Business

The Irrawaddy Business Roundup (May 21, 2016)

By Simon Lewis 21 May 2016

Government Urged to Take a Wider Look at Hydropower Plans

Burma’s new government should take a “by design” approach to developing the country’s massive potential hydropower resources, scholars and leading environmental organizations suggests in a new report funded by the United Kingdom’s aid agency.

The report, “Improving Hydropower Outcomes Through System-Scale Planning: An Example from Myanmar,” looks at how countries like Burma can “deliver the broadest range of benefits to their people” while tapping their water resources for energy, according to its executive summary. It was produced by the Nature Conservancy, based in the US state of Virginia, alongside the World Wildlife Fund and the University of Manchester in England.

It comes as the newly minted National League for Democracy (NLD) has yet to signal what its approach to hydropower will be. Most controversially, the Myitsone project in Kachin State is still hanging in the balance, with its Chinese backers pushing for a restart after former President Thein Sein suspended work on the dam five years ago.

Twenty-five hydroelectric dams of varying sizes are currently in operation, but some 45 are under construction, in the planning stage or proposed by developers, the report said.

“The previous government’s approach to hydropower development was to attract the maximum possible amount of hydropower investment,” the report said. “As a result, essentially all interested developers were encouraged to go forward with their proposed projects.”

However most of the proposed projects have made little progress, many delayed by conflict or local opposition to their environmental and social impacts. The authors see this as evidence that what they describe as a “non-selective, single-project approach” has not worked. They suggest that the new government should instead adopt a “system-scale approach that can identify the best portfolios of projects.”

The report says the government should, in the short-run, only approve less controversial, smaller projects and those within existing cascades. In the long-run, it advocates a comprehensive look at what dams in individual river systems can be built that will balance energy needs and the effects on people and the environment. The Nature Conservancy calls this approach “Hydropower by Design” and hopes it could provide a model for other countries.

To demonstrate how this approach would work, the report looks closely at the Myitnge, also known as the Dokhtawaddy—which runs down from the Shan Hills and becomes a tributary of the Irrawaddy near Mandalay—using spatial analysis and simulations of how dam building would affect water resources.

“Our results clearly showed that energy development produces tradeoffs with other resources and values,” wrote Jeff Opperman, the director and lead scientist for the Nature Conservancy’s Great Rivers Program, in a blog about the study for the World Bank’s website.

“However, there are many different options to increase energy generation and these options [vary] widely in terms of their impacts. A system-scale approach can identify ‘win-win’ or ‘close to win-close to win’ options—these are options that meet energy objectives but minimize negative impacts or have synergistic benefits for other sectors.”

Further Tourism Growth Expected to Weigh on Infrastructure

Burma’s tourism industry has not yet finished its growth spurt, analysts said this week, but the influx will put even more strain on infrastructure in years to come.

The UK-based Oxford Business Group published an update on the tourism industry, which has already grown rapidly during the country’s period of political transition from a closed dictatorship.

From only about 1 million foreign visitors in 2012, the country almost hit the 5 million mark last year, and the government has targeted 6 million visitors for 2016. The Asian Development Bank said spending by tourists in the country rose by 19 percent year on year to $2.1 billion in 2015.

The update figures cited from the World Travel and Tourism Council predicting that over the next decade Burma will have the world’s second-fastest growing tourism industry.

The sector is set to grow by 5.9 percent this year and by 7.8 percent per year up to 2026, when it will employ about 2.1 million Burmese, the council predicts.

But both hotels and airports have already been put under strain by the rising number of tourists. The recently opened new terminal at Rangoon’s airport raises annual capacity to 6 million passengers, but is only a “medium-term solution,” Oxford Business Group said.

“It is not just Yangon International Airport that is working to find space to expand,” it said. “Tourism has to compete with the residential, commercial and industrial sectors for land resources, which has pushed prices up, while zoning laws have also limited access to blocks for development in some areas.”

IFC Considering Oway Cash Injection

The International Finance Corporation (IFC), the World Bank’s investment arm, is looking at investing up to $3 million in Oway Group, a local travel booking website that runs an Uber-like ride hailing service in Rangoon.

According to a summary of the proposed investment on the IFC’s website, Oway is looking to raise $10 million to fund an expansion, including the growth of Oway Ride. The service, which connects travelers with drivers via a smartphone app, launched in the former capital in January but hopes to expand to Mandalay and Naypyidaw.

The IFC, which invests commercially in developing markets in the hope of building capacity for economic growth, said it hoped the investment would fuel job creation. Oway currently employs more than 500 people and Oway Ride has signed up 400 drivers—a figure that is expected to reach 1,500 by the end of this year, it said.

The investment would also help provide “stability” for service providers in the tourism industry, increase the supply of decent transport options and “support for innovation and technology-enabled investments” in Burma, the IFC said.

“Myanmar does not yet have a strong Venture Capital ecosystem, and lacks local and later-stage funding options,” it said. “IFC’s investment in Oway provides access to capital to a promising early-stage technology company in Myanmar.”

Environmental Group Calls for Palm Oil Halt

The global environmental group Fauna & Flora International (FFI) has issued a call for the new Aung San Suu Kyi-led government to put a stop to agricultural development that is threatening to destroy the remaining forests of southern Burma.

Large-scale concessions have been granted for palm oil plantations in the deep south since a government initiative to develop the crop began in 1999. As in other regional countries—namely Malaysia and Indonesia—that have embraced the crop for rural development and export revenue, the policy has spurred the destruction of formerly untouched forests.

But Tenasserim Division, also known as Tanintharyi Region, remains home to the last large Sundaic rainforest in peninsula Southeast Asia, although the forest is under increasing threat, according to FFI.

A recent study into oil palm plantations in Tenasserim—commissioned by FFI and funded by donors including the European Union—“found that poor policies and practices in the sector are fueling unsustainable development of this highly biodiverse landscape,” a post on FFI’s website said.

“Currently most plantations are clearing high conservation value forests, and many companies are even clearing land outside their concession boundary,” FFI’s Burma program director Frank Momberg said in the post.

“That is why we are calling on the new government of Myanmar to declare a complete moratorium on oil palm development—that means no new forest clearing and no new licenses issued—until we can be sure that these plantations are sustainable.”

Burmese Coffee Headed to Western Markets

The first container of coffee grown in Burma’s Shan Hills was shipped to Switzerland in April, and beans could soon be on sale in the United States, according to state media.

The Global New Light of Myanmar said exporters were earning between $3,800 and $4,000 per ton, citing information from a trade association.

It said coffee was already exported to Japan and South Korea, but suggested efforts by US nonprofit Winrock International to bring Burmese coffee up to export standards meant that the American market may be next.

“We aimed to export the two container loads of coffee,” the report cited Myanmar Coffee Association Chairman Ye Myint as saying, without specifying whether there were firm plans in place to send coffee to America.

“The price offered depends on the quality and the market. The price offered to the coffee growers and the production costs have to be transparent to build trust with the buyers. Only then, our market lasts longer. The higher the quality of the coffee is, the more we earn.”

A coffee trade magazine last month said buyers in the United States were searching for new sourcing countries for coffee, and were looking closely at Burma.

The Global New Light of Myanmar said coffee had the potential to replace opium for some impoverished farmers, and said Burma’s uplands were especially well-suited to growing coffee.

Shan State and Pyin Oo Lwin, in Mandalay Division, are the main centers of coffee production at present, but little is produced for export.

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