mekong Dam
The government of Laos is pushing ahead with a controversial 1,280 megawatt hydroelectric project directly on the Mekong River in defiance of strong objections by Cambodia and Vietnam.
It’s feared that the Xayaburi Dam will disrupt river flows and seriously damage fishing downstream on which millions of people depend.
The Laos decision ignores a moratorium on the dam agreed by the Mekong River Commission, which groups Vietnam, Cambodia, Thailand and Laos, with observer status held by Burma.
The dam is being financed by Thai companies and most of the electricity to be generated will be taken by Thailand, which stopped building hydro dams years ago because of major public opposition.
Thai companies are still contracted to develop hydro dams on the Salween River in eastern Burma with the same objective, to transmit electricity into Thailand.
The US-based environment NGO International Rivers said the Lao decision was “in clear defiance of its neighbors and a regional agreement.”
Mishandling of water flows out of Thai dams is blamed by some for worsening the major floods in the country in 2011.
“Thailand has developed a reputation for using neighboring countries as proxies for environmentally damaging power and industrial projects,” Bangkok energy industries analyst Sar Watana told The Irrawaddy on Nov. 8.
“The plan for Dawei on Myanmar’s east coast [a new port-industrial project] is to relieve petrochemical pollution near Bankok,” he added.