The Irrawaddy Business Roundup (Nov. 28, 2015)

By Simon Lewis 28 November 2015

Extractive Industries Transparency Report Could Exclude Vital Sectors

Burma is preparing to submit its first report to the Extractive Industries Transparency Initiative (EITI) before the end of this year, but a news report this week suggests that key data may be left out in spite of a push by civil society groups.

The government is hoping Burma will be accepted as a full member of EITI, a global project that requires transparency on what revenues are collected from extractive sectors, including mining and oil and gas. A vital step in doing so will be a report, which must be submitted by January 2, according to the local English-language newspaper Myanmar Business Today.

The Myanmar Business Today report, which was reproduced on the official Myanmar EITI website, said that Burma’s EITI implementation group had agreed to make sure the report is submitted before the end of December.

UK-based auditor Moore Stephens is reportedly working on the report, and the Ministry of Energy, which oversees oil and gas exploration and extraction, has said it has submitted detailed data on revenues for the report.

But comments from members of the implementation group to Myanmar Business Today suggest that the first report will not contain all the information that civil society has been hoping to see included.

“We can’t include hydropower plant projects and the timber industry in this report. We made this decision with the agreement of all members,” group member Kyone Hlang Htawn told Myanmar Business Today.

Another group member, Min Zarni Lin, was also cited saying that data on taxation in the minerals, jade and gem mining sectors would only be “partially reported due to lack of data.”

The inclusion of the comprehensive data on the jade trade in the EITI scheme has been highlighted as important by nongovernmental organizations, who say this highly lucrative industry is enriching a small elite and making peace more difficult to achieve in Kachin State, from where the vast majority of the world’s jade is sourced.

UK-based group Global Witness last month released a report estimating that the trade was worth some $31 billion in 2014 alone, and exposing the scale of the involvement of known drug traffickers, the Burmese military and senior government officials.

Global Witness, which holds a seat on EITI’s international board, said in the report that applying EITI transparency standards to the jade industry could help clean up the jade trade by allowing Burmese civil society groups to hold companies and officials to account.

“Conversely, if the scheme’s principles are not applied to the jade business as a matter of urgency, the opportunity would be lost and EITI’s credibility in Myanmar severely damaged,” the report said.

New Government Will Face Gathering Economic ‘Headwinds’: Analysts

Analysts at the UK-based Oxford Business Group have predicted that the new government set to be formed next year following elections on November 8 will face less favorable economic conditions than its predecessor.

The National League for Democracy (NLD) has won a majority large enough to select the next president and form a government. In an update on the situation in Burma this week, Oxford Business Group said that the victory for Aung San Suu Kyi’s party was expected to “bring renewed investor confidence,” citing the favorable international response to the election result and the possibility of further sanctions relief.

However, the analysts said, “While Myanmar remains a market of interest for many investors, the new government will likely be faced with weaker economic conditions than the last administration, largely as a result of the slowing of the Chinese economy.”

The slowdown of growth in the Chinese economy, which will see exports of commodities to Burma’s neighbor drop, has already been cited by the International Monetary Fund as an impediment to growth, the update said.

Additionally, it said, this year’s widespread flooding will have an impact on the economy, and the new government must also tackle rising inflation, which could be as high as 13 percent this year.

Thai Chamber of Commerce Wants More Government Help in Burma

Thai companies are pressuring their government to hold more official visits and business delegations in Burma ahead of moves to increase regional economic integration, according to a report from the Bangkok Post.

Leaders of the Association of Southeast Asian Nations on Sunday officially established the Asean Economic Community in Kuala Lumpur, although steps to drop trade barriers and free up the movement of skilled labor are likely to take some time fully to kick in.

But the Thailand-based English-language newspaper cited Pussadee Polsaram, director of the AEC Strategy Center at the University of the Thai Chamber of Commerce saying that Thai companies trying to enter the Burmese economy faced a lack of connections in the country. She called on the Thai government to do more to help Thai businesses trying to invest in Burma.

“The Thai government should set up trips led by the prime minister or deputy prime minister to introduce Thai businesses to local businesses just like the Chinese and the Vietnamese governments have done,” she was quoted saying.

“The two countries could hold talks at an administrative level from time to time to foster cooperation,” the report added.

Niyom Wairatpanij, a vice-chairman of the Thai Chamber of Commerce, was also quoted saying that the Thai government should be more proactive in supporting Thai companies in Burma.

“The government should ease trade and investment along the border by setting up more checkpoints, he said,” the Bangkok Post reported.

Kanbawza Links With US Firm for Satellite Broadband

KBZ Gateway, part of the sprawling local conglomerate Kanbawza Group, has entered an agreement with Hughes Network Systems to use the Maryland-based company’s technology for a new satellite Internet network in Burma.

A statement from Hughes this week said that a network was under construction to offer broadband Internet directly to offices and homes in Burma, and to the country’s mobile providers. Hughes’ “Jupiter” system will be employed for the network, it said.

“The Hughes JUPITER System features a flexible and robust gateway architecture with lights-out operation, enhanced IPoS air interface for bandwidth efficiency, and high-throughput terminals, enabling operators to achieve the highest possible capacity and efficiency for any satellite broadband implementation,” the statement said.

“This is an alliance of two companies to help bridge the digital divide in our country,” the statement quoted Stephane Lamoureux, CEO of KBZ Gateway, as saying.

“It is not just about launching a new service. It is about driving growth and success of Myanmar’s telecommunication industry by providing high-speed, shared hub services to customers across the country. The JUPITER System gives us a powerful solution today and a seamless growth path to next-generation, high-throughput satellite services as they become available in Myanmar.”

Malaysia’s OCK Group Signs Agreement With Telenor

Malaysian telecommunications firm OCK Group has entered into a memorandum of understanding with Telenor Myanmar, and is reportedly set to build more than 900 new mobile phone towers for the Norwegian firm.

OCK Group announced on Thursday that, along with local partner King Royal Technologies, it had entered an agreement with Telenor “to build and lease tower infrastructure to Telenor.”

“All parties aimed to conclude the agreement in the next few weeks,” the statement to the Malaysian stock exchange said.

The business section of Malaysian newspaper The Star reported Friday that OCK Group was “in the final stages of getting a contract from Telenor’s Burma unit to build and lease more than 900 towers in the country.

“Sources told StarBiz that the contract would last for 12 years and all the towers under this phase were expected to be completed next year.”