The Irrawaddy Business Roundup (Jan 23, 2016)

By Simon Lewis 23 January 2016

CITIC Official Pledges Environmental, Social Protections for Kyaukphyu

A senior official at the Chinese company leading the consortium that will develop a port and industrial zone in western Burma has promised that the project will create jobs for local people and protect the local environment.

The award of the contracts to the state-owned China International Trust and Investment Corporation, or CITIC, has been met with concern from local civil society groups in Kyaukphyu, where the special economic zone will be constructed.

In an interview with Chinese state newswire Xinhua in Beijing, however, CITIC Construction’s vice chairman, Yuan Shaobin, reportedly made a number of pledges about the project, which he insisted was driven “purely by business value.”

“We need to find a way to preserve the environment while fundamentally improving the infrastructure, and share the dividends released by the projects with Myanmar and the local people,” Yuan was quoted saying.

The social impacts of the development would also be measured, he said, declaring that at least 2,000 jobs for local people would be created, and training opportunities, as well as schools, health clinics and emergency rescue services provided for the area, which is prone to cyclones.

Locals may respond that they have heard such promises before. The area is already the terminus of cross-country oil and gas pipelines connecting southwestern China’s Yunnan province with the Bay of Bengal.

Local activists say previous Chinese investments in Kyaukphyu have not involved sufficient local consultation and have not been transparent about what safeguards were in place to protect local communities and the environment.

In his interview, CITIC’s Yuan promised a “more orderly, beautiful, convenient and comfortable Kyaukphyu” for the locals.

Ironically, the developer from one-party state China also had a message of hope for the political future of Burma, which he reportedly described as an “untapped virgin land in Asia.”

“I hope the incumbent and incoming Myanmar governments can adhere to the path of democracy, reform and opening-up, and inject more impetus into its economic development,” he said, according to Xinhua.

Civil Society Groups Question EU Trade Deal

A group of 571 Burmese civil society organizations has written to the European Union’s commissioner for trade raising questions about the ongoing consultation process for Burma’s bilateral trade deal with Europe.

Burma and the EU have been negotiating an Investment Protection Agreement since 2014, which will set in place some terms of trade and investment. Controversially, such agreements often remove local government’s powers to change investment conditions, giving companies the right to sue the state in offshore tribunals if policy changes impact on investment.

Private firm Development Solutions is currently collecting responses to a survey getting the feedback of stakeholders on the deal. The deadline for the questionnaire, which has been extended twice, is Feb. 25.

The collection of civil society organizations, some coming from the Myanmar Alliance on Transparency and Accountability and the Lands in Our Hands Network, is unhappy with the way the consultation is being conducted. The groups all signed a joint letter to the EU’s trade czar, Cecilia Malmström, to raise their concerns directly.

The groups say that the questionnaire appears to be aimed at businesses and that the nature of the questions themselves was problematic.

“How can we answer questions asking for our views on potential impacts of the IPA when we have never read the full text up for the negotiation?” the letter dated Jan. 14 reads.

“If the EU is genuinely interested in our views, we would like to ask you to give us full insights in the text which has been proposed for negotiations and the different positions taken so far by [the European Commission’s Directorate General for Trade] and the Myanmar government.”

The groups also pointed out that that the consultation does not tackle the question of whether an Investment Protection Agreement is needed at all. The groups, the letter says, “believe that Myanmar should not sign IPAs at this moment in time with these provisions.”

“Myanmar is still in its very early stages of democratization and peace building. Many laws and policies still need to be revised. An IPA would severely endanger our prospects for democracy and sustainable peace.”

South Korean-Backed ‘National Think Tank’ Launched

A new Burmese government-linked think tank set up with funding from the South Korean government has been officially opened in Rangoon, state media reports.

The Global New Light of Myanmar said the Myanmar Development Institute, or MDI, would get $20 million of funding from the Korean International Cooperation Agency (KOICA) over five years.

“MDI will play a role of national think-tank in Myanmar as it is a decision maker to plan national socioeconomic and country policy after its launching,” the newspaper said.

The institute will be led by a central committee including representatives of nine Burmese government ministries, it said.

The new institute appears to be similar to the Myanmar Development Resource Institute that President Thein Sein founded in 2011 as he initiated a raft of economic reforms shortly after taking over from the previous military government.

Presidential economic advisor Zaw Oo, executive director of the Myanmar Development Resource Institute’s Center for Economic and Social Development, is chairing the central working committee of the new institute, according to the report.

Malaysia’s Edotco to Invest $200M in Burma

After sealing a deal to buy the majority stake in the Myanmar Tower Company last year, Edotco, part of Malaysia’s Axiata Group, has announced plans to invest a massive $200 million in Burma.

According to the website Mobile World Live, Edotco’s CEO Suresh Sidhu said in a statement that the company, along with its local partner Yoma Strategic Holdings, will build some 5,000 towers for the country’s growing mobile phone networks.

“We are dedicated to establishing a high quality telecommunications network in Myanmar,” Sidhu was quoted saying. “This will be achieved through the introduction of sustainable and value-added services, such as alternative energy solutions, dual-purpose structures and our proprietary echo remote monitoring and management system.”

New Computer System for Burma’s Central Bank

The Central Bank has received a new computer system that will modernize the way it settles payments between the country’s banks, according to a statement from Japan’s aid agency, JICA, which is funding the system.

At a cost of almost $44 million in grant funding, JICA said the project had provided “new payment infrastructure and prompt offices functions for CBM [Central Bank of Myanmar] to promote payment environment and Real Time Gross Settlement (RTGS) among Central Bank of Myanmar and financial institution. The CBM-NET covers fund settlement, T-bond/ T-bill settlement, collateral management for Kyat liquidity, DVP and Mechanized Clearing House.”

“Myanmar needed to catch up with other ASEAN member states in financial sector development,” the statement said. “Therefore, ICT system for interbank fund settlement and T-bond/T-bill settlement is one of the top priorities, as this will bring about immediate benefits to the financial institutions.”