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Burma’s swelling private sector is looking for business injections from Thai investors, with the Thai-Myanmar business council recently welcoming a delegation from the military-ruled country.
One firm Burma is eyeing is the Siam Cement Group (SCG), owned by the Royal Family of Thailand, which is said to be seeking a strong regional presence, particularly with the advancing of a Southeast Asia free trade area due to become active in 2015.
The head of SCG, Kan Trakulhoon, was quoted in The Nation newspaper as saying that “Burma has a lot of potential for SCG investment, particularly in the cement and building material businesses”.
The newspaper reported that the senior management will hold a meeting in the country to assess feasibility. Investment in Burma could also provide a means for expansion into the ever-buoyant Chinese market.
There appears a belief that Burma will be a more stable business environment after the upcoming elections, with a future government likely to be keen to attract foreign business.
Economic analyst Aung Thu Nyein however casts doubts over this forecast. “At this moment the military regime has no intention of changing its economic policy. At the same time, one problem is major corruption throughout the country.”
He added that the party widely tipped to win the election, Union and Solidarity and Development Party (USDA), “hasn’t made any comment about economic reform, so basically I doubt the economic situation will change dramatically”.
Some construction businesses in the country are doing well, he said, but this was overwhelmingly focussed on the new capital, Naypyidaw.
Thailand is currently the largest foreign investor in Burma, with roughly US$7.41 billion invested between 1988 and 2009. Some 80 percent of this investment has been in the energy sector. Thailand’s national oil company, PTTEP, was heavily involved in the Yadana gas pipeline – along with French oil giant TOTAL and Chevron in the US – that carries gas from the Bay of Bengal to Thailand.
The eyeing of greater business with Burma coincides with an announcement that Thai prime minister Abhisit Vejajjiva will travel to the country next month. It also follows hot on the heels of warnings about the security of investment in Burma for Chinese companies.
Meanwhile Thai Prime Minister Abhist Vejajiva is due to travel to the country next month. This also follows hot on the heels of warnings about the security of investment in Burma for Chinese companies.
Despite an ambivalent political relationship, Burma and Thailand have a large degree of economic synthesis. Migrant labourers, most of whom are Burmese, contribute as much as seven percent of Thai GDP, whilst Thai manufactured goods are common in Burma, and Burmese narcotics sweep Thailand’s cities.
Whether Burma can be a successful destination for foreign investment will, as Thai firms have indicated, be reliant upon the future government and its ability to invest in infrastructure, such as electricity and transport. Business people on the border warn that the lack of these makes investment in Burmese industry, such as the garment sector, nonsensical, even when their entire workforce are from Burma.