Business

The Irrawaddy Business Roundup (Feb. 7, 2015)

By William Boot 7 February 2015

Development Banks Refute Claims They Will Fund Coal Power Station

The Asian Development Bank (ADB) and the World Bank have denied a Burmese firm’s claim that they will partly finance a coal-fired power station on the coast near Pathein.

The A1 Group of Companies said it and a Japanese consortium including major corporation Mitsubishi would fund 30% of the Nga Yoke Kaung plant’s development cost and the rest of the money would come from ADB and World Bank loans.

“The ADB is not associated with the mentioned coal-fired power project and ADB is not considering involvement in any coal-fired power project in Myanmar [Burma],” the bank’s external relations officer Alex Nyi Nyi Aung told The Irrawaddy in an emailed statement.

The ADB would make no further comment on the A1 Group.

“The World Bank is not and has no plans investing into coal plants in Myanmar [Burma],” the bank’s communications officer Meriem Gray told The Irrawaddy.

The consortium, which includes the Ministry of Electric Power, has said the plant would have a generating capacity of 300 megawatts and coal to fuel it would be imported via a purpose-built port.

A power plant of that size usually costs several hundred million dollars.

Local residents oppose the development plan. Mitsubishi has said it would pay for some local people to visit Japan to see how coal-fired power plants operate near Japanese residential areas in order to allay concerns.

China to Spend $24bn on Yunnan Province Infrastructure

Burma’s economy is about to face stiff competition for investment from the neighbouring Chinese province of Yunnan, according to an industry report.

Yunnan is currently the third poorest of China’s 31 provinces, with per capita income of only US$4,050 in 2014, oil and petrochemicals magazine ICIS reported.

The Chinese central government is spending over US$24 billion in Yunnan to improve the province’s infrastructure, including 1,500 kilometers (932 miles) of new highways. The aim is to make Yunnan a key component of Beijing’s plans for a so-called New Silk Road, analyst John Richardson said in an ICIS report on the province’s development.

“China will increasingly buy basic raw materials, such as oil and gas, from its less-developed neighbors. It will then re-export finished or semi-finished goods, such as chemicals and polymers, to these neighbouring countries,” Richardson said.

Yunnan’s geographical position connects its borders directly with Vietnam, Laos and Burma, and via the River Mekong with Thailand and Cambodia.

In addition to the twin crude oil and gas pipelines now operating from the coast of Arakan State into Yunnan, China is continuing negotiations with Naypyidaw to expand its oil transhipment port at Kyaukphyu, which it also wants to link to Yunnan by railway.

New Dawei Port-Industrial Plan a Result of ‘Pressure from Thailand’

A leading economist specializing on Burma is “very sceptical” about the benefits to the country of a port and petrochemicals complex at Dawei on the southeast coast proposed by Thailand.

A new agreement on a special economic zone at Dawei will be signed in March, Reuters quoted Thailand’s Deputy Transport Minister Arkhom Termittayapaisit as saying last week, after a meeting of Bangkok and Naypyidaw government officials.

Bangkok has been attempting to revive the Dawei project for two years, after construction firm Italian-Thai Development (ITD) failed to find financial partners to back a contract it obtained under Burma’s former military government.

“I confess to remaining very sceptical about Dawei. Pressure for it seems to come more or less exclusively from Thailand, even though the [Burma] government seems happy to play along, as an indicator perhaps of progress and investor interest,” economist and professor at Australia’s Macquarie University Sean Turnell told The Irrawaddy.

“One gets the feeling that Japan continues to be dragged to it and to only make enough encouraging noises to keep dreams alive.”

ITD will partner with Rojana Industrial Park Company in a first phase Dawei development agreement to be signed in March, Reuters quoted Arkhom saying.

Rojana is a Thai-Japanese joint venture firm based in Bangkok comprising Vinichbutr Group and Nippon Steel & Sumikin Bussan Corporation, a Japanese conglomerate involved in infrastructure developments, textiles and foods.

Central Bank Builds Closer Ties with Singapore

Singapore is seeking to further strengthen its financial links with Burma following a visit to Naypyidaw by the city-state’s senior minister, Goh Chok Tong.

The two countries signed a memorandum of understanding (MoU) on February 3 to “cooperate on banking supervision and capacity building,” said Singapore’s Channel News Asia (CNA). It will involve the Monetary Authority of Singapore and Burma’s central bank.

“The MoU reflects longstanding bilateral relations that have deepened in recent years,” said a joint statement quoted by CNA.

Two Singaporean banks, the Overseas Chinese Banking Corporation United Overseas Bank, are among nine foreign banks that have been given limited licenses to operate in Burma.

Singaporean banks had close dealings with Burma during the military regime era and military-linked funds were often rumoured to have been deposited in Singapore.

Local Firm Wins Country’s ‘First Helicopter Service License’

Air Myanmar Aviation Services has been awarded Burma’s first regular helicopter service licence by the Department of Civil Aviation (DCA), the Xinhua Chinese news agency said.

“[Burma] is upgrading its aviation business in a bid to boost the air transport sector amid growing tourist arrivals in the country year-on-year,” Xinhua said. The company will use two AS350 B3 helicopters providing a service “to airports and other designated heliports in the country.”

The Naypyidaw government has announced plans to privatise 30 airports but in January said this plan would be postponed until later this year or 2016.

The DCA said the delay was due to continuing negotiations with companies bidding to manage Burma’s international airports.

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