Business

The Irrawaddy Business Roundup (May 30, 2015)

By Simon Lewis 30 May 2015

South Korean Media Reports Rumored Daewoo Sell-Off

South Korean company Daewoo International may be looking to offload its offshore gas interests in Burma, according to reports emerging from Seoul this week.

Reports in two newspapers both said that the company might be trying to sell its 60 percent stake in the Shwe gas field amid corporate restructuring at the firm, which is majority owned by South Korean steel giant POSCO.

The gas field in Burmese waters of the Bay of Bengal reached full production in late 2013, and feeds the Chinese-backed Shwe gas pipeline. The pipeline had begun transporting gas from the Arakan State coast at Kyaukphyu to China’s Yunnan province.

The project is reportedly projected to generate more than $350 million a year for Daewoo. The company is the lead developer of the Shwe Gas Field—in which India’s ONGC Videsh, the Gas Authority of India Limited and South Korean firm KOGAS also have interests—and also holds a stake in another offshore block known as A-3.

“As POSCO is seeking to sell Daewoo International’s gas field in Myanmar by equity spinoff, there are growing concerns that it could undermine the corporate value of Daewoo International,” Business Korea reported on Wednesday.

The same day, the Korea Times said that POSCO had been forced to comment on the rumors by the Korean stock exchange.

“POSCO said it has been reviewing a wide range of steps to improve its financial soundness, adding that it hasn’t decided whether to dispose of Daewoo International’s natural resources business,” the Korea Times said. “The steelmaker said it will make a decision on the matter in June.”

The same report also quoted a Daewoo International spokesman denying the plans of a sale, but admitting that the parent company had been studying “measures to enhance its financial health.”

Japan’s Marubeni to Build Burma’s Biggest Gas Power Plant

Japanese trading company Marubeni Corporation has signed an agreement with the Burmese government to begin work toward what would be Burma’s largest gas-fired power station.

The company said in an announcement on Thursday that it had agreed with the Ministry of Electric Power to conduct a feasibility study on the proposed 400 megawatt plant in Rangoon’s Thanlyin Township. It would provide power to the Thilawa Special Economic Zone and the grid serving Burma’s biggest city, where electricity supply is struggling to keep up with rapidly growing demand.

The deal involves Marubeni forming a consortium with local tycoon Chit Khaing’s Eden Group and Thailand’s Global Power Synergy Public Company.

“This project will be the largest gas-fired power plant in Myanmar,” the statement said. “Installing new power generation capacity is an urgent issue in Myanmar because of its rapidly increasing electricity demand due to recent economic growth.

“Especially, in the Yangon region, which is the largest commercial region in Myanmar, the shortage of electricity will increase in severity due to the entry of many companies and factories.”

Sheraton Hotel Group Announces New Rangoon Site

The company behind the Sheraton hotel chain is set to open a 375-room hotel in the center of Rangoon, according to a statement.

Starwood Hotels & Resorts Worldwide will operate the Sheraton Yangon Hotel in Tamwe Township close to Kandawgyi Lake under an agreement with the hotel’s owners, Family Business Group Hotel Limited.

This year has also seen new hotels in Rangoon opened by international chains Novotel and Best Western, as investors look to capitalize on growth in both business and tourist arrivals in Burma’s economic hub.

“Sheraton Yangon Hotel will open during an exciting period in the country, spurred by a major investment from the Ministry of Hotels and Tourism that has encouraged 4 million international arrivals in 2015 alone,” the statement said, citing the government’s targeted arrivals figure for this year.

“We are delighted to partner with Starwood to introduce the company’s first hotel in Myanmar and are eager to continue the relationship by targeting additional development opportunities across the country,” Family Business Group Hotel Limited CEO Ko Ko Latt was quoted in the statement saying.

Ko Ko Latt is also an active member of Burma’s Muslim community and is the founder of the Myanmar Muslim Business Entrepreneur Association, according to his LinkedIn page.

Two More Foreign Banks Set to Open Branches Next Week

Thailand’s Bangkok Bank and the Industrial and Commercial Bank of China (ICBC) are both reportedly set to open branches in Rangoon on Tuesday next week.

Four banks have already opened their doors to customers in Burma’s biggest city in recent months, although they are currently limited to providing certain non-retail banking services.

Reuters reported that Bangkok Bank had received its license from the Burmese government and will open on June 2.

“The new branch will provide a full range of financial services and connect to the bank’s international network to support customers doing business in Myanmar,” Reuters said, citing a statement from Bangkok Bank President Chartsiri Sophonpanich.

The Myanmar Times reported that ICBC has also been issued permission to open the same day, citing a statement from the Central Bank.

Of the nine overseas banks awarded licenses to operate in Burma—the first foreign banks allowed in the country for more than 50 years—Australia’s ANZ, Mizuho of Japan and Malaysia’s Maybank are still to open branches.

State-Owned Firm Seeks Partner for LPG Terminal

The state-owned Myanmar Petrochemical Enterprise (MPE) is inviting private-sector bids to be involved in a project to build a liquified petroleum gas (LPG) terminal to serve Rangoon.

State media reported Friday that the company run by Naypyidaw’s Ministry of Energy called on local and foreign companies to submit expressions of interest to enter a joint venture for the project.

MPE wants to build a new terminal at the current site of its No. 1 Refinery in Thanlyin, Rangoon Division, and a prospective partner would also have to develop a supply chain business in Burma “encompassing importation, storage, wholesale distribution and marketing, the ministry said,” according to the Global New Light of Myanmar.

“According to the ministry’s announcement, investors must have extensive experience in the LPG industry,” the report said, adding that the ministry also planned to set up a laboratory providing services to the petroleum and petrochemical industries.

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