Business

The Irrawaddy Business Roundup (July 16, 2016)

By Simon Lewis 16 July 2016

Bitcoin Technology Could Be Used for Burma Microfinance

A microfinance institution (MFI) operating in Burma says it will harness the concept behind the cryptocurrency Bitcoin, after the technology known as blockchain was tested on its banking system.

Microfinance institution (MFI) BC Finance, a project of Hong Kong private equity firm Bagan Finance, was involved in a test of a “private blockchain,” according to a press release from tech companies Infoteria and Tech Bureau.

Those companies, which work in Japan, said they had “successfully transferred the loan and deposit account data in the main system of BC Finance, one of the largest microfinance institutions in Myanmar, to Mijin, the private Blockchain….” The test also involved Microsoft’s Azure software, according to the release.

“This is the world’s first demonstration experiment that used a private Blockchain in microfinance,” it added.

In the case of Bitcoin, blockchain technology works by recording transactions in a ledger that is shared between all the computers in a network, meaning that the currency is trustworthy without the need for a central authority. Banks and other institutions have begun working on other applications of the technology, which include private blockchains that could be used within companies to keep a shared record of transactions.

Infoteria and Tech Bureau said they would be carrying out more tests over six weeks, and that they hope blockchain technology will help MFIs in Burma with data management as the sector grows, as it “enables the safe and low-cost operation of account data.”

“We expect that this will facilitate the growth of the microfinance business,” they added.

Jeremy Kloiser-Jones, Chief Executive Officer of BC Finance said in the statement the test was “just the start.”

“While we expect it to bring significant savings, leveraging the technology to the next level—replacing analog processes and freeing up employee and customer time, will likely produce more significant savings,” he was quoted saying. “On these topics, please expect more announcements from BCF and Infoteria.’

Chinese Firm Wins Karen State Road Contracts: State Media

The state-owned China Road and Bridge Construction Co Ltd (CRBC) has reportedly won tenders to undertake improvements on the road connecting Rangoon and the rest of the country with the Thai-Burmese border crossing at Myawaddy, according to a newspaper run by the Communist Party of China.

Citing CRBC chairman Wen Gang, China Daily reported this week that the company had received bid-winning notices for Lot 1 and Lot 2 of the Asian Development Bank (ADB)-funded Eindu-Kawkareik Road Improvement Project in Karen State.

According to a procurement plan published on the ADB’s website, the two lots for civil works on the project were advertised for bidding in the second quarter of 2015.

The project will see the existing road widened to two lanes with paved shoulders for a total distance of 66.4 kilometers.

“The section will require complete reconstruction, with some short sections of realignment for improved vehicle operating speed and road safety,” the ADB’s summary of the project says.

Lot 1, which covers the first 40.4 kilometers of the road from Eindu, is estimated to be worth $60 million and Lot 2, from kilometer 42.2 to 66.5, is estimated to cost $38 million.

“The project, located in the Greater Mekong Subregion, is the first state project the new Myanmar government has publicly awarded to Chinese companies after coming to power, and also the first project funded by the Asian Development Bank that CRBC has won in the country in recent years,” China Daily reported.

Concern Over Lack of Supply Base for Offshore Drilling

An oil and gas industry insider this week raised concerns over the governments plans to set up a supply base as companies get ready to conduct offshore drilling in Burmese waters.

A post on industry network oilpro.com, written by Andre Wheeler of Ceti Corp, said that Australian firm Woodside could be drilling as early as late next year, meaning that an offshore supply base, or OSB, would need to in place to assist the company.

A site in Moulmein, Mon State, has long been proposed for such a base. But a suitable base does not yet exist, and a site for a new base has not been agreed upon, according to Wheeler.

“Thaketa [in Rangoon], the only current and operational base has serious drawbacks, not least of which is inadequate water depths and in need of extensive refurbishment,” he wrote.

“A number of other sites have been considered but all are in the very early stages of investigation in terms of site identification, with little or no basic data, such as geo-tech analysis having been done.”

Wheeler went on to say that the state-run Myanmar Oil and Gas Enterprise (MOGE) has focused on finding an operator for a new base, rather than on designing its specifications based on what is needed. MOGE issued a call for expressions of interest and reportedly received some 51 responses from local and foreign firms, but no developer has been named.

Wheeler said the government firm—which is a partner in all production sharing contracts signed with oil and gas companies—should focus on the site and design for the base, specifically making sure the location was somewhere with water deep enough and expansive enough for ships to dock and turn, and somewhere that facilitates both land and sea access.

“By appointing an OSB Operator before this runs the real risk of having the base designed and built around their capability and not what is functional in terms of existing capability that meets demand,” he wrote.

Pun Signs With Mitsubishi to Move Forward Landmark Project

The conglomerate headed by Sino-Burmese tycoon Serge Pun has signed an agreement with Mitsubishi Corporation of Japan to move ahead with an ambitious mixed-use development project in downtown Rangoon, according to an announcement.

It marks the next stage in the long-running effort to redevelop the area of the Central Railway Station, close to the iconic Bogyoke Aung San Market, an area the statement imagines as becoming a central business district to compare with Tokyo’s Marunouchi. Dubbed the Landmark development, it will also involve refurbishing the former Myanma Railways headquarters into a luxury hotel to be called the Peninsula Yangon.

A statement from Tokyo this week said the deal signed on Tuesday will see the Japanese partners, led by Mitsubishi Corp and Mitsubishi Estate Co invest about US$200 million in the project. The local partners are Yoma Strategic Holdings and First Myanmar Investment, which are both affiliates of Serge Pun & Associates.

“The Project entails redeveloping four hectares, where the SPA Group had constructed and operated an office building, commercial facilities, a hotel and other real estate assets, with two office buildings, one condominium, one building combining a hotel and serviced apartments, with commercial facilities being installed on the lower floors of each building, across a total floor area of over 200,000 m2,” the statement said.

It also detailed how the Japanese partners will form a joint venture company in Singapore to implement the project, which is getting help from the Japan Overseas Investment Corp for Transport and Urban Development, the Asian Development Bank and the World Bank’s International Finance Corporation.

MAI to Launch New Bangkok-Mandalay Flight

Myanmar Airways International (MAI) will soon fly three times a week between Bangkok’s Suvarnabhumi Airport and the central Burma city of Mandalay, according to Routes Online.

The industry news site said the flights would launch on Sept. 3, and would be flown by an Airbus A319 aircraft.

The route between the Thai capital and Mandalay is currently flown daily by Bangkok Airways and AirAsia, which uses Bangkok’s smaller Don Muang airport.

MAI was spun off from the state-owned carrier in 2010 and is now majority-owned by Kanbawza Bank, which also operates Air KBZ on domestic routes. It currently connects Burmese airports with Bangkok, Guangzhou, Kuala Lumpur, Singapore and the Buddhist pilgrimage destination of Gaya in India.

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