Weekly Business Roundup (January 02, 2009)

By WILLIAM BOOT

2008: Surge Year in Foreign Investment in Burma

BANGKOK — 2008 saw a surge in foreign companies doing business in Burma despite U.S. and European Union sanctions, observers and activists say.

The largest number of newcomers work in the oil, gas and hydrodam sectors with the aim of producing for export the commodity Burma itself is most in need of—energy.

“I would estimate that dozens of new firms have started up business in Burma in 2008,” analyst Mike Arnold told The Irrawaddy. “Many of them are Chinese state-owned enterprises underlining the tightening grip on Burma that Beijing has applied.”

“With two major pipelines to be built through the country, I think you are also going to see a continuing increase in Chinese and other Asian firms getting involved in Burma in 2009,” said Arnold, a Hong Kong-based energy sector analyst.

Thirty new company names were recently added to the so-called dirty list compiled by the human rights activist organization Burma Campaign UK, from the tourism and construction to energy.

The biggest single sector 2008 additions named by the campaign were in hydroelectric dam construction, and they came from India, Britain, Japan and China.

More than 110 of the 170 companies named in Burma Campaign’s dirty list are in energy and tourism-linked businesses.

“New targeted sanctions against the regime must be implemented if the international community is serious about cutting the regime’s financial lifeline,” says the campaign’s Johnny Chatterton.

The British human rights group says it successfully persuaded a number companies in 2008 to stop doing business with Burma, but one of its biggest targets—the London-based insurance brokers Lloyds—steadfastly refused to budge.


Daewoo ‘Coerced’ to Sell Shwe Gas to China

The gas pipeline to be built through Burma from the coast to China will cost about US $1 billion, industry analysts estimate.

But the total bill the Chinese are likely to pick up for the development of transshipment facilities for both gas and oil is likely to be at least US$2.5 billion.

The formal confirmation last week that state-owned China National Petroleum Corporation will buy a 30-year supply of gas from the offshore Shwe field merely confirms what most in the industry have known for a year.

The deal will involve pumping trillions of cubic feet (up to 200 billion cubic meters) from the Bay of Bengal to Kunming in China’s Yunnan province.

The Shwe field is being developed by a South Korean-Indian consortium led by the industrial conglomerate Daewoo International.

“It’s amusing to hear the Chinese state media report that China was selected by Daewoo from a number of international bidders for the Shwe gas,” independent energy sector consultant-analyst Sar Watana told The Irrawaddy in Bangkok this week.

“From what we understand, it is quite the opposite. Daewoo was coerced to sell the gas to China in the face of higher bids from India and Japan, and interest from Thailand. The South Korean government’s Korea Gas enterprise also wanted to buy some of the gas.”

Peliminary surveying work for the 1,200 kilometer gas pipeline is likely to begin in 2009, although it could be another four years before the gas flows.

Daewoo, the leading stakeholder in the Shwe field, has been reported to the Organization for Economic Cooperation and Development—to which South Korea belongs—for failing to comply with the multinational body’s code of corporate conduct on human rights.

The U.S. EarthRights International group said Daewoo’s commercial activities in Burma, including links with the pipeline, were against Burmese interests and human and land rights.

The South Korean government has rejected the ERI complaint as unfounded.

Some industry analysts question claims by the official Chinese news agency Xinhua that Burma will be able to tap into the gas being pumped through the country into China to “help promote economic development.”

“Unless China is going to provide the infrastructure needed, the Burmese authorities do not have the wherewithal to utilize the gas in any meaningful way,” said another Bangkok-based industry observer who declined to be named because of the sensitive nature of the subject.

China is also planning to develop an oil pipeline through Burma, from a new deep-sea transshipment port development at Kyaukpyu on Ramree Island.

This pipeline is likely to cost US $1.5 billion, according to Japan’s Nikkei newspaper quoting sources in the state Myanmar Oil and Gas Enterprise.


Thai Company to Widen Dig for Burmese Coal

The Bangkok-based coal mining company Saraburi was unable to comment this week on reports that it is expanding its business in Burma.

The open-cast miner has reportedly won a concession to dig for coal in Shan State bordering northern Thailand north of Tachilek, Burma.

Saraburi already mines extensively in southern Burma at Maw Taung, where work has severely scarred land to get at reserves the company has estimated at 10 million tons.

Environmentalists say the opencast mining methods would no longer be tolerated in Thailand, just across the border.

But Saraburi says in a Web site company policy statement that it “commits to operate in [an] ethical and mutual manner with its customers, business counterparts, alliances, employees and shareholders to benefit the society and the country as a whole.”

The new concession in Shan State was reported by the local news group S.H.A.N.