The Irrawaddy Business Roundup (Dec. 19, 2015)

By Simon Lewis 19 December 2015

Survey Suggests Minimum Wage Still Inadequate for Burma’s Garment Workers

The results of a recent survey by UK-based charity Oxfam suggest that Burma’s garment workers will still struggle to support themselves and their families, despite the country adopting its first minimum wage.

A new minimum of 3,600 for a basic working day was introduced in September, applying to companies with 15 or more staff in all sectors of the economy. Factory owners have complained that the minimum will make the burgeoning local garment manufacturing industry uncompetitive compared to regional rivals.

Oxfam on December 9 published an in-depth survey of garment workers conducted shortly before the introduction of the minimum wage. A total of 123 workers from 22 different factories inside Burma’s industrial zones were interviewed by researchers for the survey, which was conducted in collaboration with local NGOs and trade unions.

The survey found that many workers were concerned about safety in their workplaces, with more than one in three saying they had been injured in the course of their work. It also found widespread fears that factory buildings were not safe in the event of a fire. Respondents also alleged that supervisors used verbal abuse to encourage them to work faster, according to Oxfam.

The study found that almost all workers do a significant amount of overtime, and on average earn a total of $98 per month.

“Despite working six days a week and doing an average of 10.5 hours overtime each week, garment workers are not earning enough to adequately support themselves and their families,” the report said.

The new minimum wage works out to about $83 per month for someone doing basic eight-hour days. Oxfam said that its research showed that workers will still be forced to work many hours of overtime, since the minimum “will not be enough for workers to look after themselves and their families.”

The report called on local manufacturers and international brands sourcing from Burma to do more to improve conditions for workers, ensure factories give workers secure contracts, and make sure workers are paid a living wage.

“Global brands and local employers in Myanmar must seize this moment of political and economic change—and place dignity and decency at the heart of work,” Winnie Byanyima, executive director of Oxfam, said in an introduction to the report.

Yoma Strategic Forms Joint Venture with Mitsubishi

Yoma Strategic Holdings has announced a new joint venture with Mitsubishi Corporation to distribute the Japanese company’s automobiles in Burma.

The Singapore-listed arm of Burmese tycoon Serge Pun’s Yoma Group announced the joint venture on Wednesday.

In an announcement to the Singapore Exchange, CEO Melvyn Pun wrote that Yoma Strategic’s subsidiary, Yoma Nominee Limited, would hold 50 percent of the shares in new company MM Cars Myanmar Limited, with Mitsubishi holding the other 50 percent. The new company was incorporated in Burma with paid-up share capital of $8 million.

“The business of MMCM shall be distribution (wholesale), retail sales, after-sales services, maintenance services and importation of motor vehicles and spare parts manufactured by Mitsubishi Motors Corporation in Myanmar,” the announcement said.

“The joint venture with Mitsubishi Corporation formalizes our collaboration in developing the Mitsubishi Motor business in Myanmar over the past year,” Melvyn Pun was quoted saying in a press release.

Yoma has since May 2013 been operating two after-sales service centers in Rangoon, and a new showroom was officially opened this week, according to the announcement.

“We are excited that our new showroom, alongside with our service centres, will deliver a higher standard of service to our customers,” Melvyn Pun said. “Our Automotive segment is experiencing strong growth, and we are confident that the Mitsubishi Motors business will contribute meaningfully in the medium term.”

IFC Invests in Singapore-backed Microfinance Firm

The World Bank’s International Finance Corporation (IFC) has invested $1.2 million in a microfinance company operating in Burma that is backed by the Singapore government.

The IFC announced its equity investment in Fullerton Finance (Myanmar) Company Limited earlier this month.

According to its website, Fullerton is a joint venture between Fullerton Financial Holdings—a wholly owned subsidiary of the Singaporean government’s Temasek Holdings—and Burmese conglomerate Capital Diamond Star Group.

“Established in 2014, Fullerton Myanmar serves MSME [micro, small, and medium enterprises] customers through branches located in the 3 regions of Yangon, Ayerwaddy (sic) and Mandalay,” an announcement on the IFC’s website said.

“The company runs a dual urban/rural microfinance program through an innovative use of technology in the field to improve productivity and turnaround time. It aims to grow its customer base 20-fold from 10,000 customers to 200,000 customers by 2021.”

Malaysia’s OCK Group to Build More Than 900 Towers for Telenor

Malaysia’s OCK Group has confirmed that it will build 920 mobile phone towers for Telenor in Burma, investing some $75 million in the process.

The group, with local partner King Royal Technologies, has been contracted to build the towers and lease them back to the Norwegian mobile phone operator, according to a company announcement.

“OCK intends to build up to 3,000 telecom towers over five years. With the Telenor contract, OCK is positive in achieving its target,” the company said.

OCK signed an initial agreement with Telenor last month, and is one several companies providing towers to the company. Telenor says it will eventually lease about 9,000 towers across Burma to meet its contractual target of reaching 90 percent of the population.

Fellow Malaysian group Axiata has also entered Burma’s towers market through subsidiary Edotco, which recently bought a majority share in Myanmar Tower Company. The firm builds and leases towers to Telenor’s only private rival, Qatar’s Ooredoo.

State Airline Signs Deal With Hong Kong Cargo Firm

Myanmar National Airlines, which inaugurated a new flight between Rangoon and Hong Kong earlier this month, has appointed a local cargo firm as its ground handling agent.

Hong Kong Air Cargo Terminals Limited announced that it had been hired by the Burmese state-run airline, which has begun to fly international routes again after a revamp. The airline is flying four times a week between Rangoon and Hong Kong, and has also begun flying between Rangoon and Singapore.

“This new service is part of the exciting developments in Myanmar as a whole,” Hactl Executive Director Vivien Lau was quoted as saying in the announcement. “It’s a country with huge potential for international trade, and we are pleased and proud to play a part in the creation of its links with the world.”