The Irrawaddy Business Roundup (Nov. 14, 2015)
By Simon Lewis 14 November 2015
Foreign Investors Want Continuity After Elections: Report
Despite Burma’s electorate sending a clear signal at the polls that they want change, foreign businesspeople are being quoted in international media insisting that the continuity should be the order of the day when it comes to matters economic.
Foreign companies welcomed the reform process initiated by incumbent President Thein Sein after his quasi-civilian government assumed power in 2011, which has seen limited industries in the economy opened up to investment. Oil and gas exploration rights and telecommunications licenses have been offered up to private companies from overseas in what have been considered successful and surprisingly transparent tender processes.
But favorable sentiment has been tempered by continuing US sanctions, and the elections have made for an uncertain business climate, with some potential investors apparently deciding to “wait and see” how the country’s political machinations will work themselves out.
A report in the Wall Street Journal this week, following Sunday’s vote, cited government foreign direct investment figures that it said show that a previous influx of capital was “faltering.” The report quoted a key US business body expressing an apparent desire among foreign businesses that any new government in Burma not change course in terms of the economic reforms.
“We’d like to see the new government continue opening up, continue reforms, continue making it easier for businesses to invest,” the Wall Street Journal quoted Judy Benn, executive director of the American Chamber of Commerce in Burma, as saying.
The report went on to cite an unnamed foreign consultant repeating often cited concerns that Aung San Suu Kyi’s party may not have the competence to manage the economy. “We’d like to see the new government come in with an attitude that’s all about preserving continuity, rather than a completely new agenda,” the consultant said. “We’d like to see some key people in the current government retained, at least during the transition period.”
Best Western Announces Rangoon ‘Boutique’ Hotel Plan
American hotel chain Best Western plans to open a new-build property in Burma under its “boutique” brand, according to an announcement.
The hotel and resorts company said the project in Rangoon was expected to be completed in 2018, and would be branded “Vīb.”
“All 110 rooms will feature chic, urban design, along with a high level of connectivity. Guests will benefit from complimentary Wi-Fi, work spaces with conveniently placed universal power outlets and USB ports, and ‘Smart’ flat-screen televisions,” the statement said.
“The Vīb social lobby concept allows guests to relax and stay connected, with stylish seating, free Wi-Fi, ample USB and power ports for electronic devices, and LED mood lighting.”
Best Western moved into Burma in 2013, as tourist arrivals began to soar. It now operates three hotels in Rangoon and Mandalay, with more “in the pipeline,” the company said. “The decision to launch its first Vīb hotel in Myanmar reflects Best Western’s long-term commitment to this rapidly-emerging country,” it said.
Thai Firm Reaps Profits From Myanmar Brewery Sale
ThaiBev, the company that owns beverage company Fraser and Neave (F&N) has reportedly seen its profits double with the sale of its stake in Myanmar Brewery.
Singapore-based newspaper the Business Times reported that ThaiBev’s profits for the third quarter, covering the period from July to September, reached 8 billion baht, or about US$220 million.
In August it was announced that F&N would sell its 55 percent stake in Myanmar Brewery to Japanese beer-maker Kirin for $560 million. The local shareholder in the brewery, which makes the market leading Myanmar Beer, is a company owned and operated directly by the Burmese military.
“Shares of ThaiBev closed flat at 68 Singapore cents on Thursday before the results were announced,” the report said.
“Revenue grew 3 per cent during the quarter to 36.5 billion baht, but higher cost of sales and services and higher operating expenses dragged net operating income to a 5 per cent decline, to 4.2 billion baht.”
Thai Warehouse Company Considering Burma Entry
Bangkok-listed WHA Corporation is considering extending its warehouse-leasing business into Burma as part of a regional expansion plan, according to multiple reports.
Reuters said the company was planning to invest more than 32 billion baht, or about $902 million, in growing its business over the next five years.
“WHA, the market leader in building bespoke warehouses for lease, has already invested in Indonesia and aims to tap markets in Vietnam, Myanmar and Cambodia, newly-appointed Chief Executive Officer Jareeporn Jarukornsakul told Reuters,” it said.
A report run by the Myanmar Times quoted the CEO saying that the Thai company planned to invest “conservatively” overseas. A decision to enter Burma would be made after the country’s political situation was clearer, she was quoted saying.
“WHA plans to invest mostly in green energy via mergers and acquisitions both in Thailand and abroad…” Jareeporn said, according to the Myanmar Times, which also credited the Bangkok Post. “But for Myanmar, we’ll have to wait and see a clear direction after [the November 8] election before taking any action.”
Hong Kong Low-Cost Carrier to Offer Rangoon, Mandalay Flights
HK Express, a budget airline based in Hong Kong, is set to launch regular flights between the Chinese special administrative region and two airports in Burma.
According to the website Airline Route, flights will begin early next year, reaching both Burma’s commercial capital and the main central city of Mandalay.
“HK Express starting February 2016 launches 2 new service to Myanmar, with flights to Yangon and Mandalay,” the website said. “Subject to Government Approval, the airline plans 4 weekly flights to Yangon, 2 weekly flights to Mandalay.”
The low-cost carrier specializes in regional flights to popular tourist destinations. HK Express also flies from Hong Kong to the Cambodian tourist town of Siem Reap, Vietnam’s Da Nang, and Phuket and Chiang Mai in Thailand.