The Irrawaddy Business Roundup (July 19, 2014)

By William Boot 19 July 2014

Western Companies Shy Away From Banking License Bidding

Only two Western banks are listed among 25 foreign banks to have formally applied for licenses to open normal banking services in Burma.

The most bidders for licenses come from Japan, Thailand, Malaysia and Singapore, a statement by Burma’s central bank said this week. Four banks from each of those countries have gone forward from an initial list of 30 that had expressed interest.

More than 40 foreign banking companies have opened representative offices in the country but none are yet permitted to provide banking services.

The two Western firms to move into the net round of license bidding are Australia’s ANZ Bank and the BRED Bank of France, said the statement.

BRED stands for Banque Régionale d’Escompte et de Dépôt. It’s one of France’s biggest regional banks with headquarters in Paris.

Others countries with banks bidding for a license are China, India, Vietnam, Taiwan, Mauritius and South Korea.

Between five and ten foreign banks will be awarded licenses from September, Central Bank Vice-Governor Set Aung was quoted by Eleven Media as saying in June.

A selection committee to pick licensees will be made up of the Ministry of Finance, the Central Bank, the Attorney-General’s Office, a German advisory team, and representatives from the International Monetary Fund (IMF) and the World Bank, according to Set Aung.
Tourism Operators Say World Heritage Sites Need Better Facilities

Tour operators want to see an improvement in infrastructure before they can make a commitment to organize foreign visitor groups to three historic sites awarded World Heritage status, an industry report said.

Hotels and Tourism Minister Htay Aung has urged tourism leaders in Burma and abroad to promote visits to three Pyu sites: Sri Ksetra in Pegu Division; Hanlin in Sagaing Division; and Beikthano in Magwe Division.

The three sites were added to the World Heritage list in June by the United Nations Educational, Scientific and Cultural Organisation (UNESCO).

But tour operators say they are unsure that facilities such as transport, accommodation and road access are adequate, the regional tourism newspaper TTR Weekly said.

“The Pyu sites identified by UNESCO are far from ready to cater to international visitors,” the paper said. “Some tour operators raised concerns about transportation and said there was not enough detailed information on what tourist-friendly infrastructures exists to allow them to make intelligent decisions on when and how to package the attractions in tour programmes.”
NGO Queries Transparency of UK Trade Deal and ‘Burmese’ Firms

Two “Burmese” firms involved in an electricity equipment agreement brokered by the British Foreign Office might not be Burmese, an NGO campaigning for more transparent business activities has alleged.

The agreement, overseen by UK Foreign Officer Minister Hugo Swire and Burmese Minister for Electric Power Khin Maung Soe during a visit to London last week, is for small-scale power plant and generating equipment to be supplied by firms based in Britain.

One deal involves a Bangkok-based company called Andaman Power & Utility which The Irrawaddy has previously tried to contact without success over its claims about electricity development in the Dawei area of southeast Burma.

Andaman Power “has no transparent ownership” while one of the British companies involved, Aggreko, “has on its board a director who is most famous for running a different company which ripped of a million of its customers,” said Mark Farmaner, director of the Burma Campaign UK human rights NGO in London.

A second firm in the deals described by the British Embassy in Rangoon as Burmese, Yeya and Associates, appears to be closely linked with the Thai company Gunkul Engineering, Farmaner told The Irrawaddy.

“The British government dropped human rights as its priority in Burma in order to secure business deals like this from the Burmese government, but what have we got to show for it?” Farmaner said.
Temporary Power Plants Are ‘Quick Solution to Electricity Shortages’

Small-scale natural gas-fueled mobile power plants offer Burma the best short-term answer to electricity shortages while developers of large-scale projects remain “wary of committing significant investment,” a business study said.

Potentially huge opportunities for investment in power generation capacity will ensure that global players will continue to look for entry points into [Burma], said risk assessors Business Monitor International.

“Nevertheless , the transformation of the power sector in this frontier market will take time, underscored by the fact that around 75% of the population have no access to electricity and per capita electricity consumption is amongst the lowest in the world,” the study said.

“With the construction of large-scale gas or coal power plants likely to take many months, and many investors likely to remain wary of committing significant investment in large scale power capacity until they are more certain about the political and economic landscape, we believe that temporary power providers such as APR Energy will remain well placed to capitalise on demand for power in the interim.”

US firm APR Energy in June installed a 100-megawatt temporary gas-fueled power plant in the Mandalay region to operate on a two-year contract. But if the contract is not renewed, APR can dismantle and remove its equipment.
Fleet Expansion for Air Mandalay to Boost its Regional Reach

Burma’s domestic airline Air Mandalay is buying six new Japanese-made aircraft, each costing around US$40 million and with a passenger capacity of just under 100 people.

The Rangoon-based airline said it had chosen the Mitsubishi MRJ90 to both update its ageing turbo-prop fleet and give it new capacity and range to expand in the region.

The MRJ90s—Japan’s first domestically developed civilian commercial aircraft for years—will be delivered from 2018.

In the meantime, the airline is also purchasing six Embraer Regional Jets from Brazil. This plane can carry about 50 people.

“Our plan is to expand our route structure in order to service our expanding customer base as the country’s air travel requirements continue to show record growth,” Air Mandalay chief executive Gary Villiard said in a statement.

The purchase agreements were made at Britain’s Farnborough air show, said Myanmar Business Today.
Burma-China Trade Gap Rockets as More Chinese Goods Flood In

The trade gap between Burma and China is widening with the import deficit growing to around $1.2 billion in the financial year ending in March, according to government figures.

Official imports from China in the 2013-2014 financial year totaled $4.1 billion, compared with Burma’s recorded exports to China, worth $2.9 billion, said the National Planning and Economic Development Ministry, quoted by Eleven Media.

In the two previous financial years, imports and exports between the two neighbors were fairly even.