Business Roundup (January 09, 2009)

By WILLIAM BOOT

Winners & Losers Among Burma’s Foreign Partners

A new study of Burma’s economy reveals several trends in terms of the military regime’s foreign trading partners.

China is becoming increasingly influential, while Japan’s relevance is in decline.

Singapore remains important to the regime’s economic affairs but is “declining in relative terms,” said the study by Australia’s Macquarie University.

However, despite China’s overall rising influence on Burma’s economy, the regime continues to remain dependent in Thailand “as the principal market for Burma’s exports”—notably gas.

Gas is Burma’s biggest single foreign income earner, but since the global economic slump began gas revenues are declining due to a worldwide drop in prices.

The fall in gas prices will continue at least into the first half of 2009, says the report, “Burma’s Economy 2008/09: Decline, Disaster, and Ways Forward,” authored by Prof Sean Turnell.


Offshore Drillings Bring No New Year Cheer

Two expensive exploratory drilling projects at opposite ends of Burma have been abandoned as failures in the past few weeks.

Thailand’s overseas explorer PTTEP is writing off a US $27 million well probe in its Burmese offshore M-7 block in the Gulf of Martaban.

In its first drill in the block, going down to over 3,500 meters, its Janaka-1 well probe found petroleum-bearing deposits, but the firm’s assessors decided it was not enough for commercial purposes.

The M-7 block disappointment is in contrast to PTTEP’s M-9 discoveries also in the Gulf of Martaban, where at least 50 billion cubic meters have been estimated.

The M-7 block covers 13,300 square kilometers in the Gulf.

PTTEP’s disappointment follows the abandonment of exploratory drilling by South Korea’s Daewoo International in the Bay of Bengal, near the gas-rich Shwe field, in waters contested by Bangladesh.

Daewoo was reported to be paying $125,000 a day for undersea probes in the AD-7 block, an area of the bay which the Dhaka authorities claim is in Bangladesh territory.

However, both PTTEP and Daewoo say they have not given up on finding commercial oil and gas stocks and say they will continue drilling in others areas of the two blocks.

The navies of Burma and Bangladesh had a brief confrontation late last year over Daewoo’s drilling, and the territorial claims by both countries remain unresolved.


Burma ‘Too Poor’ to Hold Potential as Untapped Consumer Market

A report suggesting that Burma offers huge potential as a vast untapped consumer market for foreign companies has been put in perspective by an expert on the country’s economy.

The CEO of Singapore-based consulting firm e.three, Eric Rosenkrantz, said in a report this week that Burma offered “plenty of opportunities for regional and international companies to develop or strengthen their business.”

Rosenkranz, whose portfolio includes consulting with multinational firms such as Proctor & Gamble, Mars, British American Tobacco and Thai petroleum exploration company PTTEP, said Burma’s consumer goods market is “ready to explode.”

“What company can afford to ignore the potential of 50 million untapped consumers?” he suggested.

But Sean Turnell, an economist at Australia’s Macquarie University who produces a regular Burma Economic Watch report, said Friday that Burma’s economy was closer to collapse than booming in consumer sales.

“The people of Burma want and need many things but their incomes preclude making this demand effective simply because they cannot afford to buy them,” said Turnell.

“Per capita GDP in Burma at the market exchange rate is less than a dollar a day.”

Burma’s consumer market would be of rather less value to most makers of international consumer goods than the smallest of America’s states or most of their major cities, said Turnell.

Per capita GDP in Burma as of the end of 2008 was US $280.

“How many iPhones would this buy – assuming the military regime allowed them?