Business

The Irrawaddy Business Roundup (Jan. 31, 2015)

By William Boot 31 January 2015

Huge Chinese-Backed Oil Refinery Planned in Dawei

A huge oil refinery planned by a Chinese company for Dawei on Burma’s southeast coast would be part of China’s self-styled New Silk Road Economic Belt, according to Beijing state news agency Xinhua.

Guangdong Zhenrong Energy is at an advanced state in negotiations to build a US$2.9 billion refinery with a production capacity of 5 million tonnes per year, Xinhua said. The refined oil products would be sold in Burma but also aimed at the export market.

“Zhenrong Energy received the go-ahead for the [Burma] project from the [Chinese] National Development and Reform Commission in November and is currently applying for state approval from the authorities in [Burma],” Xinhua said.

The refinery would be part of China’s so-called One Belt One Road strategy “which is emphasizing future infrastructure connectivity with various countries,” Xinhua quoted Xiao Yaofei, a professor with the School of Economics and Trade, Guangdong University as saying.

“Xiao said Zhenrong Energy’s [Burma] project should also pave the way for other petrochemical-related investments by other Chinese firms, such as those engaged in chemicals manufacturing, for instance, and its support industries,” Xinhua said.

The refinery, to be fed by imported crude using a 150,000-ton oil dock, would dwarf Burma’s existing refineries, but analysts note that Dawei is far from the country’s main industrial growth areas where demand for fuel is highest.

Beach Holiday Resort Proposed on Pristine Mon State Coast

The Burmese firm Aurum is negotiating for permission to build a multi-million dollar holiday resort on the coast of southeast Burma in Mon State.

The resort is proposed for a stretch of beach near the town of Ye, north of Dawei, said Myanmar Business Daily.

Aurum said its plans for the Kanbyar Beach Resort include beach bungalows surrounding a hotel with 120 rooms and would cost US$12 million.

No timetable for project has been given and the firm is in talks with the Mon State government in order to obtain planning consent.

With its pristine beaches, Mon State is the focus of other proposals for holiday resorts as Burma bids to raise the number of foreign tourists while lacking facilities in many places.

Last June, the Myeik Public Corporation announced plans for a US$4 million resort on Kadan Island in the Mergui Archipelago. Myeik said then it was targeting the project in the first quarter of this year.

Thai, Burmese Ministers Discuss Border Trade Plans

The trade ministers of Burma and Thailand met at the border crossing between Myawaddy and Mae Sot this week to discuss cross-border trade expansion linked to Bangkok’s plans for a special economic zone on the Thai side.

“Cross-border trade, particularly with [Burma], should grow significantly due to the first special economic zone linking Thailand’s Tak [Province] and [Burma’s] Myawaddy being established this year,” The Nation newspaper quoted Thai minister Chatchai Sarikulya saying.

The minister led a Thai trade group to Mae Sot as part of government efforts to promote the economic zone, which will be the first of several planned on Thailand’s borders, including opposite Laos, Cambodia and Malaysia.

Chatchai’s visit to the border zone coincided with a week-long trade fair in Mae Sot to which Burmese businesses and traders were invited.

“The Board of Trade of Thailand and the Union of Myanmar Federation of Chambers of Commerce and Industry have signed an agreement to expand cooperation between the countries’ private sectors in trade, investment and logistics, as well as support the special economic zones and facilitate tourist arrivals between the countries,” The Nation reported.

“Tak Province officials have also signed three memorandums of understanding with three states in [Burma] – Myawaddy, Hpa-an and Mon – in a bid to promote trade, investment, logistics and tourism growth between the two sides.”

Mekong Dams ‘Threaten Livelihoods’ of Riverside Burmese

Campaigners against hydroelectric dams being built in Laos and Cambodia have warned that communities in northeast Burma living alongside the River Mekong will suffer economically if the projects are completed.

The dams will undermine fishing on the Mekong on which many communities depend for food and income, the campaigners said. They blamed the Mekong River Commission (MRC) for failing to act to stop the dams.

Burma is an observer on the commission whose main members are Thailand, Laos, Cambodia and Vietnam.

A meeting of the MRC has just failed to agree on action to stop preparation work on the Don Sahong dam in Laos, while disagreement continues over another at Sesan in Cambodia.

The Don Sahong, which would have an electricity generating capacity of 260 megawatts, is being built by a Malaysian firm, Mega First Corporation.

“The Lower Sesan 2 dam is predicted to cause serious harm to fisheries, local economies and livelihoods across the entire Mekong River Basin,” the legal consultant for EarthRights International in the US, Maureen Harris, told The Irrawaddy this week.

“Added to this is a cascade of 11 proposed dams along the Mekong mainstream that will affect all Mekong countries, including a 100 kilometers stretch in [Burma]. The MRC ongoing failure to ensure an adequate process for consultation and agreement between Mekong countries for projects with regional impacts threatens a loss of up to 35% of all migratory fish in the river and potentially US$476 million a year [in community livelihoods], according to an MRC commissioned report,” Harris said.

Absent a Stock Market, Burma’s Wealthy Invest in Land

Many of the seemingly timeless paddy fields which still fringe Rangoon are in fact on borrowed time, waiting to become part of the commercial capital’s growing urban sprawl and industrial landscape, The Economist newspaper said.

Many of the fields are zoned for manufacturing have lain fallow for want of industry, but this is now changing, it said.

“Land acquisition and disposal are governed by archaic laws, barely enforced, which hinder investment. Yet land prices in [Rangoon] and across the country are soaring, partly because speculators are holding out for huge pay outs, but also because, with no functioning stock market and a shaky banking system, [Burma] offers few other places for the wealthy to park their cash,” The Economist said.

Rangoon’s population is now 7.4 million and the city is crying out for a sensible development plan, the paper said in a report on Burma’s economic expansion since 2011.

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