The Irrawaddy Business Roundup (May 9, 2015)

By Simon Lewis 9 May 2015

Not Mates? Report Says Rival Aussie Business Groups in Dispute

Australian companies may be chomping at the bit to enter Burma’s so-called “frontier” market, especially in the field of natural resource extraction, but investment may be being held back by a dispute between two rival business associations.

A report last month in Australia’s biggest-selling newspaper, The Australian, featured antipodean ventures having success in Burma, namely oil and gas firm Woodside and ANZ Bank. Australian mining firms have also been linked to exploration in Burma, including Eumeralla Resources, which is seeking approval to explore for minerals in the troubled hills of Karenni State.

But the lengthy report also warned of what it called “the complexities of doing business in the country,” giving as an example a “schism” between the Sydney-based Australian-Myanmar Chamber of Commerce (A-MCC) and the locally registered Australia Myanmar Business Group.

“The Sydney-based group was formed by accountants Lachlan Foy and Michael Phin, who worked with insolvency practice KordaMentha, and Australian-educated La Min Win,” The Australian reported. “Win has close family connections to the military that still exercises substantial control.”

The report said that efforts by A-MCC to register in Burma were blocked by the local group. Little is known about the Australian Myanmar Business Group, which does not appear to have a web site.

“Government rules mean only one business representative group from each country can legally exist,” the report said. “The Australian embassy has withheld its imprimatur until a peace deal is reached.”

Michael Phin, A-MCC’s executive director, clarified in an email that the Sydney-based organization has not yet applied to register in Burma.

“A-MCC and the Australian business community in Myanmar are currently working together to formally register in Myanmar,” he said. “A-MCC will continue to deliver on various programs, events and initiatives in both Australia and Myanmar. For example, we are currently delivering a skills and capacity building program with our members, supported by funding from Austrade’s Asian Business Engagement Plan.”

He added that the group was incorporated in 2013 in Australia with the approval of the Australian government and the Australian Chambers of Commerce and Industry, and had signed a memorandum of understanding with the Burma’s main business association, the UMFCCI, in early 2014.

Public Meeting Canceled After Protest Planned Against Salween Dam

Another Australian firm in Burma in a spot of bother of late is the Snowy Mountains Engineering Corporation (SMEC). The company is acting as consultant on the Chinese- and Thai-backed Mong Ton hydropower project on the Salween River in Shan State, and has been tasked with arranging consultation meetings with local communities.

But local civil society groups have come together to form robust opposition to the dam—the biggest of a handful of dams proposed on the currently free-flowing Salween—which would see a large part of Kunhing Township flooded. Thousands of people could be displaced if the 227-meter-high dam is constructed, and the majority of the power generated by the 6,400-megawatt-capacity dam is expected to be exported to Thailand.

According to a statement from the Shan Human Rights Foundation (SHRF), the Australian firm had planned to hold the latest public meeting on the project in Kunhing on April 30, but “apparently due to news of the planned protest, the public meeting was abruptly cancelled.”

The demonstration, involving local Shan Nationalities Democratic Party member of Parliament Nang Wa Nu, went ahead, and a statement was drawn up opposing the project.

“They raised concerns about impacts the damaging of the dam on thousands of people and historical sites, the lack of guarantee of political rights, and the fragility of current ceasefires,” the SHRF statement said of the event.

SMEC is sub-contracted by the developers of the dam, which include China Three Gorges Corporation, China Southern Power Grid, Sinohydro and the Electricity Generating Authority of Thailand, according to the statement. Also reportedly involved in the project International Group of Entrepreneurs Co. (Myanmar), or IGE, a company run by the family of ruling party lawmaker Aung Thaung, who was added to the United States Treasury’s Specially Designated Nationals list last year.

SMEC did not respond to requests for comment from The Irrawaddy. The company’s website touts its “strong presence” in Burma since 1969 and says it produced an assessment of Burma’s energy sector for the Asian Development Bank in 2012.

Dawei Agreement Delayed Once More

The troubled project to build a special economic zone and port in the southern Burmese area of Dawei has hit another snag, with the signing of a new agreement reportedly delayed again.

According to newswire Deutsche Presse Agentur, an official at Thai developer Italian-Thai Development (ITD) said an agreement between the Thai and Burmese governments to kickstart the project will now not be signed until July.

Two deadlines for the agreement to be signed have already been missed, and the project itself has suffered years of setbacks due to problems securing funding. The economic zone and deep port is meant provide a hub for trade from the Andaman Sea, across the Tenasserim Hills, to Thailand.

“The delay is reportedly due to administrative slowdowns in Naypyidaw,” DPA reported, citing ITD marketing manager Pravee Kamolkancha.

The report added that, “The Thai government and Italian-Thai Development are ready to sign the agreement,” according to the ITD official.

Spanish Group to Run Hotel in Vietnamese Development

Spanish chain Melia Hotels International will operate a 439-room hotel at the bank of Rangoon’s Inya lake, according to the Vietnamese company building a massive mixed-use development in Burma’s biggest city.

Vietnamese conglomerate Hoang Anh Gia Lai (HAGL) announced on May 2 that it had signed an agreement that will see part of the development run by the Spanish company, which manages 20 five-star hotels worldwide.

“Melia Yangon Hotel has been built with 429 international-standard rooms fully equipped with modern facilities such as a convention center, restaurants, entertainment and sport areas, and other high-grade facilities,” HAGL said in a statement.

The hotel is part of the first phase of a sprawling development valued at $550 million under construction by HAGL, which is set to also include office space, retail outlets and condominiums. The company is reportedly seeking new partners for the project after an agreement with Singaporean company Rowsley to take a 50 percent stake in the project fell through.

Carlsberg Opens Beer Factory in Pegu

Danish company Carlsberg began brewing beer at a factory in Pegu Division this week, in a joint venture with the local tycoon famed for bringing Pepsi to Burma.

A report in the Global New Light of Myanmar said the factory was officially opened on Thursday in a ceremony attended by local officials and the Danish ambassador to Burma.

The company has developed a new beer, YOMA, which was designed specifically for the Burmese market and includes rice among its ingredients. The state-run newspaper said the factory will also produce the company’s flagship Carlsberg beer and its Tuborg brand.

“Carlsberg says its presence in Myanmar will bring employment to thousands of people countrywide in the coming years, with the company already employing more than 150 staff.” the newspaper reported.

The factory is a joint venture between Carlsberg Group and Myanmar Golden Star, a local company headed by businessman “Pepsi” Thein Tun, who brought the American soda brand to Burma in 1991. Last year, Thein Tun took over a majority stake in the English-language Myanmar Times newspaper.

The Danish beer brand will hope to make inroads into Burma’s beer market, which is dominated by the military controlled Union of Myanmar Economic Holdings, which brews Myanmar Beer and Singaporean brand Tiger Beer.

The new facility will have the capacity to produce 60 million liters of beer each year, the state media report said, adding that beer consumption among Burmese is currently low relative to other countries.

“According to the company’s research, Myanmar’s beer consumption, at 6 litres per head on average per year, is very low compared with 38 litres for Thailand and 100 litres for Europe,” the report said.