Economy

WEEKLY BUSINESS ROUNDUP (Saturday, June 9)

By William Boot 9 June 2012

Paris Group Says China Still Active on Myitsone Dam

The International Commission on Large Dams (ICOLD) has denied reports in the Chinese media that it is involved in assessing the safety of the suspended Myitsone hydroelectric dam project. However, the Paris-based organization confirmed that the state-owned China Power Investment Corporation (CPI) is still active in the project despite the suspension ordered by the Burmese government last September.

“ICOLD follows UN rules respecting national sovereignty,” it said in a statement. “It issues recommendations on the state-of-the art of dam engineering but it does not have any operational role in dam building.

“The builder of the Irrawaddy Myitsone dam project in Myanmar has directly asked experts coming from countries with long-term experience in building and operating large dams to assess its work.”

ICOLD also disclosed that Burma has applied for membership of the body, which describes itself as a “forum for the exchange of knowledge and experience in dam engineering.”

“CPI is making a mockery of the dam suspension,” the Kachin Development Networking Group said. “They’ve refused to pull out of the dam site, and now they’re bringing in global dam technocrats to challenge the suspension.”

Thai Oil Firm Expands Burma Interests

Thailand’s state-owned oil and gas giant PTT Group is stepping up its investment in Burma.

Its exploration subsidiary PTTEP has signed agreements to drill in two onshore blocks in the Irrawaddy valley, and PTT said it plans to establish a chain of roadside fuel retailing stations in the country.

“No major [fuel retail] brands have yet been established in Myanmar. This is a good chance for PTT to set up there,” chief operating officer Nuttachat Charuchinda announced.

“We have looked at Myanmar as a high-potential market, with oil consumption per capita still very low,” said Nuttachat.

Demand for liquefied petroleum gas (LPG) in Burma is only 10,000 tonnes a year compared with 200,000 consumed in Thailand each month, said PTT.

Meanwhile, PTTEP has joined a little-known Burmese firm called Win Precious Resources to explore two large areas west of Naypyidaw. One block is 13,300 square km, PTTEP said.

“[Burma] is one of our focus countries in upstream petroleum, and we’re also preparing gas development plans for its central government,” PTTEP chief executive Tevin Vongvanich said in a statement.

Little if anything is known about Win Precious Resources other than that it is linked with Singapore. Under new rules for Burma’s oil and gas sector, foreign investors must take on a Burmese partner.

Stiglitz Warns Burma of ‘Natural Resource Curse’

Prominent international economist Joseph Stiglitz has urged the Burmese government to establish a sovereign fund to manage all the country’s profits from oil and gas.

Such a fund would help ensure the revenue benefits the whole country’s development and not become lost in what has become known as the “resource curse.”

“Many countries with large natural resources have not done well. They’ve not done well in terms of growth, equity, poverty reduction, and so much so that this is called the natural resource curse, and we’ve studied the causes and what can be done about it,” the Nobel prize-winning economist told CNBC news.

Income from oil and gas is expected to rise steadily as Burma opens up and more foreign investors move into to explore and develop energy resources.

Sovereign wealth funds are usually state-owned and involve long-term international investment in stocks, property, precious metals or solid businesses, such as utilities, to maximize profitability on capital.

Korean Firm Signs MoU on Rangoon Power Plant

South Korean industrial firm BKB has signed an MoU to build a 500 megawatt gas-fueled power plant in the greater Rangoon area.

If the plan goes ahead, it will increase Burma’s electricity-generating capacity by almost one-third.

The plant, planned for Tharkayta Township “could be completed in about one year,” the New Light of Myanmar claimed. However, no start date has been announced.

The paper said the MoU also involved a firm named Hexa International, which is listed as a Burmese importer of second-hand vehicles.

200 Foreign Firms to Attend Rangoon Business Summit

Organizers of a business “summit” in Rangoon later this month say more than 200 foreign companies have registered to take part.

One-quarter of participants are from financial institutions and investment business, said the Centre for Management Technology (CMT) in Singapore, while another 22 percent are from the agricultural sector.

Another 18 percent of those registered to take part are from the oil, gas and power industries.

The New Myanmar Investment Summit is being held on June 21-22 in Rangoon and keynote speakers are billed from the Burmese government’s newly formed Directorate of Investment and Company Administration, part of the Ministry of National Planning and Economic Development.

The focus of the conference will be detailed explanations of the country’s new foreign investment rules and land reforms plans, said CMT.

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