Award of major airport contracts offers new clues about Thein Sein government’s approach to doing business.

Yangon’s still-sleepy international airport has grown increasingly busy amid a growing tourist trade, a flood of Western diplomats and NGOs re-establishing themselves in Myanmar, and planeloads of corporate executives coming to see whether all the changes are real.

Yangon airport last year handled about 3 million passengers, above its capacity of 2.7 million. An upgrade will increase capacity to 5.3 million before the new airport opens.

And soon enough, the rising tide of visitors to the long-isolated country will be touching down in modern airports as the country moves forward with plans to expand its air travel infrastructure.

But for now, South Korea and a connected Myanmar tycoon with ties to China and Singapore — and a spot on the US blacklist — are the big winners.

The Myanmar government in early August awarded the rights to build a new $1-billion airport outside Yangon to South Korea’s state-owned Incheon International Airport Corp (IIAC). The licence to upgrade Yangon’s existing airport, meanwhile, went to a consortium including Steven Law’s Pioneer Aerodrome Services Co.

The decisions came during a pivotal few months for foreign investment in Myanmar, which may demonstrate how just how serious President Thein Sein’s reformist government is about transparency, and just how interested Western countries are about doing business in this still-troubled country.

The awarding of the airport contracts followed a closely watched telecoms auction in June, and came as the government prepares to award scores of oil and gas licences later this year.

The government has pledged that in the new Myanmar, foreign investment will be free and fair. And for a country emerging from decades of isolation and corruption, the auction earlier this year of two lucrative mobile licences, to Norway’s Telenor and Qatar’s Ooredoo, went surprisingly smoothly. The government put the German consulting firm Roland Berger in charge of the bidding process, which was transparent and above-board, say business sources.

But investors have looked at the other tenders more sceptically.

While oil and gas companies — including super-majors such as ExxonMobil — are eagerly eyeing scores of offshore drilling sites, which could be awarded late this year, reliable information remains scarce.

Myanmar Oil and Gas Enterprise, the state-owned agency that will enter into production-sharing agreements with the winning companies, has a dismal reputation and a history of corruption. Indeed, Revenue Watch, a US-based non-profit, ranked Myanmar dead last in “resource governance” in a recent report.

The airport process, meanwhile, has generated far fewer headlines, though the government says it is critical to the country’s ability to deal with increasing numbers of business travellers and tourists. In addition to the Yangon expansion plans, there will also be a new airport built in Mandalay.

But the plan to build a major new airport 80 kilometres outside Yangon, when the existing international airport is also being upgraded, left some scratching their heads.

“The big question that is relevant for Myanmar as a whole is what is the civil aviation strategy and what is the role of the various airports,” said Satya Ramamurthy, head of the Asia-Pacific government and infrastructure team at the consultancy KPMG.

In the competition for the rights to build the Hanthawaddy International Airport, the consortium led by Incheon beat out the Yongnam-Cape-JGC consortium (comprising Japanese and Singaporean companies), Japan’s Taisei Corporation, and Vinci Airport, a joint French-Malaysian bid.

The bid to upgrade Yangon International Airport went to a consortium of Chinese, Singaporean and Malaysian firms that includes Myanmar’s Pioneer, part of the Asia World conglomerate controlled by Law, a local tycoon who remains on the US Treasury Department’s “specially designated nationals” list — meaning US companies can’t do business with him.

Law, who is also known as Tun Myint Naing, is the son of Lo Hsing Han, a key figure in Myanmar’s illegal drug industry for decades, who died last month.

The decision was all the more intriguing given the foreign lobbying firepower of one of the firms that Law beat out — the US-based ACO Investment Group (ACO), whose bid included the aerospace giant Boeing and also involved Kurt Campbell, the former US secretary of state for Asia.

Campbell had been a key player in the US government’s Myanmar policy — and the Obama administration’s shift in attitude over the last few years — before he entered the private sector and quickly became involved in Myanmar investments.

Construction on the various projects won’t be completed for years. But already, regional airlines are stepping up their flights to Myanmar.

Source: Bangkok Post

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