Business

The Irrawaddy Business Roundup (August 30, 2014)

By William Boot 30 August 2014

China and Burma Cooperate on Border Jade and Jewelry Market

Burma’s northern town of Muse is cooperating with Ruili directly across the border in China to promote a new jade and jewelry market, according to the state-run Chinese news agency Xinhua.

Production and sales of Burmese jade have skyrocketed in the last three years. The value of exports in the 2013-14 fiscal year soared to about US$1 billion from $34.2 million in the 2011-12 year, according to figures from the Ministry of Economic Development in July. The black-market trade is estimated to be several times higher than the official figures.

The jade market will be part of the Muse economic zone now under construction and scheduled to open in 2015, Xinhua said. It includes hotels, offices, market areas and the region’s biggest bus station, according to the Chinese news agency.

“[Chinese] jade carving expert Liu Dong told reporters that the general economic environment for the Chinese jewelry and jade market had cooled off, which means the jade companies of Ruili must transform themselves to upgrade their business,” Xinhua reported.

“The new jade market will regulate and promote the structural adjustment of the jade market, pushing for its rationalization.”

Xinhua quoted the director of the cultural industry office in Ruili, Lu Yan, as saying the Muse economic zone “will bring new opportunities to the jewelry industry of Ruili.”

British Company Sells Aircraft Refueling Trucks to Rangoon Airport

A British airport services firm has won a contract to supply aircraft refueling vehicles to Rangoon International Airport.

Flightline Support Limited in Oxford will provide two 20,000-liter refueling trucks in a deal that was assisted by Britain’s Ministry of Trade and Investment and the British Embassy in Burma, said managing director Ray Harris in a company statement.

Harris said he also visited the embassy and was advised on developing business links with state-owned Myanma Petroleum Products Enterprise (MPPE) and the Ministry of Energy.

“They open so many doors and give so much advice and support,” Harris said of his dealing with the British Ministry of Trade and Investment.

However, the human rights group Burma Campaign UK was critical of the British government’s close business links with Naypyidaw.

“One of the reasons the British government no longer prioritizes human rights in Burma is because it is focusing not just on winning contracts for British companies, but also on winning contracts from the Burmese government itself,” campaign director Mark Farmaner told The Irrawaddy.

US Funding Lined Up for Big Solar Power Plant Project in Mandalay

A US investment company is undertaking to raise financing for a US$480 million solar energy project in the Mandalay region.

The project will have an electricity generating capacity of 300 megawatts, equal to 12 percent of Burma’s present-day capacity, Reuters quoted Michael Froman of the Office of the United States Trade Representative (USTR) as saying.

New York-based ACO Investment Group and the Ministry of Electric Power reached an agreement under the auspices of the USTR, Reuters reported.

The USTR is an agency directly linked with the White House.

The agreement is for two 150-megawatt solar plants to be built “most likely in the Myingyan and Meikhtila districts,” Reuters said. Electricity from the projects will power the Myotha Industrial Zone, Froman said.

ACO Investment said financing from US institutional investors totaling $150 million was already in place and the target date for construction to be completed is 2016.

Some of the plant’s equipment will be built in the United States but a construction company has yet to be chosen, Reuters said.

Onshore Container Terminals Planned to Ease Logjams as Imports Rise

Burma is inviting foreign and domestic investors to build several container terminals linked to a modernized road and rail network to improve the distribution of goods.

Two of the terminals, also known as dry ports, will be in Rangoon and a third in Mandalay, said state media. Another terminal could be built at Tamu on the border with India, according to a report by state television.

Development of the Mandalay terminal and associated infrastructure could cost around US$10 million, the TV report said.

The aim is to transfer and store an increasingly large volume of imports arriving to Rangoon on container ships, the Japan International Freight Forwarders Association said. In the 2012-13 financial year, 470,000 containers landed in Rangoon, growing to 610,000 in 2013-14.

“The state-run railways plans to renovate 13 bridges on the Rangoon-Mandalay [route] to ensure access of containers from ocean ports and vice versa,” the association said.

Burmese authorities are planning to have the terminals and the infrastructure improvements completed and operational by the start of the Asean Economic Community (AEC) at the end of 2015, the Bangkok Post said.

The AEC will lower import and export barriers and tariffs among the 10 countries of the Association of Southeast Asian Nations (Asean).

Foreign Investors Granted More 100% Ownership Agreements

The number of industry sectors in which foreign investors can establish 100 percent-owned businesses has been expanded.

Businesses in which foreigners can have full ownership will now include mining, construction, construction materials and equipment, hydro and coal-fired power generating plants, and jewelry products, said the Myanmar Investment Commission (MIC).

Restrictions on ownership or conditions of operation remain in place for 21 industries, said a report by Eleven Media, citing MIC. Notably these include oil and gas exploration and production, port development, petrochemicals and transportation.

The MIC imposes conditions of operation on some foreign-owned industries, such as tobacco, which requires a minimum 50 percent local content as well as the bulk of production being exported.

UK Defense Ministry Broke Law Over Burma Army Training Program

Britain’s Ministry of Defence broke the country’s Freedom of Information Act by claiming “commercial confidentiality” as an excuse for refusing to disclose details of a training course for Burmese Army officers, a watchdog said.

The London Information Commissioner’s Office said the ministry had breached the law by failing to give course details after a request from the human rights NGO Burma Campaign UK.

“The Ministry of Defence cited commercial confidentiality because the course is run jointly with Cranfield University, and argued that releasing the materials could give competitor universities an advantage,” the campaign told The Irrawaddy.

Under the law, the ministry should have provided the requested information on the 2013 course within 20 days but it took 10 months, the commissioner’s report said.

“Burma Campaign UK made the request following the controversial decision by the British government to spend more than £100,000 [US$166,000] of British taxpayers’ money providing unconditional training to the Burmese Army, despite many ongoing human rights violations by the Burmese Army,” said the NGO’s director Mark Farmaner.

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