Weekly Business Roundup (October 03, 2008)

By WILLIAM BOOT

Japanese Companies get All Clear to Invest in Burma

The Japan External Trade Organization, known as JETRO, has ended its “hold” warning to Japanese companies made after the 2007 Burmese military crackdown, sources say.

Reports from Rangoon say Japanese firms want to set up parts manufacturing factories in joint ventures with local businesses, but no details have been disclosed and JETRO did not provide more information.

JETRO, a Tokyo government-funded business development agency, had advised companies planning to invest in Burma to wait in the wake of the violence, sparked after monk-led protests over harsh economic conditions and the junta’s tight grip on daily life.

The alarm was heightened by the fact that the only foreigner to die when the army opened fire on unarmed protesters in Rangoon was a Japanese cameraman who was filming the crackdown.

About 60 Japanese companies have a presence in Burma, either in factories or promotional liaison offices, says JETRO.

All of them scaled down their activities after the crackdown.

However, Japanese vehicle manufacturers have expressed new interest in joining one of several so-called special economic zones the ruling junta says it plans to establish.

Suzuki and Isuzu are already involved in low-scale ventures in Burma. Suzuki has been manufacturing pickup trucks and motorbikes since the late 1990s but a continuing poor economy has prevented expansion, say industry analysts.

The junta-linked Myanmar Economic Holdings and SPA Motorcycle Ltd, as well as the Ministry of Industry, are involved with Suzuki and Isuzu.

Lloyd’s Pressured by UK Government to Quit Burma

Major international insurer Lloyd’s of London is being pressured to stop doing business with Burma.

The British government has written to Lloyd’s expressing disquiet at its continued Burma links through brokers and affiliates.

The government wrote to Lloyd’s chairman Lord Levene. The contents of the letter have not been disclosed by either side, but the London Observer newspaper reports that it has led to Levene writing to underwriters and agents “urging them to consider” their continued involvement with junta-linked business.

The British government action follows increased public campaigning against Lloyd’s by the human rights group Burma Campaign UK after the company’s announcement of 2008 first half year global profits of US $1.76 billion.

The London-based NGO termed Lloyd’s profits in Burma “blood money” and called for a campaign to pressure the company to get out of Burma.

Lloyd’s refuses to disclose details of its Burma business, but it is believed to provide insurance guarantees for air and sea transport—key elements of the junta-controlled economy.

The loss of such underwriting could seriously upset the junta’s foreign business operations.

“This is humiliating for Lloyd’s. For too long they have profited from helping to finance Burma’s brutal dictatorship,” Burma Campaign UK campaigns organizer Johnny Chatterton told The Irrawaddy.

“Lloyd’s is breaking government guidelines and damaging their reputation. If they don’t end their involvement in Burma soon they will be branded by Burma in the same was that Barclays was with Apartheid South Africa and Exxon is with climate change.”

Junta’s Maung Aye to Bangladesh for Business, Sea Talks

Burma’s second-highest ranking military government chief, Vice Snr-Gen Maung Aye, is to make a second trip to western neighbors to drum up business and improve ties.

Maung Aye is scheduled to visit the Bangladesh capital Dhaka on October 7 for three days of talks which will include a bid to push forward settlement of disputed offshore waters.

Both countries are anxious to resolve their long-running territorial waters disagreement so they can get on with exploring for more undersea gas.

Foreign developers inside Burmese waters have already found huge gas reserves in the Shwe field.

Bangladesh upset both Burma and India recently when it announced plans to offer international licenses to explore blocks it claims are inside its territory—but disputed by the neighbors.

Maung Aye recently visited India, during which a major agreement was finalized to allow a state Indian company to build to large hydroelectric dams on the Chindwin River in northwestern Burma.

Like India, Bangladesh has been making a series of overtures to Burma to improve what have been frosty relations.

The Bangladeshis have made a number of economic cooperation proposals, including leasing large tracts of land inside Burma’s western Arakan State to grow crops to ship back to Bangladesh.

The Bangladeshis are also eyeing up prospects for small-scale hydro schemes in Arakan.

In addition, the Burmese government was reported last month to be planning to build a trading center at Maungdaw near the border to facilitate trade with Bangladesh. The focus is said to be shrimp sales.

According to media reports in Dhaka, Maung Aye will be accompanied by Foreign Minister Nyan Win and a 50-member business and bureaucrat delegation.