Economy

The Irrawaddy Business Roundup (Jan. 9, 2016)

By Simon Lewis 9 January 2016

Thai Trade Delegation Set to Visit Burma Amid Tensions

Amid widespread anger over the sentencing of two Burmese migrant workers to death in Thailand last month, the Thai commerce minister is set to lead a delegation to Naypyidaw that hopes to boost trade between the neighboring countries, according to Thai media reports.

Protests erupted across Burma after Zaw Lin and Wai Phyo were convicted of the murders of two British backpackers on the Thai island of Koh Tao, forcing Thailand’s embassy in Rangoon to close its consular section. Burmese officials have insisted that border trade has been unaffected by the protests, but army chief Snr-Gen Min Aung Hlaing has joined calls for a review of the evidence in the case, which is widely disbelieved in Burma.

The Buddhist monk-led nationalist movement known as Ma Ba Tha has also called for a boycott of Thai goods in Burma.

Media in Thailand reported this week that a high-level Thai government delegation would be visiting the Burmese capital next week with the aim of ramping up bilateral trade.

English-language newspapers the Bangkok Post and The Nation both reported comments by Commerce Minister Apiradi Tantraporn saying that the Thai military government wants to raise bilateral trade to about $10 to $12 billion in the next two years. Trade was worth $8.15 billion in 2014, according to Thai government figures cited by The Nation.

Apiradi will lead the Thai delegation in a meeting of the two countries’ Joint Trade Commission in Naypyidaw on Jan. 14-15, The Nation reported. The incumbent and likely outgoing Burmese commerce minister, Win Myint, is expected to lead Burma’s delegation

“Besides setting trade targets, the ministers will also seek further cooperation in banking and financing in a bid to use local exchange rates for trading between the two countries,” The Nation reported.

“They will also exchange information on trade rules and regulations, increase cooperation at cross-border checkpoints and discuss how to upgrade the checkpoints so that Thailand and Myanmar can achieve increased trade growth,” Apiradi said.

Thailand’s government is also set to propose the formation of a new Thai-Burmese trade body to represent the private sector, according to the reports.

“They will also discuss speeding up development of the Dawei deep-sea port and industrial economic zone along with other economic zone projects,” the Bangkok Post reported.

As well as Thai companies leading the push to develop an economic hub in Dawei, in southern Burma, Thai conglomerate CP Group was also last week announced as a member of the winning, mostly Chinese, consortium set to build a port and industrial park in coastal Arakan State.

Discovery Hailed as Reassurance for Oil and Gas Investors

The discovery of natural gas in a deepwater offshore exploration block confirms that energy resources off the country’s coast are “worth chasing,” according to an analyst cited by Bloomberg.

A joint venture between Australia’s Woodside Petroleum and Burmese-run firm MPRL—which is registered in the British Virgin Islands—announced this week that it had found a gas column below the seabed in an exploration block off the Arakan State coast known as A-6. French firm Total E&P Myanmar also holds a stake as a non-operator in the project.

“Further analysis will be undertaken to understand the full potential of the play, but this de-risks a number of leads which will now be matured,” Woodside CEO Peter Coleman was quoted saying in a statement. “This discovery is an encouraging outcome for future exploration and appraisal activity in the area.”

Block A-6 was among 20 offshore areas awarded to international firms in a tender concluded in March 2014. Companies have now begun exploration after protracted contract agreement processes.

In the meantime, however, the price of energy has been driven down by a global oversupply, potentially denting Burma’s hopes for a quick injection of cash into state coffers as exploration efforts lead to production.

The find reported by Woodside and MPRL is the first from the exploration projects underway offshore, which also involve majors Shell and Statoil.

In its report on the news, Bloomberg cited Adrian Prendergast, an analyst at Morgans Financial Ltd. in Melbourne, Australia, saying the find would be a boost to investors.

“For a lot of the global players that rushed into the space, this confirms it is prospective and worth chasing,” he was quoted saying. “But there’s still a long a way to go.”

However, Prendergast reportedly cautioned over Burma’s still-uncertain political situation, saying: “Given the sovereign risk, you’d need a lot more than that to get comfortable.”

Hong Kong Carrier Delays New Rangoon, Mandalay Flights

A Hong Kong-based low-cost airline has been forced to delay its inaugural flight between Burmese cities and the Chinese Special Administrative Region due to “regulatory approval issues,” according to the website routesonline.com.

HK Express, which already operates flights between Hong Kong and a number of Southeast Asian tourist destinations, said in a November press release that it would begin flying regularly to both Rangoon and Mandalay’s airports beginning from mid-February.

The airline had already begun offering highly discounted rates for flights on the routes, touting the flights as an opportunity for “travelers looking for an off-the-beaten path adventure.”

But according to a post on routesonline.com, “Due to regulatory approval issues, Hong Kong Express is delaying planned service launch to Myanmar by over 6 months.

“The airline previously planned to begin 4-weekly Yangon service from [Feb. 17] and two-weekly to Mandalay” beginning Feb. 21.

The routes’ launch dates have been revised to early September, the post said.

Japanese Firm Offers Car Insurance in Burma: Report

One of Japan’s largest insurers has begun offering car insurance in Burma, where the vast majority of drivers are uninsured, according to a report from Nikkei Asian Review.

The report, published Wednesday, said that Sompo Japan Nipponkoa Insurance had recently entered the Burmese market, operating out of the Thilawa Special Economic Zone close to Rangoon.

“[Sompo Japan Nipponkoa] will mainly market vehicle insurance, as well as bodily injury and property damage liability coverage, to customers including businesses operating in the zone,” the report said. “With just 5 percent or so of drivers in Myanmar carrying insurance, the market is expected to enjoy significant growth.”

According to the insurer’s website, it was licensed in Burma in May last year, after the government began opening up the insurance market, which was long monopolized by a state-run firm.

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