Major Reform Bills to Be Passed Before New Parliament, Say Analysts
Halfway through its first session after the election, the Union Parliament appears poised to clear most or all of the outstanding economic reform bills before new lawmakers take their seats at the end of January.
With discussions of a supplementary budget underway, the next order of business is expected to be some of the marquee economic bills that have been stalled in parliamentary committees for a year or more, including revisions to the 100-year-old Companies Act, the 1994 Mining Law and the 1993 Banks and Financial Institutions Law (BFIL), along with the update and merger of the Foreign Investment and Myanmar Citizens Investment laws.
In an analysis released before the election, the Eurasia Group global political risk management consultancy said it expected the outgoing Union Solidarity and Development Party to push through as many of the outstanding reform bills as possible rather than risk having the legislation delayed until after a new government was formed at the end of March.
“The fact that the session has been called so early suggests that both USDP party members and government officials want to take full advantage of the period before the new parliament is formed,” said Eurasia Group’s Christian Lewis.
The firm believes that while updates to company and investment laws are possible before the new parliament convenes in January, the “badly needed” banking law would likely be delayed until April at the earliest.
“The bill’s complexity, and opposition from vested interests keen to avoid deeper scrutiny of their lending practices, make it unlikely to pass,” said Lewis.
Burma’s retail banking sector is dominated by businessmen close to the former military junta. Another lending institution, the Myawaddy Bank, is a subsidiary of the military-controlled Union of Myanmar Economic Holdings Ltd conglomerate.
The Eurasia Group’s analysis concluded that despite the pre-election fears of opposition politicians and activists, the USDP was unlikely to risk upsetting the investment climate by passing laws favorable to its own interests during post-election parliamentary sessions.
“We think it would require an unrealistically large change of opinion among numerous parliamentarians to accomplish these changes, especially given domestic and internal demands for a peaceful and fair election process and handoff of power,” Lewis said.
Korean Loan Finalized for Dala Bridge Project, Burma Rail Funding
Six months after it was approved by Union Parliament, a signing ceremony has been held for the construction of the Burma-Korea Friendship Bridge across the Rangoon River, linking impoverished Dala Township to the commercial capital’s downtown grid.
The Global New Light of Myanmar reported this week that the agreement, which also incorporates a low interest loan for 60 new rail coaches, was inked between South Korea’s state-owned Exim Bank and Burma’s Construction and Rail Transport ministries the previous day at Naypyidaw’s lavish Kempinski Hotel.
The Irrawaddy reported in May that the 1.9-kilometer (1.16-mile), $138 million bridge would be underwritten by a 40-year, 0.01 percent interest loan from South Korea’s Economic Development Cooperation Fund.
Tens of thousands of people are estimated to travel daily to Rangoon by ferry from Dala, a township with a dearth of employment opportunities and a lack of water and electricity infrastructure.
Under Rangoon’s urban expansion plan, passed by the divisional parliament in June, Dala will be the fourth urban satellite area to receive major funding for new commercial and residential development after an area northeast of East Dagon, a southwestern tract across the Hlaing River comprising parts of Kyimyindaing, Seikgyikanaungto and Twante, and Thanlyin in the city’s southeast.
The southwestern expansion project was infamously suspended last year when it was revealed that the heads of the Myanmar Saytanar Myothit company, who were awarded the project without a public tender, had close ties to outgoing Chief Minister Myint Swe.
There are currently no plans to build a bridge across the Hlaing River to link the southwestern project with Rangoon proper.
The Construction Ministry expects the Dala bridge, which will link Lanmadaw’s Phone Gyi Street to Dala’s Bo Min Yaung Rd, to be completed in 2020.
Trafigura Subsidiary in Thilawa Port Deal
Singapore-based oil and gas firm Puma Energy is setting up shop at Thilawa, with Bloomberg reporting the company is in the process of building a $100 million storage facility for bitumen and petroleum products at the deep-sea port.
The project will service the adjacent Japanese-backed Thilawa Special Economic Zone, which became the first of three planned SEZs to commence operations earlier this year. Investment is still trickling in to Thilawa as companies adopted a wait-and-see attitude to the 2015 elections, the results of which are predicted to drive a massive rise in foreign direct investment pledges over the coming fiscal year.
Since the end of 2014, Puma’s presence in Burma has expanded rapidly. The company is already in exclusive partnership with the state-run Myanma Petroleum Products Enterprise (MPPE) to distribute jet fuel at 11 airports across the country, as Burma’s burgeoning tourism market fuels strong growth in the aviation industry.
“Puma Energy is interested in all segments of the market in Myanmar,” Puma Chief Financial Officer Denis Charazin told Bloomberg.
The firm is one of 11 foreign companies currently duking it out to form a joint-venture with MPPE for a liquefied petroleum gas distribution company. LPG is a major fuel source for private automobiles in the country’s south.
Puma Energy’s largest shareholder is Trafigura, the Dutch commodity trading giant, which owns a 49 percent stake in the firm. Trafigura is no stranger to controversy, most infamously its dumping of toxic waste chemicals in some of the poorest neighborhoods of the city of Abidjan in Côte d’Ivoire.
Over 100,000 people subsequently sought medical attention as a result of exposure to the waste. The company was forced to settle a class action lawsuit brought against it when The Guardian published internal company correspondence showing that members of the firm were aware of the potential health consequences of the dumping.
APR Extends Kyaukse Power Plant Management Agreement
US energy firm APR has announced the extension of an operating agreement for the 102MW Kyaukse gas power plant in Mandalay Division through to the end of 2016.
Built by APR in the middle of last year, the Kyaukse plant was given a 20MW capacity upgrade in the first three months of 2015 to accommodate extra demand during the dry season.
“As the first US power company to do business in Myanmar in recent years, we have been fortunate to have exceptional business partners in Myanma Electric Power Enterprise and the national government,” Laurence Anderson, the firm’s chief executive, said in a Tuesday press release.
The Kyaukse project, agreed to in February 2014, was installed and operational after 90 days and produces enough power to meet the electricity demands of six million people in the country, according to the statement.
The plant is powered by natural gas from the Shwe pipeline, which connects the deep-sea port at Kyaukphyu in Arakan State to China’s Yunnan province.
APR has operations in more than 25 countries for a combined total capacity of 2.5GW, including power plants in Indonesia, Bangladesh, Japan and Sri Lanka. The company told The Irrawaddy in May 2014 that the company is hoping to invest further in Burma with future natural gas projects.
Burma Keeps China Smelters Waiting on Ferronickel Export Ban
A two-month old export ban on ferronickel is having effects further down the supply chain, with Chinese smelters having trouble meeting client orders as a result, according to a metal industry trade publication.
Metal Bulletin reported on Nov. 9 that at a recent industry conference, a Chinese buyer said the Burmese government had in September suspended exports to the Dagongshan smelter in Guandong while it renegotiated the distribution of sales proceeds, stopping the smelter from providing refined metals to two Chinese manufacturers further afield.
A renegotiation of export prices may conclude next month, according to the source.
Ferronickel is primarily used to manufacture stainless steel products. Spot prices for nickel have been in a downward trend since an all-time high of US$25 per pound in 2008, shortly before a sudden collapse in commodity prices during the 2008 economic crisis. The metal currently trades at around $5 per pound.
According to Metal Bulletin, Burma accounted for around one eighth of total ferronickel imports into China before the export ban commenced, citing Chinese customs data.