Burma Business Roundup (Saturday, Oct. 13)

By William Boot 13 October 2012

Suzuki Plans Car Factory as Part of Rangoon Industrial Zone

The Suzuki Motor Corporation is planning to build a factory in Burma capable of producing up to 30,000 cars a year, a leading Japanese newspaper has disclosed.

The factory will be part of the Thilawa Special Economic Zone on the outskirts of Rangoon which is to be developed by a Japanese construction consortium.

“Suzuki plans to build the plant on 40 hectares in the suburban Thilawa district of [Rangoon] and will establish a wholly-owned subsidiary in the country. In the initial years, the plant will manufacture several thousand cars a year,” said the Asahi Shimbun newspaper.

“A company jointly set up by Myanmar [Burmese] and Japanese organizations will start developing the special economic zone as early as next spring to improve infrastructure, including facilities for electricity, water and sewerage. Suzuki executives have already inspected the planned site and are positive about construction of the plant there,” the paper reported.

Suzuki had a factory building motor bikes for about 10 years between 1999 and 2010 when a joint venture with the Ministry of Industry formed under the military regime expired and the plant closed.

“Japanese companies are increasingly moving to set up factories in countries other than China because of the strained relations between the two countries after the Japanese government nationalized the disputed Senkaku Islands in the East China Sea on Sept. 11,” said the Asahi Shimbun.

Major Malaysian Phone Operator Interested in Burma Market

A big Malaysian firm has declared its interest in bidding for a license to enter Burma’s telecommunications market when Naypyidaw finalizes new rules for the sector’s development.

“Myanmar is a logical and interesting market to consider investing into and it represents a strategic market given its high growth potential,” said the Axiata Group of Kuala Lumpur in a statement to Malaysian newspapers.

Axiata is a regional business with telephone interests in 10 operations across Asia from Iran to Indonesia and claiming 200 million mobile phone users.

It has an annual turnover exceeding US $5 billion.

The Norwegian Telenor Group, which also operates in Malaysia as well as in Thailand, has also expressed interest in entering the new Burmese market.

“With its geographical location, low mobile penetration and expected economic growth, it is natural for us to consider Myanmar,” a Telenor manager in Malaysia told the Malaysian Star newspaper this week.
But the manager, who was not named, added: “What is needed now is for the [Burmese] government to establish a sound legal and regulatory framework that provides the necessary predictability and security for foreign investment.”

The Naypyidaw government has indicated that it will permit four telephone operating licenses, two for domestic firms and two for foreign investor companies.

Dawei Port Project Should ‘Not Become a Thai Taxpayer Burden’

The Thai government’s decision to effectively take over the Dawei port-industrial project in southeast Burma is an unjustified burden on taxpayers in Thailand, two leading Bangkok business experts say.

“Notwithstanding valid health and environmental concerns over Dawei, hard political economy questions are being ignored,” the experts believe.

“The Yingluck government’s decision to effectively shoulder the Dawei development project places burdens on Thai taxpayers to the benefit of the private sector construction conglomerate, Italian-Thai Development (ITD).”

The comments come from Thitinan Pongsudhirak, director of the Institute of Security and International Studies at Bangkok’s Chulalongkorn University, and Pavida Pananond, associate professor at Thammasat Business School in Bangkok.

They argue that the failure by ITD to start the multi-billion dollar Dawei contract they acquired under the former Burmese military regime was due to the loss of powerful political contacts in Burma, notably Gen Tin Aung Myint Oo, who was linked with Max Myanmar, “a crony conglomerate connected to the military regime.”

“For ITD, what looked like easy baht on the back of political connections quickly became unfeasible. As the initial phase of ITD’s US $8.5 billion languished, its share price wobbled. Interested investors were spooked. But then the [Thai Prime Minister] Yingluck government’s virtual bailout arrived to save ITD’s day,” the two Bangkok academics say in a commentary in The Bangkok Post.

They say the principle of a major oil port and petrochemical complex for Dawei, leading to an economic bridge between Burma, Thailand and the rest of Southeast Asia is a good one, but “first and foremost the [Thai] government would be better off laying out the enabling conditions for local and international private interests to invest.”

Burmese Whiskey Brand Becomes Official Drink at Chelsea Football Club

Burmese whiskey maker International Beverage Trading Company (IBTC) has won a sponsorship deal with England’s Chelsea Football Club.

IBTC’s leading brand, Grand Royal, has “become the club’s official whiskey,” according to marketing magazine Campaign Asia-Pacific.

“The tie-up, brokered by Sports Revolution, is important not only for the brands involved but also because it marks the first such advertising partnership between a Myanmar-based company and a prominent Western brand following the country’s liberalization reforms,” said the magazine.

Among other benefits to IBTC is the right to use Chelsea FC’s logo in it brand advertising.

“The IBTC deal supports Chelsea’s strategy of raising its profile within [Burma] and Asia as a whole,” said Campaign Asia-Pacific.

Chelsea is reportedly planning visit Myanmar during its 2013-14 pre-season tour.

English Premier League football clubs are looking increasingly to Asian markets for promotion of their brand merchandise because of the huge fan base, reckoned to be 40 percent of the global TV viewing audience at several hundred million, according to the Barclays Premier League Global Fan Survey.

India-Burma Trade Set to ‘Double by 2015’

Direct trade between India and Burma will more than double over the next three years. That’s the prediction of Burma’s consul-general in India, Kyaw Swe Tint, addressing the Bengal Chamber of Commerce and Industry.

The value of two-way trade in the last financial year was US $1.28 billion.

Agriculture, health, education, mineral resource exploitation and pharmaceuticals will be key areas of growth following the signing of 12 MoUs between the two countries, he said.

But one of the main stumbling blocks was the continuing lack of proper road and railway cross-border connections to help improve trade links, the news agency Xinhua quoted him telling the Bengal chamber.