Economy

Business Roundup (July 27, 2013)

By William Boot 27 July 2013

Burma Govt Acquires 51 Percent Ownership of Letpadaung Copper Mine

Majority ownership of the controversial Letpadaung copper mine in central Burma has been signed over the Naypyidaw government, according to the official Chinese news agency Xinhua.

The mine, which was the scene of violent clashes over expansion at the end of last year between security forces and local villagers, is now 51 percent owned by the Burmese government under a new agreement signed in Naypyidaw on Thursday, said Xinhua.

The other 49 percent will be jointly held by the Chinese mine operator, Wanbao Mining Ltd, and the Union of Myanmar Economic Holding Ltd (UMEHL), an army-controlled business. Previously those two companies held a 100 percent ownership.

The Burmese people will now be the “majority beneficiaries,” said Xinhua, which also reported that a portion of profits will annually go to local communities and an environmental cleanup.

“The [ownership] amendment legally sets that 2 percent of net profits goes toward corporate social responsibility with a focus on immediate communities,” said Xinhua.

“The contract safeguards environmental stewardship with Wanbao paying US$2 million per annum throughout the commercial production period of the project into a dedicated account to ensure international standards of environmental protection.”

The Chinese news agency said, “Wanbao views the milestone agreement as heralding a new dawn in the relationship between mining companies and their host countries.”

Wanbao is a subsidiary of the Chinese state-owned industrial conglomerate Norinco, which, among other things, produces weapons and ammunition.

Belgian Engineers Plan New Hydro-Dams Survey of Irrawaddy River

The Belgian engineering company SBE is to make a US$1 million feasibility study for small-scale hydro-dam projects at three locations on the Irrawaddy River.

The consulting firm, based in Antwerp, will partner with Burma’s Directorate of Water Resources and Improvement of River Systems under the Ministry of Transport, according to Eleven Myanmar news website.

The study, to last until October, will be in the vicinity of Yanapo, Chauk, Minhla and Aung La, according to the website, which quoted directorate officials.

The aim is to build water gates on the river linked to turbines which could generate up to 240 megawatts of electricity at each location.

A large and controversial hydro-dam project at Myitsone on the Irrawaddy River in Kachin State has been suspended by President Thein Sein on environmental grounds.

That project, to be built by Chinese firms, was intended to have a generating capacity of up to 6,000 megawatts.

China in Plan to Build Oil Refinery on Gulf of Martaban in Mon State

A Chinese construction company is discussing proposals for an oil refinery that would produce 5 million tons a year on the Mon State coast in the Gulf of Martaban, according to reports.

A study is under way for the refinery at Kalargote, between the Mon capital Moulmein and Yay, said Eleven Myanmar news website. It did not name the Chinese firm, which it said was working with the Myanmar Economic Corporation.

Kalargote is north of Dawei, where plans by Thailand to build a large port and oil transhipment terminal and refinery have been stalled for years due to lack of investment.

Burma has three small refineries that together produce less than half of the country’s demand for diesel and petrol.

There have been several other foreign proposals for new refineries in Burma, including one from Thai state oil firm PTT, but none have moved from the drawing board.

Naypyidaw Forum to Lure 900 Businesses and Investment Advisers

Yet another large international investment forum is to be held in Naypyidaw, this time organized by the London-based business magazine Euromoney.

The forum, in September, will bring together more than 900 “international and local business leaders, policymakers, financiers and economists,” said the magazine.

It will offer potential investors “an ideal platform to connect with the country’s government and business leaders,” it said in a promotional advertisement.

Speakers at the forum include representatives of the International Monetary Fund, the Japanese government aid agency Jetro, US Ambassador Derek Mitchell and Burma’s President Thein Sein.

The September 10-11 event will also include banks, investment strategists and numerous local and foreign company representatives as the new capital continues to rival Rangoon as a venue for major promotional events.

Shortage of Commercial Lawyers Hinders Legal Firms Entering Burma

Burma is facing a shortage of well-trained local commercial lawyers as foreign legal firms seek to set up shop in Rangoon and Naypyidaw.

With more large foreign investment opportunities arriving in Burma, there are “tremendous opportunities for foreign [legal business] engagement which didn’t exist until last year,” said The Lawyer, a legal news website.

“Lawyers are following investors and businesses, their potential clients, into the country,” said the International Business Times (IBT). “Although the market is still in the process of warming up, the most immediate opportunity lies in the oil and gas and the telecom industries.”

“Firms looking to grow their Myanmar practices face a common constraint—the lack of local lawyers well-versed in advising on commercial and corporate transactions,” said the IBT, quoting The Lawyer.

“Due to years of sanctions and military rule almost no local lawyers have been exposed to commercial transactions—most have chosen to focus on litigation and other retail types of work,” said Zaid Ibrahim, a Malaysian law firm quoted by The Lawyer.

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