The Irrawaddy

The Irrawaddy Business Roundup (May 31, 2014)

Yoma Increases Investment Grip on Burma’s Mobile Phone System

Burmese-owned conglomerate Yoma Strategic Holdings has increased its interest in Burma’s nascent mobile phone network.

Yoma’s subsidiary YSH Finance raised its stake in Digicel Asian Holdings from 8 percent to 25 percent, media reports said this week.

The stake increase would make Digicel Asian Holdings an associated company of Yoma, said The Edge business news in Singapore.

Yoma is registered in Singapore but controlled by Burmese businessman Serge Pun and has interests in real estate, agriculture, vehicles and tourism, as well as telecommunications.

Digicel Asian Holdings was created as a joint venture by Pun and Irish businessman Denis O’Brien, chief of global telecommunications firm Digicel, after their bid for one of the two mobile phone network licenses in Burma failed. It has secured a contract with network developer Ooredoo to build and lease a network of mobile phone masts in Burma.

Digicel has spent more than US$25 million “assembling its network of mast sites” in Burma, a recent Irish Times report said.

Business, Govt Leaders Put Infrastructure Top of Forum Agenda

Tackling Burma’s infrastructure problems such as poor roads and railways and a general lack of electricity will be a main theme of a business leaders’ conference to be held in July.

The conference, chaired by President Thein Sein, will be the first under the auspices of the newly formed Myanmar Business Forum, which is to receive assistance from the International Finance Corporation, said local media reports.

A venue and date for the forum have yet to be announced, but the Union of Myanmar Federation of Chambers of Commerce and Industry suggested it would be at the end of July.

Other development issues to be discussed by the forum will be agriculture, fishery, forestry, banking and finance, hotels and tourism, said Eleven Media.

Tourism is major foreign revenue earner for Burma and is one of the fastest growing business sectors, but it is also hampered by poor infrastructure, said the travel trade magazine TTR Weekly.

“Tourism experts say due to poor infrastructure and a shortage of suitable transport, ecotourism tours are more expensive than similar tours sold in neighboring countries,” reported TTR Weekly.

Oil Imports Grow as Burma’s Refineries Fail to Cope

Burma is importing record volumes of refined fuels such as diesel and petrol, and the actual amount might be much higher than official figures suggest because of smuggling, a report said.

Demand in the financial year to March was 40,700 barrels per day (bpd), according to Ministry of Energy figures. That’s a rise of 5 percent over the previous year, but Reuters quotes unnamed fuel traders saying last year’s increase could have been up to 25 percent if smuggled imports via Thailand are included.

Burma’s three small refineries in theory have a combined capacity of about 56,000 bpd, but two of them are so decrepit they “barely function,” said Reuters.

The rising demand is coming not only from the country’s growing numbers of car owners but factories dependent on diesel for electricity generators and to operate machinery.

More than 50 percent of official imports are handled by Chinaoil, a subsidiary of China’s state-owned PetroChina, and Hin Leong of Singapore, said Reuters.

But the recurring problem of poor infrastructure hampers fuel distribution, said Reuters, and also limits volumes coming into Burma by sea.

“Only smaller tankers carrying about 6,000-10,000 tonnes of oil can enter the shallow [Rangoon] River estuary to reach [Rangoon] and Thilawa ports designated to receive oil,” said Reuters.

Renewed Interest in Salween Dams May Result From Thailand’s Coup

Thailand’s military coup is expected to trigger renewed efforts by Thai business interests to build hydroelectric dams on Burma’s Salween River, an industry report said.

The Bangkok energy ministry’s permanent secretary has put forward a set of proposals to the military-run National Council for Peace and Order to re-start a clutch of energy projects which have been stalled by recent political turmoil and government paralysis, said Platts energy agency.

The proposals include opening up to international bidding a new batch of onshore and offshore oil and gas blocks and electricity expansion projects, especially hydroelectric schemes in Laos and Burma.

The state-owned Electricity Generating Authority of Thailand has backed controversial dams in Laos being built mainly to provide electricity to Thailand, and has shown interest in hydropower projects on Burma’s Salween, which runs close to Burmese-Thai border.

“The energy ministry had been working on an energy reform plan over the past months, although this has been delayed by the political instability,” Platts said.

The coup will also provide the stability to encourage Thai oil refineries to raise exports again, said Platts. Thailand has been a major source of fuel oils for Burma.

UN Bid to Replace Poppies Stalled by Lack of Access in Shan State

Despite a big surge in opium production in 2013, the United Nations Office on Drugs and Crime (UNODC) said it still being refused access to some poppy growing areas of Shan State.

The UNODC program to assist poppy farmers in southern areas of Shan State to develop other marketable crops and help improve market access with new roads is stalled because UN teams have not been given permission by the Naypyidaw government, the agency’s country manager Jason Eligh told Mizzima.

There was a 26 percent increase in the production of opium in Burma for making heroin in 2013, the UNODC said.

UN development assistance provides alternatives to earn income. Poppy farmers in Shan State lack access to markets outside the drug trade, Eligh said. “Developing regional markets or creating access to existing markets by building roads can provide farmers with opportunities to sell different crops,” Mizzima said, quoting the UN official.

“I don’t know if there is a disagreement between the Tatmadaw and government. I don’t know if there’s a disagreement between elements in Shan State,” Eligh said of the stalled access.

Firms From 11 Countries Show Interest in Investing in Thilawa Zone

More 40 foreign companies have expressed interest in acquiring factories or warehouses in the Thilawa Special Economic Zone outside Rangoon, a government minister said.

The companies come from 11 countries, the Deputy Minister for National Planning and Economic Development Sett Aung was quoted by Eleven Media saying. Permits to build factories will be made available soon, but it’s not clear who will actually invest.

The zone site is being developed by Japanese construction firms backed by the Japan International Cooperation Agency.

Several Hong Kong-based garment and textile companies are reportedly among the most definite investors in factories.