The Irrawaddy Business Roundup (September 13, 2014)

By William Boot 13 September 2014

Five Small Airports to Be Privatized, But 25 Others ‘Not Commercial’

Five of Burma’s 30 small airports have been given approval to proceed with plans to sell or long-lease them to private operators, a travel trade report said.

Burma’s Civil Aviation Department named the five to be privatized as Bagan-Nyaung U, Heho, Tachilek, Thandwe and Kyaukphyu airports.

“Bagan-Nyaung U Airport, which has seen a massive influx of tourists, could draw the most attention from private companies,” the chief of the Directorate of Civil Aviation, Kyaw Soe, was quoted by TTR Weekly as saying.

“The Directorate was given the job of overseeing the privatization of 30 airports, which will be leased or sold to private companies,” the trade paper reported.

“However, only five of the airports have the green light to negotiate with private firms at present and many of the airports listed are decades away from being profitable ventures.”

The small airports sell off comes as Burma prepares for an influx of millions more tourists.

Ministry of Hotels and Tourism has forecast up to 5 million people visiting Burma in 2015, up from 2 million in 2013 and a predicted 3 million this year.
Contracts up for Grabs to Develop Kyaukphyu Special Economic Zone

Foreign and Burmese firms will be invited from Sept. 15 to bid for one of three construction contracts to develop the planned Special Economic Zone (SEZ) around the central coast town of Kyaukphyu, Arakan State.

Twelve companies have already expressed interest in investing in the development, likely to initially cost US$200 million, said the Kyaukphyu economic zone management committee, according to Eleven Media.

The development will be divided into three sections, according to the committee: a deep-water port, an industrial estate and a residential area.

About 4,000 acres of land around Kyaukphyu have been allocated for the SEZ, said Eleven Media.
The planners are targeting textiles, construction materials, food processing and general manufacturing for the industrial estate.

Maung Muang Thine, vice-chairman of the Kyaukphyu economic zone management committee, said that the committee would choose contract winners by the end of this year,

Burma’s Ministry of Electric Power is meanwhile assessing four bids to build a 50-megawatt gas-fueled power station in the SEZ.
New $94m River Bridge to Boost Burma-Thailand Trade

A new commercial traffic bridge is to be built across the River Moei, which forms part of the border between Burma and Thailand.

It will cost about US$94 million, mostly paid for by Thailand, and will supplement the old bridge linking Mae Sot on the Thai side with Burma’s Myawaddy, said World Highways magazine.

Construction is scheduled to begin in early 2015 and be completed within a year, it said. The new bridge will have a weight capacity of 100 tons.

The Mae Sot-Myawaddy crossing carries most of the land trade between the two countries. A new bridge was mooted in 2009 by the chamber of commerce in Thailand’s Tak Province, which said the old bridge was inadequate for growing trade.

The Mae Sot area is one of several Thai areas being considered for special border trading status under a plan put forward in August by the military-installed National Council for Peace and Order.
Sanctions ‘Legacy’ Frightening US Firms From Investing in Burma

US government encouragement to American businesses to invest in Burma is being “hindered by the legacy of sanctions,” a report said.

“Few US banks are willing to transfer money into or out of the country. And even money transfers through a third country like Singapore often get blocked by US firms if Myanmar appears in a company name,” said the Wall Street Journal.

The US business newspaper cited the case of Daniel Rathbun, an American businessman who visited Burma recently and was subsequently hassled by his bank. He had accessed his account from a computer in Burma and SunTrust Banks said this contravened its rules and threatened to close his account.

“Many banks see allowing any Myanmar transactions as problematic. Despite lifting of the broad ban, US authorities still blacklist more than a hundred Myanmar companies and individuals because of alleged relationships with the country’s military,” said the Journal.

“While US State Department officials are encouraging American business to invest in Myanmar, the banking woes and the blacklist have stopped many companies from doing so,” it said.

“Fewer than a dozen companies have reported investing more than half a million dollars in Myanmar. Those include Coca-Cola, Western Union and Gap Inc.”
Vietnam Bids to Invest in Burma’s Energy, Finance and Building Sectors

Vietnamese business investment in Burma could top $1.5 billion by the end of 2015, a trade association predicts.

At present, Vietnam has seven projects in the country totaling $600 million in value, the biggest of which is Hoang Anh Gia Lai Group’s hotel, apartments and offices complex in Rangoon, with a price tag of $440 million, said The Vietnam News Agency (VNA).

“The Association of Vietnamese Investors in Myanmar (AVIM) hopes Myanmar will accelerate the licensing process for Vietnamese projects in the fields of textiles, agriculture, health care, energy, construction material production, finance and banking,” said VNA.

AVIM chairman Tran Bac Ha announced the $1.5 billion target at a meeting with the Speaker of Burma’s Parliament, Shwe Mann, who was visiting the Vietnamese capital Hanoi, said VNA.

AVIM members include Vietnam’s state-owned oil and gas monopoly PetroVietnam and Vietnam Airlines.