Boom tipped for builders

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Thai firms likely to do well from mass of Myanmar projects

Thailand’s energy investment in Myanmar is expected to remain strong in the years to come, but firms in the construction industry are expected to play a much bigger role in the country following the many development projects approved.

Myanmar approved 340 high-rise projects nationwide in the first quarter of this year on top of 705 low-rise projects. That compares to 24 and nearly 400 last year, Pisanu Suvanajata, Thailand’s ambassador to Myanmar, told a seminar on “Gateway to the New Construction Era” last week.

He anticipates high demand for steel, cement and construction materials in response to the property development boom as well as the development of three special economic zones – Thilawa, Dawei and Kyaukphyu – and other public construction projects.

The Myanmar government recently approved US$7.8 billion (Bt253 billion) to construct roads and bridges, as the country gears up for the Asean Economic Community.

“Thai companies in Myanmar are operating in six industries. Next year, I’m convinced that investment in the construction industry will be the second [biggest],” he said later in an interview at the embassy.

The six industries include hotels, trading and agriculture.

In construction, Siam Cement Group’s $400 million cement plant will be operational in 2016, while Millcon Steel’s plant in Thilawa is expected to commence manufacturing in the same year after the start of construction in the third or fourth quarter of next year.

Sittichai Leeswadtrakul, chief executive officer of Millcon, said Myanmar would help complete the jigsaw puzzle, as the company aims to become an integrated supplier of steel in Asean, with greater capacity in commodity steel for CLMV nations and value-added steel mainly for the automobile industry in the region.

On the sidelines of the seminar, he said the complete acquisition of Thai Special Steel Industry (TSSI) and the relocation of commodity steel production to Myanmar are among the plans. Also planned for the future is finding new partners for two subsidiaries – Millcon Special Steel, established to take over TSSI, and Mill Thiha, a joint venture to operate the new steel plant in Myanmar.

“It’s hard to find skilled labour here. But migrant workers working with us in Thailand are encouraged to return here as supervisors. The investment here will not generate significant revenue for the company, but we’re here for a long-term stay in view of the potential of Myanmar,” he said.

The envoy sees opportunities in three main areas. The first relates to the government’s policy to lift the standard of living, which covers power and water supply as well as the manufacturing of hygiene products.

The second is connected to the government’s development policies designed for the three special economic zones. While Thilawa focuses on manufacturing, Kyaukphyu will be the petrochemical hub and Dawei will accommodate heavy industry.

The third covers trading, as purchasing power stands to rise as a result of economic reforms.

His concern is procrastination by Thai companies. A Bangkok Bank source has also said many customers showed interest in making inroads into the country, but few have made actual moves.

Thai embassy website

To woo Thai investors, the Thai Embassy on October 1 launched website dedicated to providing information. It contains investment information ranging from macroeconomic outlook updates and the foreign investment law to the tax system. Daily and weekly subscriptions for Myanmar-related news are available.

A meeting room is provided inside the embassy where Thai companies can conduct talks with potential partners with beverages provided for free.

“We offer a preliminary consultation service. Should anyone seek more details, we can refer them to the recently launched Thai Business Association,” he said. “Our aim is to establish the right perception of Myanmar and guide Thai companies to new opportunities.”

While Myanmar likes to do business with Thailand, newcomers should incorporate corporate social responsibility into their operations from day 1. “People here treasure their natural resources. There’s a high tendency for companies for which profits come first to flop here. Don’t ask what the minimum wage is here. You’d better rephrase it to how much you should offer,” he said.

As of August, Thailand’s total investment in Myanmar nearly reached $10 billion.

According to the Directorate of Investment and Company Administration, 44 Thai companies have invested $3.1 billion in the country, accounting for 7.9 per cent of the $39.3 billion invested by foreign companies from 28 countries.

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