Economy

The Irrawaddy Business Roundup (March 1, 2014)

By William Boot 1 March 2014

Burma Improves Investor Confidence But Corruption Rules, Says Report

Burma’s government is making the country more attractive to foreign businesses but the improvement and enforcement of regulations which reassure investors is “slow and lacks sufficient transparency,” a new study said.

The country’s adoption of the international Convention on the Recognition and Enforcement of Foreign Arbitral Awards is a positive step, but fitting it into Burma’s “complex and ill-developed legal framework will be a major challenge,” said the January-March Country Risk Report by UK business analysts Maplecroft.

“Investors will find that the business environment is skewed in favor of local conglomerates such as the Myanmar Economic Corporation,” the study said.“These businesses have strong ties to the military, and have a dominant market position in sectors ranging from fuel distribution to real estate.”

It also warned that foreign investors partnering local businesses “face very high risks of corruption and mismanagement”.

However, on the positive said Maplecroft said there was little risk of the state nationalizing investor assets.

It warned that medium-term economic growth in Burma could be upset by a labor skills shortage even though there was a large and underemployed workforce.

“Foreign firms looking to invest in agribusiness, forestry, extractives, construction, manufacturing and services are struggling to find qualified local workers,” said Maplecroft, in part because of a poor education system.

The return home of more Burmese now working abroad would be a benefit, it suggested.

‘Policy Vacuum’ in Thailand Leaves Burmese Workers Facing Extortion

Burmese and Thai racketeers are cheating tens of thousands of Burmese workers in Thailand amid a “policy vacuum” on employment visas, a workers’ rights group has alleged.

Failure by Thai authorities to implement a transparent visa renewals system for migrant workers whose visas are expiring means that there are now more than 100,000 officially registered Burmese in Thailand illegally, said the Migrant Worker Rights Network (MWRN).

“Workers are being dismissed by employers and cheated by agents and employers offering fake or expensive documents,” said MWRN in a statement urging the Burmese government to intervene to help. “More worryingly, such workers are increasingly being arrested and extorted by law enforcement officials or forced to buy unlawful protection cards in some provinces.”

The governments of the two countries discussed the issue in the middle of 2013 but the subsequent political chaos in Bangkok with many government offices disrupted by protesters for months means little has been done to establish a proper visas extension scheme.

“This policy vacuum and lack of procedural clarity means employers and workers must rely on expensive and unregulated Thai and [Burmese] labor agents or brokers for information and to navigate complex procedures,” said MWRN.

Major Japanese Retailer Eyes Shopping Malls in Rangoon

Japanese retailer Aeon Group is reportedly planning to promote its Topvalu and Jusco brand products in Burma.

Aeon will open offices in Rangoon soon as part of investment plans to develop retail outlets in Burma, said the Japanese news agency Kyodo.

Aeon, the second-biggest retail business in Japan, has been expanding in Southeast Asian and now operates shopping malls in Vietnam, Malaysia and Thailand, and is planning ventures in Indonesia and Cambodia.

Aeon hopes to open an office in Rangoon in March to “lay the groundwork for launching a shopping mall in the country’s former capital and largest city by 2016,” said Kyodo.

Bagan Visitor Fees ‘Could Fund an Improvement in Tourism Facilities’

Visitor entrance fees to the Bagan ancient city and temples site will total around US$3 million in a full financial year and some of the money could be used to improve tourism facilities in the popular area, a travel trade newspaper said.

The total number of annual visit to the sprawling site is fast approaching 200,000 and the entrance fee was increased to $15 per person in July last year.

The Myanmar Tourism Federation is negotiating to take over collection of the fees from the Ministry of Culture, said TTR Weekly.

“The federation will pay 85% of the fees to the government, while 5% will go towards Bagan’s regional development projects and the remaining 10% will be used to ensure [Burma] is promoted at international travel forums and conferences,” said the newspaper, based in Bangkok.

Media reports have said that the swell of visitors to Bagan over the past two years has put a strain on services, and a shortage of accommodation has encouraged some younger tourists to camp overnight inside the site.

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