More Foreign Investment in Infrastructure ‘Depends in Thilawa Success’
Future foreign investment in infrastructure development in Burma hinges on the outcome of the Thilawa Special Economic Zone (SEZ), a business analysis company predicted.
“We believe the outlook of [Burma’s] construction sector is significantly dependent on the success of the Thilawa SEZ and future SEZs such as Dawei and Kyaukphyu,” said a study by Business Monitor International (BMI).
The strong investment in Thilawa, on the edge of Rangoon—mostly by Japanese firms—was positive and pointed to further foreign investment in Burma’s “severe deficit in infrastructure, industrial and commercial buildings,” BMI said. But many overseas businesses are waiting to see how successful the Thilawa project turns out to be.
Japanese companies have taken the majority investment share in Thilawa, primarily with the backing of conglomerates Mitsubishi, Marubeni and Sumitomo, plus the Tokyo government-financed Japan International Cooperation Agency.
These Japanese interests have a combined 49 percent stake in Thilawa.
Plans for SEZs at Dawei on the southeast coast and Kyaukphyu, where China has already invested in an oil transhipment port, are unlikely to progress much until Thilawa is completed and working, said BMI.
Burma’s Offshore Oil, Gas Auction Involves ‘Mysterious’ Firms
The Naypyidaw government’s still-not-finalized auction of offshore oil and gas blocks lacks real transparency, a business report said.
The criticism, in the London Financial Times, comes as Burma’s application to join the Norway-based international Extractive Industries Transparency Initiative was given candidate status on July 2.
Winning bids for the blocks include major international companies such as Chevron and Royal Dutch Shell, but also a “clutch of foreign and local companies about which little has been revealed,” said the Financial Times.
It named two foreign firms as having “mysterious” backgrounds: Berlanga Holding of the Netherlands and Caog of Luxembourg, both linked to Shyngys Kulzhanov, a Kazakhstan energy entrepreneur.
It also raised questions about the true ownership of Burmese firms IGE and UNOG, which “have historically been controlled by Pyi Aung and Nay Aung, sons of a hardline pro-military politician.”
“Critics say the sell-off is a worrying regression from a widely praised mobile phone license round last year. One [Burma] analyst who asked not to be named describes the oil auction as ‘second rate’ and a ‘missed opportunity,’” the business paper said.
Although winners of the offshore blocks were announced in March, each is still privately negotiating terms with the Ministry of Energy and the state Myanmar Oil & Gas Enterprise.
The Financial Times quoted Matthieu Salomon, Asia-Pacific program manager of the Natural Resource Governance Institute, as saying: “You do not change a political culture of decades of secrecy and no communication overnight.”
EITI has given Burma 18 months to submit a first report on the state of transparency in its oil and gas sector after which a decision on membership of the body will be made.
French Oil Search Firm Opens Rangoon Base for ‘Substantial’ Prospects
French hydrocarbons survey specialist CGG has opened an office in Rangoon to “service and support anticipated growth in [Burma’s] oil and gas exploration sector,” the firm said in a statement.
CGG carries out below-surface electronic surveys to map out potential oil and gas reservoirs.
The Paris-based firm said it was the first international geoscience company to open up in Burma.
“With the [Burma] government’s recent award of 16 onshore and 20 offshore blocks to international and local oil and gas companies, we foresee a quickening in the pace of exploration activity over the next 18 months,” CGG Executive Vice President Sophie Zurquiyah said.
The firm said it was employing a “team of highly experienced Burmese geophysicists” in its Rangoon center.
River Dams Main Solution for Electricity Shortage, Says Power Ministry
The government has given a strong indication that it intends to permit more hydroelectric dam development despite popular public opposition.
Electricity generated from hydropower projects will provide 37 percent of the country’s energy needs by 2030, Deputy Minister for Electric Power Maw Tar Htwe reportedly said.
This would amount to the largest share of a proposed electricity generating capacity of 23,500 megawatts by 2030, the minister was quoted by Myanmar Business Today as saying on July 1.
That capacity would be more than five times today’s level of 4,360 megawatts, which is enough to provide electricity to barely 30 percent of Burma’s population, and then intermittently.
“Hydroelectricity will produce over 37 percent of the [ministry’s planned] power output, with 20 percent coming from natural gas, 33 percent from coal and more than 9 percent from other renewable energy sources,” said Myanmar Business Today, quoting Maw Tar Htwe.
A controversial Chinese-financed 6,000-megawatt hydro dam project on the Irrawaddy River at Myitsone in Kachin state remains suspended by the Naypyidaw government due to public opposition.
Several hydro-dam project proposals, involving Chinese and Thai business interests, are still in the pipeline for the Salween River.
Rice Production Must Rise and Home Use Fall if Exports to Grow: Expert
Poor productivity and high domestic demand stand in the way of Burma becoming a major international rice exporter again, an industry expert said.
“[Burma] has huge natural resources for growing rice like the Irrawaddy Delta, however, average rice yields have been flat and actually dropped slightly over the last decade,” said Adam John of the Agricultural and Food Policy Studies Institute.
“Domestic rice consumption is still very high,” John said in an assessment for the rice industry publication Oryza.
Although Burma is a substantial rice producer—ranked seventh in the world—export trade volumes are “not consistent year to year,” John said. “It may be argued that Burma sees international rice markets as a way of getting rid of surplus rice stocks.”
But John noted that more rice might become available for export if Burmese continue a trend to eat less of the crop.
“Domestic rice consumption is still very high with 50 percent of daily calorie consumption per person coming from rice, but there has been a decreasing trend where locals are substituting rice for other foods,” he said.