Weekly Business Roundup (November 21, 2008)

By WILLIAM BOOT

China’s Burma Oil Conduit an ‘Abuse Threat’

China’s confirmation that it will use Burma as a conduit to ship oil from the Middle East and Africa into its southwestern provinces has triggered alarm among human rights campaigners of heightened risks of abuse.

Chinese state media quoted senior officials from Yunnan Province, which borders Burma, as saying that work on building a pipeline costing US $1.5 billion would begin within the next six months.

Construction work on both sides of the border is starting earlier than previously planned, ironically because of the global economic slump. The Chinese Communist Party has in the last ten days initiated colossal public spending totaling around $600 billion on numerous infrastructure projects to keep the country’s slowing economy working.

China has been rumored to be building a deep-draft port at Kyaukphyu on Ramree Island, located just off western Burma’s Arakan coast, capable of handling oil supertankers.

Xinhua news agency has more or less confirmed this by announcing that Burma will “provide an alternative route for China’s crude imports from the Middle East and Africa and ease the country’s worries of its over-dependence on energy transportation through the Strait of Malacca.”

Concurrent with the oil pipeline, China’s state-controlled energy giant China National Petroleum Corp (CNPC) is to build another pipeline through Burma costing just over $1 billion to pump gas from Burma’s offshore Shwe field.

International human rights groups have warned of the dangers to Burmese communities through which the pipelines will be built.

“The oil and gas pipelines to China pose massive threats to human rights from Arakan to Shan states—forced relocation, forced labor and other impacts on local populations are likely from pipeline security battalions,” Wong Aung, coordinator of the Shwe Gas Movement, told The Irrawaddy on Friday.

It’s understood that the South Korean industrial giant Daewoo International, which is the main developer of the Shwe field, will partner with CNPC.

“While CNPC will operate the gas pipeline, Daewoo International will still be culpable for the human rights impacts of the pipeline as the largest stakeholder in the Shwe Gas Project, of which the pipeline is a part,” said Matthew F Smith of the US-based EarthRights International (ERI).

ERI recently named Daewoo in a complaint to the Organization for Economic Cooperation and Development (OECD), of which South Korea is a member, for failing in Burma to adhere to corporate responsibility undertakings by OECD countries.

“From what we understand, the CNPC will virtually own and control the operation of these pipelines even though it has been announced that the Myanmar Oil and Gas Enterprise will be the other shareholding partner,” regional energy industries analyst-consultant Sar Watana told The Irrawaddy on Friday.

“These are major undertakings and underline China’s influence and utilization of Burma for its growing energy needs.”

Junta to Permit Building of 15 More Hydrodams

The Burmese ruling junta is reportedly planning another 15 hydroelectric projects on Burma’s rivers in addition to the 22 already on the drawing board or under construction.

If approved, the 15 hydrodams would have an electricity-generating capacity of almost 14,000 megawatts—on top of the 16,500 MW expected to result from dams already being developed.

“These dams, if they reach fruition and their full operating potential, would deliver more electricity than Thailand currently uses,” energy consultant Collin Reynolds in Bangkok told The Irrawaddy this week.

“It’s ironic, given the paltry level of electricity-generating capacity that Burma lives with in the 21st century. The Burmese have a mere 1,700 MW according to their own government’s latest official figures. Such a low level explains why Burma looks black on nighttime satellite pictures of the region.”

Neighboring Thailand has a generating capacity of 26,000 MW and will be a major recipient of hydropower generated in Burma. Other countries who will tap this power source are neighboring energy-hungry giants India and China.

The Chinese will not only be major recipients of the Burmese hydropower—their state-owned companies are heavily involved in the construction work to build them, the official Chinese news agency Xinhua said this week.

The companies include Yunnan Machinery and Equipment Import and Export Co, the Farsighted Investment Group Co, Gold Water Resources Limited and the China Power Investment Corporation, which alone will build seven dams, said Xinhua.

Japan to Build More Vehicles in Burma despite Global Slump

In the midst of a global recession, Japan is stepping up investment in its motorbike and vehicle assembly in Burma.

Nissan and Suzuki have partnership deals with First Myanmar Investment (FMI), a junta-linked leading Burmese business.

FMI president Theim Wai announced last week that the company is to significantly increase local production of vehicles, in particular Suzuki pickup trucks and motorbikes.

Neither side has disclosed how much will be invested in factory production line expansions, but FMI said the number of pickups to be built in 2009 will increase from its current level of 170 per month to 1,200 per month next year.

Suzuki’s formal joint venture status via the junta’s Ministry of Industry (2) was recently renewed for ten years.

Its assembly plant is in the South Dagon Industrial Zone in Rangoon.

Lloyd’s Boss also Board Member of Burma-linked Total

The chairman of global insurers Lloyd’s of London, the subject of a get-out-of-Burma campaign, has been disclosed as an influential board member of the French oil company Total.

Total is one of the last major European firms still operating in Burma, delivering hundreds of millions of dollars profit per year to the Burma junta via its sales of gas to Thailand from the Gulf of Martaban.

Lloyd’s boss Peter Levene has so far ignored calls by the British government to reconsider its involvement with the Burmese regime. It provides vital insurance cover for Burma’s international shipping and aviation businesses.

Human rights group Burma Campaign UK has recently been bombarding Lloyd’s staff with emails and telephone calls asking them to pressure Levene, who was named by US anti-corruption campaigner Inner City Press this week as a Total executive.