The Irrawaddy Business Roundup (Feb. 6, 2016)

By Simon Lewis 6 February 2016

Ooredoo Chief Says Burma Commitment ‘Pretty Much Intact’

Having invested a massive $1.7 billion in Burma since 2014, Qatari telecommunications firm Ooredoo has pledged to double down on its investment, despite lagging behind its rivals in the battle for subscribers, Reuters reports.

The newswire this week published an interview with Ooredoo Myanmar CEO Rene Meza, who took the helm at the company last year.

According to figures published on its website, Ooredoo had 4.8 million subscribers in Burma by September last year. Reuters said market leader MPT, the part state-owned former monopoly holder, now claims 18 million subscribers. Telenor of Norway, which entered the market just after Ooredoo, has raced to 12 million. The figures for Telenor and MPT may be more up to date than Ooredoo’s, which are the most recent the firm has published.

The interview attributed Ooredoo’s slow progress to an initial focus on higher-value data services, with Meza declaring that the new approach would be “mass market,” meaning a lowering of data tariffs and more focus on distribution.

“The initial approach when we launched services was not a mass market approach,” Meza told Reuters. “As you can imagine, it is a fast moving market. One year of delay, in terms of the right commercial execution, basically means the gap that you see in the market today.”

The report made no mention of whether a boycott against Ooredoo called by Burma’s Buddhist monk-led nationalist movement had an impact on the company, which comes from Muslim-majority Qatar.

Meza dismissed the notion of an Ooredoo pullout, adding that another $350 million would be invested in 2016.

“We don’t see any slowdown in investment, any slowdown in executing our strategic initial plans for Myanmar,” he was quoted saying. ”Our commitment to continue investing remains pretty much intact.”

IFC Could Fund Rangoon Container Port

The World Bank’s International Finance Corporation (IFC) is considering loaning a total of $200 million to a company operating a container port in Rangoon, according to a filing on the organization’s website.

IFC’s summary of the proposal said it would involve funding capital investment in the port and refinancing bridge loans already taken by MyanmaAnnwa Swan A Shin Group, a local family-owned company that operates the Myanmar Industrial Port on the Rangoon River.

“The proposed IFC investment consists of a US$40 million IFC A Loan, a US$40 million convertible C loan and a US$120 million in parallel loans,” it said.

A justification of the potential investment said the funding would help to expand the port, which already handles 278,000 containers annually and holds a 40 percent market share, according to IFC.

“The port will help to unlock the potential of the international trade, and thus will directly and indirectly support job creation and economic development in the region,” it said, adding that government revenues would also be increased by rising trade.

“The Project will be among IFC’s first investment[s] in the transport sector in Myanmar. It will have a demonstration effect and will encourage private sector investors to develop more infrastructure projects in the country.”

The filing named the owners of MyanmaAnnwa Swan A Shin Group (MAS) as Captain Ko Ko Htoo and his wife and son, Sandar Aung and Min Thiha, respectively. The IFC described Captain KoKoHtoo as “a Myanmar national with over 15 years of international shipping experience.”

The Myanmar Industrial Port’s website states that the privately owned port has been in operation since 2003, when it “was founded with the guidance and assistance of the Head of State,” which at the time was the now retired junta leader Sen-Gen Than Shwe.

According to a state media report from the time, the port was officially opened by Khin Nyunt, then Secretary-1 of the State Peace and Development Council, in a ceremony that involved Captain Ko Ko Htoo presenting “gifts” to the junta’s former spy chief.

“The ministry had permitted private entrepreneurs to undertake port services in cooperation with local and foreign investors, as long as the services are in accord with the Myanmar Investment Law,” the port’s website says. “MIP was built with MAS as the sole investor, with MAS funding and overseeing the port construction and operations 100%.”

Hong Kong Garment Investor Talks Political Uncertainty

The CEO of Hong Kong textile conglomerate Lawsgroup has said the Burmese business environment remains uncertain due to ongoing political machinations.

In an interview with the Financial Times, published this week, CEO Bosco Law said the company—which also operates in Bangladesh, Vietnam and mainland China—had set up a factory close to Rangoon last year.

Lawsgroup employs more than 2,000 workers in a t-shirt factory north of the commercial capital, the report said.

The CEO, whose grandfather founded Lawsgroup in Hong Kong, said local politics and inexperienced government officials made doing business difficult.

“Opening a new factory is always tough,” Law was quoted saying. “Everything is new in Myanmar. Even if you talk to the [government’s] commerce department, they don’t really know the policy…everything is a guess, everything is grey.”

Although the National League for Democracy is now the largest party in parliament, it is still unclear who will be the next president.

“Who knows what will happen? But still, if we have a 70 per cent chance [of success] we will go for it,” Law was quoted saying.

Outgoing Electric Power Minister Meets Chinese on Hydro Projects

The outgoing Burmese government, which runs the country only until the end of March, met with a Chinese hydropower industry representative this week, and reportedly pledged to prioritize Chinese-backed dam projects.

The state-run Myanmar International Television (MITV) reported the meeting Tuesday between Minister for Electric Power Khin Maung Soe and Liu Qi, the chairman of the China-Myanmar Electric Power Cooperation Commission. Deputy Minister for Electric Power Maw Thar Htwe was also present, it said.

The commission was established following an agreement signed by Burmese President Thein Sein and Chinese Premier Li Keqiang in November 2014. MITV said the meeting this week was the commission’s third.

“China has invested in Myanmar’s electric power sector especially in hydropower generation,” the report said. “18 hydropower projects have been agreed to be implemented as priority at the second commission meeting.”

The report did not go into the recent history of Chinese-backed hydropower in Burma.

One of the first acts of the new Thein Sein administration in 2011 was to suspend the Chinese-backed Myitsone hydropower project, with the president declaring that work on the dam would not move ahead under his watch.

Since then, the China Power Investment Corporation, the firm that was behind the $3.6 billion plan to dam the upper reaches of the Irrawaddy River, has been lobbying to get the project restarted. However, it is unclear what approach an NLD-led government will take to an inherited—and highly unpopular—project like Myitsone.

Singapore Firm Announces Work on Rangoon Shopping Center

Singapore-based Solibuild Construction Group has won $9.4 million worth of work in Burma in connection with a shopping center refit.

The company said it had been awarded a design and build contract “for the addition and alteration works of St John Shopping Center” in Rangoon.

The Jan. 26 statement gave little details about the shopping center or its location, and did not name the local partners with whom Solibuild will work.

“The Project is awarded by a joint venture between 2 reputable companies in Myanmar, which have activities in retail and real estate development,” it said. “The Project is expected to commence in the first quarter of 2016 and is to be completed within 8.5 months from the commencement.”