Weekly Business Roundup (November 28, 2008)

By WILLIAM BOOT

India, Burma Reach Tax Cooperation Deal

One of the more interesting agreements reached at a top-level trade and political relations meeting between India and Burma is a tax cooperation deal.

The two countries have agreed on ensuring “avoidance of double taxation for investors from the two countries and prevention of fiscal evasion with respect to taxes on income.”

Economists who monitor Burma’s blacklisted international financial dealings wonder how New Delhi envisages integrating such a policy.

India has recently agreed to undertake some major infrastructure developments in Burma—including hydrodam projects and redevelopment of the west coast port of Sittwe—involving a number of Indian companies.

Key members of the Burmese junta and various enterprises are under economic sanctions by the United States. The International Monetary Fund and World Bank have put Burma on blacklists for non-payment of loans; and the United Nations recently admitted that it was losing millions of Cyclone Nargis aid dollars through an enforced exchange rate implemented by a junta-designated bank.

Burmese Tourism Increases a ‘Little’

Two reports paint different pictures of the state of Burma’s tourism industry.

According to the one report, foreign tourist visits to one of the country’s world famous sights halved in the six months after May’s Cyclone Nargis.

Numbers visiting Rangoon’s Shwedagon pagoda—often seen as a barometer of tourism—dropped to 25,380 in that period, compared with almost 54,000 in the same period of 2007, the Weekly Eleven journal quoted Ministry of Hotels and Tourism figures as saying.

But another report citing the ministry said foreign tourists numbers in recent months have “picked up a little.”

The number of visitors entering through Rangoon Airport was 11,245 in September, rising to 17,848 in October, said the overseas-based Burmese news agency Mizzima.

The bulk of foreigners entering Burma remain Chinese and Thais and many are repeat entries who travel no farther than the casinos on the Burmese side of the border.

“Most real tourists go to Rangoon, Mandalay, Bagan and Inle Lake,” said a travel agent in Bangkok who declined to be named. “In those places, there is a little recovery post Nargis. But the beach resorts are hurting, and some hotels that cater exclusively to Westerners have closed down recently.”

After Cyclone Nargis an international tour operator, Exotissimo Travel, based in Bangkok, did a deal with the Ministry of Hotel and Tourism to provide visas on arrival in the country. The aim was to encourage more visitors by eliminating paperwork at Burmese embassies.

In the aftermath of Nargis, which came on top of the bloody crackdown in September 2007 on street protests, the Tourism Entrepreneurs Association in Burma reported tourist numbers had plummeted 90 percent.

Talks Postponement Coincides with Daewoo Drilling

Energy industry analysts say the announcement that Bangladesh and Burma will not meet again until January to discuss disputed maritime boundaries coincides with the completion of the working schedule of oil and gas explorer Daewoo International of South Korea.

Daewoo was at the center of the recent naval confrontation between Burma and Bangladesh when the Bangladeshis challenged an exploratory drilling rig operating on behalf of the South Koreans in Bay of Bengal coastal waters.

After a military face off and diplomatic protests, Daewoo packed up and left the disputed site—which is not far from the major Burmese Shwe gas field.

The two neighboring countries met in November to try to resolve their longstanding territorial dispute, but talks ended without agreement with a decision to meet again before January.

“That’s curious given, the urgency of this issue, because it about coincides with the end of the five-month exploratory offshore drilling period that Daewoo announced in September,” oil and gas services consultant Collin Reynolds in Bangkok told The Irrawaddy this week. Daewoo moved away from the contentious site earlier this month, but it is unclear whether it is drilling elsewhere.

In September, Daewoo announced it had won unspecified drilling rights from the Myanmar Oil and Gas Enterprise.

It hired the U.S. firm Transocean, the world’s largest offshore drilling contractor that hires out specialist equipment and technicians, and said it would explore in the area for five months.