Day One
Daewoo
After
enjoying the wonderful breakfast at the Chatrium Hotel in Yangon, we headed off
in our gigantic bus to meet Daewoo International Corporation. Everyone was very excited to enter into our
first meeting and a bit anxious to see how these meetings would proceed.
Daewoo
International Corporation is Korea’s largest trading company and a subsidiary
of POSCO (Pohang Iron and Steel Company), a multinational steel making company
based in Korea. Mr. Si Bo Joo, the executive vice president and managing
director of the Myanmar branch, gave a wonderful presentation of their gas
production journey in Myanmar also known as ‘The Shwe Project.”
He went on to talk about some of the technical aspects of drilling,
production, and transfer into the main pipelines.
Interestingly, he also discussed
how the contract with the Chinese company, SEA Gas Pipeline Corporation
receives 80% of the total sales volume of gas, and only 20% goes into the
domestic market. From the first gas produced in 2013 of 200 million standard
cubic meters per day to 500 MSm3/d
in 2014. The share of gas will not increase over time unless they are able to
find more sources and increase their current capacity. The off-shore gas is
transferred from the west Myanmar to west China through a 792.5 kilometer
pipeline.
Mr. Joo also went into detail of
Daewoo’s serious intent in their promotion of CSR. Since starting their project
in 2000, they have invested 4.2 million USD on socio-economic programs that
have mainly been distributed in health and education. He also mentioned they
are environmentally conscious and have participated the Mangrove restoration
near the coast that also protect the people from cyclones such as Cyclone
Nargis in 2008 that devastated Myanmar with approximately 100,000 deaths.
Although mainly rich in gas, Myanmar
will play a pivotal role in the oil industry by transferring Middle Eastern oil
to China through a oil pipeline paralleled with the gas one. Currently they are
going through the Strait of Malacca and will save companies for transportation
costs.
As the meeting was
concluding, Mr. Joo gifted all of us a beautiful glass paperweight that had a
figure of the gas rig in Swe. This was a very informative meeting and a great
start to the week, and we headed back to the bus.
Back on the bus, the gigantic bus and Yangon traffic combined did not help our travels. The local infrastructure changes and increase in tourism has made the traffic in Yangon very congested but after arriving at a local Burmese restaurant, we had our choice of many different dishes including prawns, chicken, mutton, and vegetable dishes. We had our fill and the food was fantastic and definitely worth the wait.
Tata International
After a hearty Burmese
lunch, we spent a couple of hours at the Junction Square Shopping Centre,
Myanmar's largest mall. The group split off to explore the shops, sample some
desserts at the food court, and play arcade games--Margaux and Matt entertained
a few local children with their dance moves on the Dance Dance Revolution mat.
We left the mall in the late afternoon to head to our next meeting, which was
with Sunil Seth, the Myanmar Country Head for Tata International. Mr. Seth
provided us with an informative and detailed brief on the state of business,
trade, and infrastructure in Myanmar. Mr. Seth has been with the Tata Group for
three decades in Asia and in Europe, and he has witnessed the changes taking
place in Myanmar since assuming his current role two years ago.
Tata has identified
Myanmar as one of three key target markets for investment, along with Indonesia
and Vietnam. Myanmar has traditionally been an exporter of agricultural goods,
including pulses and rice. In recent years, exports of pulses--mainly to
India--have continued, but both the quantity and quality of rice produced has
decreased. Tata is involved in the export of pulses, selling branded Burmese
pulses at its retail markets in India. Mr. Seth noted that despite the recent
downturn in rice production, the country has the potential to modernize
production techniques and once again become a competitive rice exporter.
Tata's most
significant investment in Myanmar, however, is a coal power plant currently
under development in Pathein. The plant, which is expected to produce 1,320
megawatts of power annually, is expected to cost $3 billion, and it represents
the largest single Indian investment in the country. The current power
infrastructure is inadequate, however, and severe irregularities in pricing are
disrupting the market. Tata, along with other Indian companies and Thai
companies, are advising the Myanmar government on developing a uniform power
purchase agreement, which would standardize power pricing, and Chinese
companies are focusing on upgrading and expanding the power grid. In addition
to its agricultural and power investments, Tata operates an automobile assembly
plant near Mandalay. Tata struggles to compete on price with used Japanese
cars, but Tata is better positioned in the market for commercial vehicles.
Mr. Seth has been
impressed with the progress made in Myanmar over the last few years. The
country has been cut off from the modern management best practices developed and
used abroad for the past fifty years, and, as a result, decision-making is
still too concentrated at the top of the government hierarchy. Nonetheless, in
Mr. Seth's view, the government has been effective in implementing its reforms
over the past two years, and the administration has been receptive to input
from the private sector. Mr. Seth is optimistic that the rate of progress will
continue, and he expects the (currently small) middle class to expand fairly
rapidly, paralleled by increased retail and access to consumer goods.
We thanked Mr. Seth for meeting with us and for answering all of our questions, and we headed back to our hotel to unwind after a productive day.
~Udit Banerjea
Amazing,
ReplyDeleteYour blog is informative, thanks a lot for sharing.
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