The Irrawaddy Magazine |
- Garment Factories Downsize in Response to Minimum Wage
- Scrapping Indonesia’s Bullet Train Leaves Top Investors Confused
- The Irrawaddy Business Roundup (Sept. 5, 2015)
| Garment Factories Downsize in Response to Minimum Wage Posted: 04 Sep 2015 07:19 PM PDT
 Garment factory workers stage a demonstration calling for wage increases in February 2015. (Photo: The Irrawaddy) RANGOON — At least one factory has shut down, and several others have reduced their workforces and cut allowances, following the government's adoption of a minimum wage. Ahead of the introduction of a 3,600 kyats (US$2.80) minimum wage, which took effect on Sept. 1, the Sabel Pwint Garment Factory in Rangoon's Hlaing Tharyar Industrial Zone closed its doors. It is believed the company provided termination payments to all of its 237 employees. They submitted an application for closure on Aug. 26," said an official from the Ministry of Labor, Employment and Social Security, who requested anonymity. "It said it would cease operations on Aug. 31 and compensate all employees according to the law. Employees have so far not filed complaints." Before the minimum wage was finalized, following two years of discussions, some garment factories based in Hlaing Tharyar cut their workforces in anticipation of the changes. At least 97 employees of the Shwe Hsan Yi canvas bag factory were made redundant in July, while the Asia Rose garment factory laid off 190 workers. Garment factory owners lobbied against the 3,600 kyats minimum wage, set by the government after tripartite negotiations with labor unions and employer representatives, but there have been differing views of its potential impact on businesses. "A 3,600 kyats minimum wage might impact upon outsourcers in the future, but it is unlikely to directly affect garment factories which operate independently and receive orders from buyersdirectly," said Myat San Win, owner of the UMH garment factory. Factory owners said they were also dealing with a range of additional costs that were eating into profit margins, including the tripling of electricity bills as a result of generator use during power cuts, higher rents, inadequate port and transport facilities, a short supply of skilled laborers and low workforce retention. The current Minimum Wage Law also has its critics among labor activists. Aung Lin, chairman of the Burma Trade Union Federation, said that a provision allowing employers to hire employees on a three-month internship and a further three-month probationary period allowed firms to hire and fire as they pleased "They may take advantage of this provision to sack employees who engage in labor rights activities," he said. "[But] we'll monitor the actions of employers and help employees in line with the law." Employees have expressed concern that companies will cut other allowances as a consequence of the new minimum wage. "Some garment factories in the Mingaladon Industrial Zone have stopped providing meal," said Phyo Zin Kyaw, a garment factory worker. "Some no longer provide ferry services. Some have increased their workload. And some workers have quit of their own volition because of these changes." The minimum wage will be applied across all industries in Burma, with exemptions for small and family-owned businesses employing less than 15 people. Overtime is paid at double rates.
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| Scrapping Indonesia’s Bullet Train Leaves Top Investors Confused Posted: 04 Sep 2015 06:59 PM PDT  Attendants pose for a photo beside the models of a high-speed train during at an August exhibition in Jakarta. (Photo: Rivan Awal Lingga / Antara Foto & Reuters) JAKARTA — Indonesia’s 11th-hour decision to scrap plans for the nation’s first high-speed railway has sown confusion among top investors from China and Japan, potentially undermining the strong foreign investment that has been a rare economic bright spot. China and Japan had been battling over the multi-billion dollar contract, until it was abruptly pulled in what appeared to be the latest in a series of regulatory flip-flops and erratic policy-making moves under President Joko Widodo. Indonesia’s chief economics minister was left to explain to the two Asian giants on Friday the reason why Jakarta decided at the last-minute that a bullet train was no longer viable for Southeast Asia’s largest economy. “It looks like a sudden move because the recommendation was made after a review of both proposals,” Teten Masduki, presidential chief of staff, told Reuters. “But the recommendation is in the best interest of the country.” Tokyo and Beijing had lobbied heavily for the $5 billion contract, each sweetening the terms of their bids up until Monday’s deadline. Analysts believed that whoever had won would likely have been the front-runner for future high-speed rail projects in Asia, including one linking Kuala Lumpur and Singapore. “It was the recommendation from independent consultants that suggested to the government that a medium-speed rail was a better option because the cost is cheaper and the time of the journey isn’t much longer,” Masduki said. President Widodo announced late Thursday that a bullet train between the capital Jakarta and the textile town of Bandung was unnecessary, since it would never reach its maximum speed of more than 300 km (188 miles) per hour in between station stops. The administration instead advocated a slower train for the 150 km journey and asked China, Japan, and others to submit new proposals. “Consequently, both proposals extended by our government and the Chinese government are not accepted,” Yasuaki Tanizaki, Japan’s ambassador to Indonesia, told reporters on Friday. “I have expressed my regrets.” The train was initially intended to be the first instalment of a 763 km rail link connecting Indonesia’s two biggest cities, Jakarta and Surabaya. The presidential palace said it still wanted to build a bullet train covering the entire Java island. A Chinese embassy official in Jakarta declined to comment until more information was provided by Indonesia. “The project was a priority for China because it would have been one of the first and most visible manifestations of President Xi Jinping’s ‘One Belt, One Road’ overseas investment drive,” said Tom Rafferty, Beijing-based analyst at the Economist Intelligence Unit. “Chinese firms have not always been sensitive to political risk in foreign markets but on this occasion the lobbying and marketing effort was extensive. The decision therefore seems likely to dim China’s confidence in the Indonesian market.” Japanese ambassador Tanizaki said he did not think Thursday’s decision would affect Japan’s investment in the country. He said Tokyo was waiting for details on the medium-speed rail project before deciding whether to participate. The road to Thursday’s decision was particularly bumpy for Tokyo, which had initially believed it won the contract in March after completing a more than $3 million feasibility study. But Indonesia decided to invite other offers in order to get the best deal. Japan is Indonesia’s second largest investor and is no stranger to the uncertainty surrounding major infrastructure projects in the world’s fourth most populous country. Japanese firms have been waiting four years to build a $4 billion coal-fired power plant, Southeast Asia’s biggest, and were told by President Widodo last week that construction was now set to start. But obstacles still stand in the way with dozens of landowners refusing to give up their paddy fields, leaving investors still uncertain on when ground will finally be broken. “The cumulative effect of delays on a number of projects could send a bad signal to investors,” said Paul Rowland, a Jakarta-based political analyst. “It’s clear that the president is frustrated with the pace of things.”
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| The Irrawaddy Business Roundup (Sept. 5, 2015) Posted: 04 Sep 2015 05:10 PM PDT  A traffic officer in downtown Rangoon (Photo: Steve Tickner / The Irrawaddy) ADB Warns Over Traffic as Rangoon's Circle Line Gets Funding Boost As Rangoon's roads become more clogged with cars by the week, the Asian Development Bank (ADB) has issued a warning to countries across the Asian continent on the economic drag caused by endemic traffic congestion in major cities. The bank's warning comes alongside the news that the Japanese government will put more funding into upgrading the city's circular railway line. However, more ambitious public transport projects have not yet been agreed. Burma's biggest city has seen a surge in the number of vehicles since import restrictions were relaxed in 2011 as part of a wider economic reform program that has also seen Rangoon awash with new money—much of which is used to import cars, mainly from Japan and Thailand. According to a Myanmar Times report earlier this year, 430,000 of the country's 640,000 registered vehicles—including cars, buses and trucks—are in the former capital. Most visitors who have sat in road clogged with white Toyota Proboxes will not be surprised that the number includes some 57,000 taxis, according to the Times. An article posted on the ADB's website this week said that such traffic problems are holding back economic growth across the region, as well as contributing to climate change. "Road congestion already costs Asian economies an estimated 2-5 percent of their gross domestic product every year due to lost time and higher transport costs," the bank said, adding that concerns over traffic were not just economic. "The region's cities suffer from the highest air pollution levels in the world with as much as 80 percent attributable to transport. Health problems due to air pollution, such as respiratory diseases, cost many Asian developing countries 2-4 percent of their gross domestic product." The article went on to say that ADB would be supporting railway and inland waterway projects across the region. Through its so-called Sustainable Transport Initiative, the "ADB will be promoting business models capable of realizing the potential competitiveness of these modes of transport within the public sector, privately, or through public-private partnerships." In Rangoon, the Japanese aid agency, JICA, has taken the lead in funding new public transportation schemes. The agency has proposed the city build a subway system, and even suggested it might fund the project, but the plan is reportedly still under discussion. In the meantime, attention is being focussed on turning the rickety circular railway line into a modern urban transport system. The Global New Light of Myanmar reported early this week that JICA would provide a $207 million loan for upgrades, including new trains from Japan, under an agreement that had not yet been signed. Reuters reported Thursday that the plan had been approved. "The upgrade will see journey times cut by half," the state-run newspaper quoted Myanma Railways senior general manager (inspections) Ba Myint as saying. The project also involves installing new technology on the circle line, and is scheduled to be completed by 2021, the report said. Analysts See Post-Election Bounce for Property Market While Rangoon's real estate market has slowed down in recent months, a planned expansion of the city could help ensure it bounces back after elections in November, according to analysts at the Oxford Business Group. The UK-based firm said in an update on the construction sector this week that property values have started to come down after a surge in recent years as demand exploded against a backdrop of severely limited residential and office space. It said new residential properties coming on the market "may have tipped the balance towards an excess of supply in some segments" and that demand for new apartments—which are usually bought "off-plan", or while construction is still underway—had cooled. "Sales of units to investors as either rental properties or on speculation of a continued rise in prices have also dropped amidst uncertainty ahead of the November elections," the update said. However, Oxford Business Group pointed to a government plan to extend the city's urban area outwards, which it said would support the property market. City officials have announced plans to build seven new urban areas around the city, with a development in the northeast of the city worth almost $400 million already proposed, it said. Once the elections are over, the group foreign interest in the property market is predicted to return. "The government has also moved to allay concerns and boost confidence in the construction and real estate sectors, pledging to compensate investors and developers for losses incurred after the cancellation of five developments near the Shwedagon Pagoda, where construction was blocked on concerns the projects would affect the views of the temple or damage its foundations," said the update. "Despite the cancellations, the successful launch of Yangon's urban expansion program may mean concerns over Myanmar's property development industry are short-lived." PTT Offloads Stakes in Onshore Exploration Blocks The Thai state-owned oil company PTT has offloaded 20 percent of its two Burmese onshore oil and gas exploration blocks, according to an announcement to the Stock Exchange of Thailand. PTT Exploration and Production (PTTEP) president and CEO Tevin Vongvanich said in a note to the bourse on Aug. 31 that the decision to sell off part of its Burmese interests was "part of PTTEP's strategy in portfolio management, aiming to both add value to the project and manage risk." Global energy prices have slumped this year, raising concerns that oil and gas exploration activity underway in both offshore and onshore Burmese areas may be less likely to lead to production. PTTEP's divestment is offset, however, by the fact is also involved in the already-producing Zawtika offshore gas field and another offshore field where gas had been located. According to the note this week, subsidiary PTTEP South Asia Limited previously held a 90 percent stake in both the onshore blocks, known as PSC-G and EP2, which cover 13,330 and 1,345 square kilometers, respectively, and are both located in the area of the Irrawaddy River basin. A 10 percent stake in each of the blocks has been sold to Japan's Mitsui Oil Exploration Co. Ltd, MOECO, the note said. The same stakes have also been transferred to a Thai company named PALANG SOPHON OFFSHORE PTE. LTD. The company does not appear to have a website, but is also involved in oil and gas exploration in the Thai waters in the Gulf of Thailand. "The transaction was approved by the government of Republic of the Union of Myanmar," the announcement said. Local partner Win Precious Resources retains a 10 percent stake in the two blocks. The Burmese company is an affiliate of Myanmar Precious Resources Group, which boasts on its website interests in gold mining, jade mining and "producing crude oil from shallow wells." Indian Firm Hired By 'Luxembourg' Oil Explorer An oil and gas company linked to a mysterious Kazakh entrepreneur has hired Indian firm Alphageo to conduct 2D seismic surveys in a deal worth $3 million, according to an Indian media report. The Economic Times reported Wednesday that a Dubai subsidiary of Alphageo had been hired by CAOG, a company officially listed in Luxembourg that was awarded one of 16 onshore oil and gas exploration blocks in a 2013 tender. CAOG is one of a handful of companies that raised eyebrows in Burma's recent oil and gas tenders when it was awarded the rights to explore the block known as MOGE 4 in Sagaing Division. UK-based campaign group Global Witness highlighted the company for not providing any details of its ownership on request. According to a report in the Financial Times last year, CAOG is linked to Shyngys Kulzhanov through the Kazakh's group of companies known as Berlanga Group, which also won one of Burma's offshore exploration blocks. "The 44-year-old Mr Kulzhanov, who is listed as having an address in London's Belgravia, developed oil and gas interests in Kazakhstan after the collapse of the Soviet Union," the Financial Times reported. "He focused on the lucrative export market for energy to fuel the rapid growth of neighbouring China, playing a part in deals such as a 2009 venture with Xinjiang Guanghui Industry to send gas for liquefaction over the border." Thai Construction Contractor Sets Up Burma Subsidiary Christiani & Nielsen (Thai) Plc, a Bangkok-listed company, has reportedly opened a new subsidiary in Burma in the hope of joining the country's construction boom. The Bangkok Post reported comments from assistant managing director Surasak Osathanugraha regarding the new venture named CN Myanmar. He said the company had moved in when one of its customers in Thailand was looking to build a factory in Burma, the report said. "Company activities are now limited to project management and supervising difficult or risky tasks, generating tens of millions of baht in fee-based revenue," the Post reported. "CN Myanmar will have registered capital of US$50,000, the minimum required for a foreign firm in that country, before increasing amid the high number of construction jobs expected." The post The Irrawaddy Business Roundup (Sept. 5, 2015) appeared first on The Irrawaddy. |
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