Irrawaddy Business Roundup (January 11, 2014)

By William Boot 11 January 2014

Burma’s Business Environment ‘Best Improved’ in 2013 Global Survey

Burma has been named the country making the “greatest improvements” in its business environment in 2013 in a global survey of 173 countries.

The accolade was made in the 2014 Legal and Regulatory Environment Risk Atlas from global risk analytics company Maplecroft of Britain.

Burma’s improvement came through “reforms to address issues such as corruption, rule of law, the regulatory framework, respect for property rights, and corporate governance,” said Maplecroft.

The country is still ranked 5th in a listing where 1st is worst, but Maplecroft said Burma’s improvements were laudable.

“In the last year the only country to significantly improve its risk profile is [Burma], which moved up more than 10 percent in the [Risk Atlas] scoring system. The government’s resolve to improve the business environment means a number of important steps have been taken to enhance investor protection, including the implementation of a new foreign investment law in March 2013,” it said.

But Maplecroft does add a note of caution: “Despite this positive medium-term outlook, current levels of corruption, lack of rule of law and interference in business by a wide range of powerful and vested interests, including the military, continue to create a very uneven playing field for foreign investors.”

India’s Infosys Wins Burma Govt IT Contract

One of India’s biggest IT businesses, Infosys, is being awarded a major contract with Burma’s government, the Business Standard newspaper of Mumbai said.

The Naypyidaw government is hiring Infosys “to devise a strategy on using IT to improve governance efficiency,” said the paper, quoting unnamed Indian sources.

The Standard noted that Burmese opposition leader Aung San Suu Kyi visited the headquarters of Infosys last November while on a tour of India.

“Suu Kyi discussed on how technology could play a role in [Burma’s] development. Infosys [previously] committed to undertake a six-month training program for 100 engineering students from [Burma],” the newspaper said.

Infosys is working with several Indian federal government offices on IT modernization projects, including income-tax processing and postal services, the Standard said.

“Infosys is trying to take its success in India in various e-governance projects to other countries in Southeast Asia,” it quoted a company source as saying.

Thein Sein Seeks 28 Percent Economic Growth for Naypyidaw in Budget

First details of the Naypyidaw government’s 2014-2015 financial year state budget proposals have been published following a presentation by President Thein Sein to the National Planning Commission.

It targets different levels of growth in several key sectors of the economy and three regions of the country, according to the government-run New Light of Myanmar newspaper.

A growth rate for the new financial year 3.9 percent is the target for the agricultural sector; 10.4 percent for industry; and 12.4 percent for the services sector.

Modest increases are planned for spending in education—5.92 percent compared with 5.43 percent in the current year—and for health, up to 3.38 percent from 3.15 percent.

The plan aims for 9.3 percent growth for the Rangoon region; 12.4 percent for Mandalay and district; and a whopping 28.2 percent for Naypyidaw.

“The president has stressed the need to attract foreign investment to develop technology and human resources, and to double domestic production in seven sectors in order to reach an 8 percent increase in GDP,” a summary produced by the Network Myanmar website said this week

“The seven sectors are cited as industry, agriculture, infrastructure, energy, mining, tourism, finance and communications.”

Bangkok Unrest May Help Burma’s Tourism, But Services ‘Must Improve’

More than 80,000 foreigners visited Burma in 2013 on business visas, figures from the immigration office at Rangoon Airport showed.

The figures showed that 82,000 businesspeople from countries were permitted to use Burma’s visa-on-arrival system. The number of countries whose citizens can use this system increased to 48 during last year, said Eleven Media quoting the department.

These figures were published as the chairman of the Myanmar Travel Association, Aung Myat Kyaw, urged the Naypyidaw government to help improve Burma’s transport and accommodation infrastructure if it wanted to achieve a target of 7.5 million tourist visits per year by 2020.

“[Burma’s] image will draw more tourists, but we need better infrastructure, security services and quality to sustain the growth,” he told a Rangoon meeting.

The political unrest that has been disrupting neighboring Thailand’s capital Bangkok for weeks and is now threatening a total shutdown of the city could boost tourists to Burma in January and February, the travel trade magazine TTR Weekly said.

“Thailand’s Civil Aviation Department has now officially confirmed 56 flights [to Bangkok] have been cancelled from Singapore and Hong Kong until late February,” the magazine said on Jan. 8. It quoted tourism office officials warning that there could be 400,000 fewer visits to Thailand in January, normally a peak time for foreigners holidaying in the country.

Bangladesh Plan for Gas Import Terminal ‘Could Benefit Burma’

The under-siege Bangladesh government has promised the electorate it will authorize the construction of a terminal to handle imports of liquid natural gas (LNG) as the country struggles with a severe electricity shortage.

It’s a move which could benefit Burma’s export economy in the next few years as the Ministry of Energy prepares to award exploration contracts to explore 30 blocks of the Bay of Bengal for gas and oil.

The Bangladesh electricity crisis, which has forced many businesses to close or operate only a few hours per day, is one of the issues that fuelled street violence before and during national elections last week.

The state energy company Petrobangla has proposed a floating terminal to be built on Moheshkhali Island in the Bay of Bengal, said the Financial Express of Dhaka.

The gas shortage is worst in the main industrial port of Chittagong where hundreds of businesses have closed down because of the lack of electricity. Most power in the country is fuelled by natural gas.

“The Bangladesh government has said it wants to import in the region of 5 million tonnes of LNG. That is a lot and it would clearly be cheaper and quicker buying it from [Burma] than further afield suppliers such as Indonesia or the Persian Gulf countries,” industry analyst Collin Reynolds in Bangkok told The Irrawaddy.