Chinese Firm Gets Go Ahead for $3b Dawei Refinery
A massive Chinese government-backed project to build an oil refinery in southern Burma was among the dozens of deals rushed through by the previous government before it left power at the end of March.
According to a report from Reuters on Tuesday, officials at the Myanmar Investment Committee (MIC) have signed off on the state-controlled Guangdong Zhenrong Energy’s project for Dawei, the coastal town in Tenasserim Division that is the site of a planned special economic zone (SEZ).
The 100,000-barrel-per-day refinery, which will include a terminal, oil storage and distribution facilities, is estimated to represent an investment of US$3 billion, Reuters said.
BMI Research, in an analysis sent out this week, said the project would reduce Burma’s reliance on imported refined fuels. In the short term, however, the refinery may have to rely on imported crude until new domestic oil discoveries are made, it said.
“The approval for Guangdong Zhenrong’s project signals Myanmar’s growing appetite for attracting greater foreign investment into its aging refining sector,” BMI said.
“Meanwhile, the firm’s planned investment will be viewed favorably by China, as it falls in line with the country’s broader maritime Silk Road initiative that seeks to expand Beijing’s economic and geopolitical influence in Southeast Asia, among other regions.”
The MIC approved a total of 48 projects during its last meeting on March 25, raising concerns that projects were rushed through ahead of the democratically-elected National League for Democracy (NLD) taking power.
But the Dawei refinery project will also raise concerns because of the local partners involved, who will control a combined 30 percent of the project, Li Hui, a vice president and head of refining at Guangdong Zhenrong, told Reuters.
The first local partner is Union of Myanmar Economic Holdings Limited (UMEHL), a Burmese military-controlled company.
But Burmese tycoon Tay Za, who is blacklisted by the United States over his links to the former military government, is also involved. Tay Za is the chairman of the Htoo Group, named by Reuters the parent company of Yangon Engineering Group, a partner in the Guangdong Zhenrong project.
The state-run Myanmar Petrochemical Corp. is also a partner, Reuters said.
Guangdong Zhenrong representatives spoke publicly about plans for a refinery in Dawei as early as 2012. That was before the government canceled the original concession for the Dawei SEZ after the developer, Thailand-based Ital-Thai Development (ITD) had problems funding the project.
A new agreement, also involving ITD, was signed last year, with the government of Japan pledging to put up some of the cost.
The project has raised concerns about the impact on local people and on the local environment in Dawei. Many fear that a planned deep-sea port and a road that would put the area within a few hours of Bangkok could degrade a pristine stretch of coastline.
As well as coming during the lame-duck period after the military-backed Union Solidarity and Development Party (USDP) suffered a massive defeat at elections in November, the approval of the Guangdong Zhenrong project may also be unpopular since a Chinese company will be the majority owner, with 70 percent.
Chinese developers to have a poor record of dealing with local communities and heeding environmental concerns in Burma. A Chinese company was also controversially granted the tender to build a port and industrial development in Arakan State during the final months of the last government.
Australian Miner Hopeful of Long-Awaited Approval in Karenni State
Australian mining company Eumeralla Resources believes it will get approval to begin mineral exploration in Burma’s mountainous Karenni State before the end of September this year.
New mining rules introduced late last year are expected to bring a flurry of foreign investment into the sector. However, as a document the company has produced in order to drum up investment warns, the regulatory environment for extractive industries in Burma is still uncertain, especially given the recent transfer of power.
“Investors should note that Myanmar Government’s policies on mining are especially fluid as a new Government has recently been appointed, which may result in material changes to mining laws or regulations,” the document, published on Eumeralla’s website on April 5, says.
The Australian company first began applying for permission to explore for tin and tungsten in Karenni State in 2013, but the project has been held up attaining approvals at different levels of government.
The company said it had “conducted successful negotiations over the license area with government authorities and expects the exploration permit to be granted in Q2 or Q3 of calendar year 2016,” referring to a period from the start of this month to the end of September.
The document is a share prospectus designed to attract more investment for various projects in which Eumeralla is involved. It says the company hopes to raise a total of Aus$1.3 million, or about US$980,000, in total. Some US$340,000 of that is intended for the company’s project in Burma.
“Funds will be used to finalize the formal grant process and begin mineral exploration at the exploration permit in Myanmar, the application for which is held by Mawsaki Mining Co., Ltd in which the Company holds a 70% interest,” it says.
The prospectus does not state who holds the other 30 percent interest in Mawsaki, a matter that has raised concerns that the project could fuel conflict in Karenni State.
Previous Eumeralla filings say the shareholder is Myanmar Energy Resources Group, which was described as a “Myanmar conglomerate with operations across a diverse range of business sectors.”
As The Irrawaddy has previously reported, local civil society group the Molo Women Mining Watch has linked Mawsaki to the Karenni Nationalities People’s Liberation Front (KNPLF), an ethnic armed group that allied with the Burmese military after signing a ceasefire in 1994, and became an official Border Guard Force in 2009.
Garment Exports Predicted to Reach $12b by 2020
Burma’s garment exports could be worth $12 billion by the year 2020, according to a report carried in state media, which also predicted that the apparel industry would employ some 1.5 million workers by that time.
The Global New Light of Myanmar attributed the ambitious figures to an unnamed “international textiles monitoring body,” but reports elsewhere said the prediction came from the Myanmar Garment Entrepreneurs Association.
Garment exports were badly hit by international sanctions in the early 2000s, but since 2013 a number of international brands have begun sourcing from the country once more.
Exports were expected to recover to about $2 billion last year, according to the Myanmar Garment Manufacturers Association. The sector employs about a quarter of a million people, the MGMA says.
Abuses Reported in Korean-Owned Factories
A new report claims to have uncovered labor abuses at garment factories owned or part-owned by South Korean firms.
Local group Action Labor Rights said in its report late last month—entitled “Under Pressure”—that it had interviewed 1,200 workers at 39 different factories with South Korean links between April and June last year, comparing the findings to what’s required of employers under Burmese law.
The survey, the group’s report said, “reveals significant non-compliance on the part of many Korean factories, particularly with laws on working hours and overtime. In factories surveyed, excessive overtime appeared to be the major issue of concern, both from a legal compliance perspective, but also in terms of the key issue impacting on the health, well-being and safety of factory employees.”
It said almost 30 percent of factories did not keep to a rule that limits overtime to 16 hours a week. The majority of workers, 62 percent, said they were not allowed to refuse to work overtime.
“This is unsurprising given that almost two-thirds of workers [63%] said that their take-home pay was not enough to live comfortably,” the report said.
The survey also found discrimination against trade union leaders, and that reports of sexual harassment in the workplace were an issue.
“On sexual harassment, 7% of female respondents reported that either they had such experiences or they heard their female co-workers had such experiences,” it said.
Thai State-Linked Firm to Prioritize Gas Power
A branch of Thailand’s state energy company is prioritizing gas-fired power in Burma, according to a Burmese state media report.
The Global New Light of Myanmar said Wednesday that Global Power Synergy Co. had power generation projects totaling 3,000 megawatts in the works in Burma, citing the company’s chairman and chief executive, who it did not name. GPSC’s president is Dr. Toemchai Bunnag.
The state newspaper said GPSC—which is a spinoff of Thailand’s state energy conglomerate PTT—was planning to expand around the region as the Association of Southeast Asian Nations’ economic integration plans take hold.
“Establishment of gas-fired power plants is on the company’s list of priority,” the report quoted GPSC’s CEO as saying. It said the company was involved in two plants that would produce 500 and 400 megawatts of power each, as well as the construction of a 2,000 megawatt coal-fired power plant.
It did not give locations for the planned power plants, but GPSC has previously been named as a partner in a project for gas power in Thanlyin Township, just outside of Rangoon.
Bangkok-listed public company PTT is the majority shareholder in GPSC. PTT’s oil and gas exploration and production arm is also involved in offshore gas projects in Burma.