The Irrawaddy Business Roundup (Dec. 13, 2014)

By William Boot 13 December 2014

Burma Gets Wired up to China’s Yunnan Province

The Chinese state-owned telecommunications firm China Unicom has finished building a 1,500-kilometer (932-mile) long optical cable route through Burma.

The cable links China’s neighboring Yunnan Province with the Bay of Bengal coast, and improves communications between Mandalay, Rangoon and Ruili on the Chinese side of the border.

“The optical cable line will improve south China’s telecommunication quality with Southeast Asia and nurture outsourcing industries like call centres,” said Myanmar Business Today, quoting China Unicom.

“The project, designed to improve regional connectivity, cost about US$50 million.”

Foreign Investors Hiding Behind Burmese Citizens ‘Face a Crackdown’

Foreign investors who seek to bypass laws by registering businesses under the names of Burmese citizens are facing a “crackdown” by the Myanmar Investment Commission, a report said.

The problem is most pronounced in Burma’s rapidly growing garment industry, commission secretary Aung Naing Oo said.

“As far as we know about 50% of companies [in the garment industry] were foreign investments registered under the names of [Burma] citizens,” he was quoted by the Myanmar Times as saying.

Foreign firms are not permitted from entering business in several industries and are subject to restrictions in other areas, such as land ownership.

Aung Naing Oo said there had been a two-year leniency window for foreign investors to comply with the law but now the commission is “going to take action…in the future there will not be any forgiveness for them.”

Developing Nations ‘Need to Share Electricity’ to Improve their Economies

Cross-border electricity trading would help the economies of South and Southeast Asia to improve by overcoming power shortages, a report said.

Blackouts and other electricity restrictions are shaving at least two percent off Bangladesh’s annual gross domestic product, the London Financial Times said as an example of the problems facing the region.

“The shortages drive up business costs due to the need to invest in expensive diesel-fired generators, lead to a loss of worker productivity and high levels of wastage of perishable products in sectors such as agriculture and fisheries,” the Times said.

Similar problems face Burma and India, it said.

“Lack of investment, crumbling infrastructure and inefficient systems cause shortages and similar losses in all the growing economies of the region. Cross-border connectivity could enhance system reliability, lower costs and carbon emissions and relieve debilitating shortages, the business newspaper said, referring to a proposal by the World Bank.

The Association of Southeast Asian Nations has developed a blueprint for cross-border power sharing but little has happened yet.

Singapore Firm Pays US$47 Million for Share in Rangoon Office Tower

Keppel Land, a Singapore company part of one of the world’s biggest offshore oil services businesses, is paying over US$47 million for a share in a new office construction in Rangoon.

Keppel will buy a 40% share in the City Square Office development in Pabedan Township, Myanmar Business Today has reported.

Other partners in the tower block project, which covers 2.4 hectares (six acres), are Burmese businesses Shwe Taung Junction City Development and City Square Development.

The overall cost of the major development will be US$118 million, Keppel reportedly said.

Singapore companies are among the biggest foreign investors in Burma, especially in real estate.

“Foreign investment goes mainly into the hotel and real estate business and Singapore and Hong Kong come first,” Aung Naing Oo, the secretary of Myanmar Investment Commission, was quoted by Eleven Media as saying this week.

Tourism Steam Train Service Sets Off ‘Without Telling the Tourists’

A vintage steam train service to attract rich foreign tourists to the historic Bagan site has been introduced without any advanced marketing overseas, the regional travel industry magazine TTR Weekly said.

“Very little advance notice has been given to overseas tour operators so it is unlikely that the train’s sales team will be able to muster group business in the short-term,” TTR Weekly said.

“Tour operators are likely to adopt a cautious approach to see if the train is here for the long-term, or just another experiment that lacks a marketing plan, or sales expertise to secure advance bookings through the international travel trade.”

The 110 kilometer (68 mile) round trip between Kyaukpadaung in Mandalay Division and Bagan has been developed by Bright View Steam Locomotive Tours and begins on Dec. 16 on a weekly basis.

Burma is attracting ever-growing foreign tourist numbers but many of them visit on pre-booked packages via travel companies.

The ministry of hotels and tourism is forecasting that the total number of visitors to Burma this year will reach three million, and has set a target of five million tourist arrivals by the end of 2015.