The Irrawaddy Business Roundup (July 9, 2016)

By Simon Lewis 9 July 2016

Burger King opens in Burma, but only for outbound flyers

The first Burger King outlet in Burma opened at the start of July, but the restaurant at Rangoon International Airport’s new terminal will remain off-limits to most people in the country.

The Facebook page for Rangoon’s airport announced the opening the day before it launched on July 1 in the brand new “T1” terminal.

The restaurant is “available to departing passengers only,” however, as it sits airside of immigration controls.

The same goes for American ice cream shop Swensen’s, which also opened on July 1, according to the Facebook page, although that chain already has branches in Rangoon. Both are operated in Burma under a franchise held by the Bangkok-based Minor Food Group, the Myanmar Times reported. The company holds the franchises for both chains in Thailand, according to its website.

At the moment, to visit the restaurants, you have to be on a flight with one of three airlines currently operating out of the new terminal: Myanmar National Airlines, Vietnam Airlines and Air Asia.

Yangon Aerodrome, the company that operates the airport, inaugurated the new terminal building in March. The company is a subsidiary of Asia World, a massive conglomerate that is blacklisted by the U.S. Treasury for its links to the illegal heroin trade.

Japan’s Hitachi has big plans for Burma

Japanese electronics and infrastructure conglomerate Hitachi is reportedly planning to increase by a factor of five the size of its operations in Burma.

Nikkei Asian Review reported comments from Hitachi’s president and chief executive officer, Hiroaki Nakanishi, who visited the capital, Naypyidaw, this week.

The CEO would be meeting with government officials to propose new projects as the company looks to expand its operation to 300 billion yen (about US$299 million) by 2020, the report said.

Hitachi, along with fellow Japanese company Mitsubishi Corporation, won a Myanma Railways contract in May last year for upgrades on Burma’s dilapidated rail network. The $24 million project, due for completion in June 2017, includes installing systems to coordinate signals along a 140-kilometer stretch of track between Rangoon and Pyuntaza, Pegu Division.

“On top of the electrification of the rail system, we will present proposals to the government, including a comprehensive plan to develop the transportation infrastructure,” Hiroaki was quoted saying.

Hitachi wants to help improve the government’s database of maps using GPS, which would “provide a launching pad for resource exploration, disaster prevention, flood control and other related operations across a wide spectrum,” the president was quoted as saying.

Hitachi will also work with Japan Post to help Myanmar Post offer “e-money” services, the Global New Light of Myanmar reported.

A press release on Wednesday said a unit of the group, Hitachi Solutions, had also won a tender last year to “implement an electronic data interchange system” for Burma’s Port Authority. The company also said it would host a Social Innovation Forum in Naypyidaw to boost its sales in the country.

“Last year, Hitachi announced plans to expand our business in [Burma] and increase the number of local employees five times—from 200 to 1,000—by 2020,” Hiroaki was quoted in the statement saying. “We are very much on track and I am pleased to share that our employee numbers have more than doubled to over 500 in just one year.”

Next round of licenses for foreign banks underway

A Vietnamese bank has received its license to conduct banking operations in Burma after the government said in March it would award four additional banks permission to do business in the country.

Following a round of awards in 2014, nine overseas banks were granted licenses that allow them to conduct limited operations in the country, although they are not permitted to do retail banking.

In March, the government said it had decided to award additional licenses to the State Bank of India, E. SUN Commercial Bank of Taiwan, Shinhan Bank of South Korea and the Bank for Investment and Development of Vietnam (BIDV). Reuters reported that the four banks would have a year in which to demonstrate that they could deliver on their business plans before getting a permanent license.

According to the Hong Kong Trade Development Council, “the four banks are each required to invest at least US$75 million of capital and have 12 months to fulfill business commitments outlined in their initial applications. They should also take all necessary measures to ensure functional banking operations from day one of business.”

Reports from Viet Nam News and the Chinese state newswire Xinhua said this week that Burma’s Central Bank had now granted BIDV its license, allowing the Vietnamese bank to commence operations from this month.

“In the coming period, the bank will focus on providing modern banking products and services to [Burma’s] enterprises and foreign firms in the country, especially those from Viet Nam and countries with close links to [Burma], such as Japan, the Republic of Korea and Taiwan (China),” Viet Nam News said.

“The other three […] are yet to meet the set requirements for final approval for service licenses,” Xinhua said. “South Korea’s Shinhan Bank, which plans to operate its branch in [Rangoon] in the first quarter of 2017, said [Burma] will play a crucial role in tapping deeper into the market of the Association of Southeast Asian Nations.”

Efforts to boost Burma’s trade with Thailand

Following the visit of State Counselor Aung San Suu Kyi to Thailand last month, during which she met with the Thai junta leader Prayuth Chan-ocha and addressed Burmese migrant workers in the country, the two countries are reportedly targeting bilateral trade worth up to US$12 billion next year.

The Nation reported the target in an article citing Thai Commerce Minister Apiradi Tantraporn, ahead of his delegation attending a meeting this week of the two countries’ Joint Trade Commission (JTC) in Naypyidaw.

The Bangkok-based newspaper said the two-day meeting would work out ways to push trade to $10-12 billion from its 2015 level, $7.74 billion.

“At the JTC meeting, the ministers will discuss cooperation on Mae Sot-Myawaddy border trade and the setting up of a CLMVT (Cambodia, Laos, [Burma], Vietnam and Thailand) Business Council led by the private sector to solve trade-related problems,” The Nation said.

“Under the JTC, Thailand and [Burma] will also support the use of local currencies in special economic zones (SEZs) and other areas, while seeking ways to facilitate investment from both countries.”

Telenor appoints new CEO for Burma

Norwegian telecommunications company Telenor is replacing its CEO for Burma, almost two years into its operations in the country.

The current chief financial officer, Lars Erik Tellmann, 44, will become CEO from Aug. 1, a statement said.

He replaces Petter Furberg, who led the company’s entry into Burma in 2014. Since it launched in September of that year, the company has built a subscription base of more than 15.5 million, based on its most recent statistics, published in April. It also has a network of more than 5,000 cellphone towers.

“Under Petter’s guidance, Telenor has established itself as a preferred mass market operator in [Burma]. He hands over a company with a clear vision, a well-established strategy, and a strong foundation for future growth,” Telenor Group CEO and President Sigve Brekke said in the statement.

Tellman, who has been with Telenor Myanmar from its start, suggested there would be continuity in terms of strategy.

“Telenor has a solid market and network presence in [Burma] and with a proven strategy and business model we are well set-up for future growth,” he was quoted saying.