The Burma/Myanmar Thread

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The Burma/Myanmar Thread

Post by PeteC » Sat Jan 14, 2012 7:58 am

What has been going on there these past few months has left me speechless. Relations were normalized today between Burma and the USA, and I suspect most other western countries will now follow. Has anyone read anything of substance as to why theses changes are happening, and at such a rapid pace?

It all seemed to begin when they cancelled the China backed damn in the north a few months back. I wonder if China simply got too possessive and wanted to place troops in the country, or implement other control measures?

I'm certainly not going to complain about what's happening after all these bad decades, but I wonder what the cause and motive is for it all? One thing is clear, China is one very unhappy puppy at the moment....yet more western influence on another border is on the way. Pete :cheers:
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Re: Burma

Post by MrPlum » Sat Jan 14, 2012 8:51 am

I'm also curious as to what has caused this change. Commentary is very cautious. Business opportunities might attract expats over there from Thailand.

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Re: Burma

Post by Coldmike » Sat Jan 14, 2012 11:45 am

It does seem that the pace of change is extraordinary, but I've no idea why. It could be very hazardous for Thailand though as labor is much cheaper and the floods have left many factories in Thailand re-evaluating their plans. Also, there has been negligable tourism in Burma, yet they have an extremely attractive, undeveloped coastline that could challenge some of Thailands best spots (someday).
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Re: Burma

Post by hhfarang » Sat Jan 14, 2012 12:34 pm

Myanmar seems to have started a period of reformation. They have been freeing incarcerated political prisoners recently including Suu Kyi and even allowing her to run for a seat in their Parliament.

Lots of news and links about it here:

http://www.theglobeandmail.com/news/pol ... le2302537/
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Re: Burma

Post by STEVE G » Sat Jan 14, 2012 3:24 pm

I'm left wondering if they have been watching last years uprisings in the Middle East and saw the writing on the wall for this kind of Government. The last unrest in Myanmar was quickly put down but if the public in general take notice that they can succeed in overthrowing the regime, it could be a very different story next time.

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Re: Burma

Post by margaretcarnes » Sun Jan 15, 2012 9:13 am

The numbers of political prisoners released in the last couple of days - and the apparent speed of it all - just seems too good to be true at the moment.
Maybe there is more to it all than Hillary getting chummy with Aung San Su Chi (sp.) but couldn't it simply be that Hill has been the catalyst here?
What we dont know of course is what - if any - deals and incentives Hill offered during her recent visit. But the sight of those released prisoners is enough to give me hope for now. Let's hope it lasts.
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Re: Burma

Post by dozer » Sun Jan 15, 2012 10:02 am

It is well known within the Oil & Gas industry that Burma has potentially substantial reserves of both.
I work in the industry and I am more than likely to be there within the next 6 to 12 months.
The Western powers have been have been happy for the country to be ruled with an iron fist, as it then can keep the resources in reserve, stored in their natural setting.
However now with the Chinese making a move the West have now indicated that the time has come for the country to open up and allow the exploration to start.
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Re: Burma

Post by migrant » Sun Jan 15, 2012 11:00 pm

I, too, have heard Burma has incredible potential.

Perhaps the Generals figure they can "extract" more money from a burgeoning economy than from a poverty stricken one
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Re: Burma

Post by STEVE G » Mon Jan 16, 2012 6:07 am

It is well known within the Oil & Gas industry that Burma has potentially substantial reserves of both.
I'm not sure that you can so simply reduce the politics of the region down to te obscene demands of the energy sector.

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Re: Burma

Post by margaretcarnes » Mon Jan 16, 2012 6:36 am

STEVE G wrote:
It is well known within the Oil & Gas industry that Burma has potentially substantial reserves of both.
I'm not sure that you can so simply reduce the politics of the region down to te obscene demands of the energy sector.
Ethically no. But with Western economies and needs involved...?
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Re: Burma

Post by dozer » Mon Jan 16, 2012 3:17 pm

margaretcarnes wrote:
STEVE G wrote:
It is well known within the Oil & Gas industry that Burma has potentially substantial reserves of both.
I'm not sure that you can so simply reduce the politics of the region down to te obscene demands of the energy sector.
Ethically no. But with Western economies and needs involved...?
I have worked in the Oil & Gas industry for nearly 35 years and I can assure you there are absolutely no ethics,when it comes down to what is best for the company, with little or no regard to the impact to the host country.

All the majors have been on the starting blocks in Burma for nearly 10 years and as soon as they get the go ahead they will be in.

The fields are already known, so it is just a matter of the Western powers getting the type government in place that the oil companies can do business with.
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Re: Burma

Post by PeteC » Mon Jan 30, 2012 2:01 am

Now we're starting to get some forward thinking/planning. Pete :cheers:

http://www.bangkokpost.com/news/investi ... e-frontier

As doors open, businesses face a formidable frontier
The civilian government is coming out of decades of isolation, but along with a wealth of opportunities investors are faced with several challenges in overcoming the rot of military rule

Published: 29/01/2012 at 12:00 AM
Newspaper section: Spectrum

As Myanmar trades political reforms in return for an end to economic sanctions, businesses big and small are queuing for access to the region's last closed economy. Entry will be dictated by political connections, financial clout, further reforms and necessity.

Chief among those necessities will be food and infrastructure _ roads, ports dams, electricity and access to clean water _ but areas like health are also in dire need of investment. Myanmar was ranked 190th among other countries in terms of its health care, the worst in the world. Access to capital and appropriate partners are the biggest stumbling blocks to development in these areas.

"Burma [Myanmar] is one of the few frontier or 'reservoir' countries left _ Cuba is another example _ that have serious economic potential due to their resources and proximity to large developed or developing markets," said Gavin Greenwood, a risk consultant with Hong Kong-based Allan & Associates.

LOCATION, LOCATION, LOCATION

China, Thailand and Singapore have been active in Myanmar for a decade while Japan, South Korea, India, the US and Europe have made recent forays and are easing sanctions. According to one analyst this was akin to "kicking the tyres" to assess what's possible and profitable.

Free at last: Three political prison stories (Link at source)

Two large ports are already under construction. China National Petroleum Corp has begun construction of a 770km oil pipeline from Myanmar's west coast to China with port facilities being built in Madeira.

That area offers access to nearby offshore oil and gas fields, existing port facilities which include a naval base, an existing airport at Kyaukpyu and deepwater and sheltered moorings for docking with an expected depth of up to 20m. Importantly, the pipeline highlights Myanmar's strategic importance, providing an alternative route for China's energy needs to the Malacca Straits.

A massive US$8.6 billion (272 billion baht) port and industrial complex is also under construction in Dawei in the south by Italian-Thai Development Co, which has a 60-year concession. The industrial park is massive, 16 times bigger than the largest of any such project already built in Thailand.

"Looking ahead 20 years from now, 2030, the economy around the Indian Ocean would be growing more than it is now given the fact there are at least two major countries located nearby _ China and India," said Somchet Thinaphong, managing director of Dawei Development Co.

"Burma and Dawei are in the middle. So this creates a uniqueness for new investments and we should immediately capitalise," he said. "There is a route which represents a regional corridor from Dawei passing through Bangkok to Vietnam. It's a strategic corridor."

More important, he says, will be Myanmar's strategic importance within Asean which is aiming to become a fully integrated economic community by 2015. The Dawei Special Economic Zone will become an Asean hub.

Essentially the goal by 2015 for the community is to have a stable, prosperous economy capable of competing with the likes of China and India with the free flow of goods, services, investments and capital _ based on a single market and production base. It's an ambition that has been incompatible with Myanmar's trajectory in recent decades and something had to give, especially considering Naypyidaw's ambitions of serving as Asean chair in 2014.

''The next big story is likely to be the new special economic zones, including along the borders with Thailand and China,'' said Morten Pedersen, a Myanmar analyst with the University of New South Wales in Australia. ''This should include agri-business, which is certainly a big priority for the government.''

He said from a developmental perspective, with foreign direct investment (FDI) increasing and broadening, a key issue in the coming years would be the quality of investment and this would also encompass human rights and environmental issues.

''It will be a long time before the Burmese government is able _ even if willing _ to exert proper supervision in this area,'' Mr Pedersen said.

FROM THE INSIDE OUT

Resource rich with a population of about 60 million, the potential size of Myanmar's economy is comparable to that of Thailand and Vietnam but the immediate transitional period is expected to create problems for an inward looking government and profit-demanding foreigners.

Nevertheless the idea of a politically correct Myanmar will no doubt tantalise business with potential opportunities thought unimaginable just six months ago.

''Burma is now entering its age of reconnaissance as companies from countries that had shunned the country's military regime for decades examine its potential as a market for their products or services or source of raw materials or low cost labour,'' Mr Greenwood said.

The list of companies lining up is a who's who of the corporate world.

Chief among Thai corporations are PTT, PTT Exploration & Production, Ratchaburi Electricity Generating Holding and Hemaraj Land & Development. These firms are likely to benefit from large infrastructure and border economic development projects.

Toyota and Honda have expressed an interest in locating a production base at Dawei as part of a broader strategy to reduce costs. Japan has also indicated it will help bank roll the project, although it would also like to restructure debt currently held by the country's military leaders.

Mitsubishi, Mitsui and Sumitomo, all from Japan, along with Malaysia's Petronas, American conglomerate General Electric, Danish shipping Line Maersk and Indian group Jubilant Energy are also planning to invest.

And amid the brouhaha that came with the release of political prisoners over recent months, other announcements were made by the government which fielded much less coverage.

This included the awarding of 10 on-shore oil and gas blocks, by far the biggest tenders, to companies that included Petronas, PTT Exploration & Production and Jubilant.

THE WILD WESTHowever, just like the opening of Vietnam and Laos at the end of the Cold War, Cambodia once its civil wars ended in 1998 or Thailand 30 years ago, Myanmar remains a legal and political minefield dogged by corruption. Transparency International ranks it at 180 equal with Afghanistan, one spot ahead of Somalia and two ahead of North Korea, considered the most corrupt country on Earth.

''As far as I know, rules and regulations are one of the biggest obstacles,'' said one Yangon-based political analyst who declined to be named.

''Here in Myanmar, there is no investment law, money exchange law, things like that. Nowadays, businessmen from abroad complain that there are no clear explanations for obstacles they face because there is no clear direction,'' he said.

Those laws are expected to be discussed and legislation passed by the parliament in upcoming sessions and are sorely needed for all levels of the isolated society. Copyright infringement in the arts is another major issue. Artists of all types, particularly musicians, have for years simply copied and sold works from abroad while claiming it as their own.

Banks are also keen to get involved, in particular the UK-based Standard Chartered, Bangkok Bank, Siam Commercial and Krung Thai. But the country lacks an independent central bank, nor has it fully recovered from the 2003 crisis when 20 private banks or informal financial companies went bankrupt.

The black market flourishes on the dilapidated main streets of Yangon. Mr Greenwood said another major hurdle to stepping-up low cost industrialisation to kick-start a moribund economy is Myanmar's human limitations.

Myanmar had a history of high quality English-orientated education but 50 years of military rule resulted in the closure of the best universities and schools amid fears they would harbour student resentment and protests. According to Joshua Kurlantzick of the Council on Foreign Relations this was perhaps the most destructive blow dealt to Myanmar's economic future.

Mr Greenwood was harsher in his assessment: ''The emerging population has been effectively uneducated, or even 'diseducated' _ by the regime in what may be compared to a less bloody variant of the Khmer Rouge efforts to create supine, isolated and even physically weakened peasantry,'' he said.

One possible solution touted is the return of educated exiles. But analysts doubted the release of dissidents, political reforms and the prospect that freed democracy icon Aung San Suu Kyi will win a seat in parliament at the April 1 by-elections would be enough to entice those living abroad with well paid jobs to return home.

POTENTIAL AND PITFALLS

Despite the shortcomings, a business boom is already being talked up. Last November the country's industry minister declared the government was expecting an enormous inflow of foreign investment, mainly from Asia.

The price of industrial land has reportedly quadrupled in parts of Yangon on the back of a rumour mill running hot on speculation about the development of satellite cities and large construction projects.

Even up-market travel agents are starting to offer boutique services out of Bangkok. One group, Khiri Travel, is offering tours around the country in a private and, of course, luxurious jet.

At $8,500 a head a for four days and three nights, the company's general manager Edwin Briels was optimistic in describing his target market as ''high-end clients who want to be treated like millionaires'' undertaking ''one of the greatest little holidays in Asia''.

Currently, Myanmar's main income earners are a little more modest. Garments and tourism, alongside timber felling _ an abomination among environmentalists _ and mining have provided limited financial returns for a government which has already privatised much of the country's assets among the military.

While comparisons with Thailand and Vietnam are understandable, the reality is that Myanmar sits squarely behind Cambodia and Laos, which have been transformed by a decade of unprecedented growth with both countries establishing stock markets.

''Myanmar could create a stock exchange within a couple of years but first it has to pass some new enabling laws,'' said Doug Clayton, chief executive officer of Leopard Capital, an investment fund that focuses on emerging markets.

Mr Clayton has followed Myanmar's fortunes for more than two decades and said property, hotels and consumer goods usually led the foreign investment wave into transitional countries but that such investors in Myanmar faced peculiar hurdles such as sanctions, uncompetitive foreign investment regulations and a bizarre official exchange rate system.

''All this may rapidly change as Myanmar's reforms continues but this is the reality as of today,'' he said.

His sentiments were echoed by Mr Pedersen who added the economics in the early days of development of such countries was more about politics and Myanmar had the potential to become a serious regional competitor in areas like garments once sanctions are lifted.

''But this will take some significant progress in day-to-day governance, below the changes in high politics and governance approach that we are seeing at the moment,'' he said, adding that small investors were likely to see a quick rise in demand off the back of tourism.

However, he added it would take some time before an expat community was established, if at all, to support the levels of Western-style bars and restaurants seen in the other major cities around the region that often find support among the foreign donor community and NGOs.

''In fact, I am not sure this will ever happen _ the Burmese are much more self-reliant and likely to continue to limit the role of aid agencies. And that's a good thing, I think,'' Mr Pedersen said.

Either way, analysts agree that Myanmar as a development story could run for decades, the process will be long, at times arduous _ and the returns could be great for Myanmar and business alike _ if the reforms initiated by the civilian government after it came to power in November, 2010, remain on track.

Additional reporting by Piyaporn Wongruang
THE ECONOMY: KEY FACTS AND FIGURES

An International Monetary Fund delegation visited Myanmar earlier this month to discuss economic development and the outlook for the country with leading figures. The following are some of their projections and key identified areas of reform.

REAL GDP GROWTH

2011-12: 5%

2012-13:6%

Increases are expected to be driven by commodity exports and higher investment, supported by robust credit growth and improved business confidence.

INFLATION

2011-12: 4.2%

2012-13:5.8%

Rising food prices are expected to be the key driver of inflation.

CURRENCY

The parallel market for the kyat has seen it appreciate by about 32% since the end of 2009-10, caused largely by foreign inflows. If sustained, exchange rate appreciation could undermine Myanmar's already limited external competitiveness.

On the upside, the recent easing of foreign direct investment restrictions, increase in private sector credit and continued progress towards lifting exchange restrictions and unifying the exchange rate could bolster growth.

SUGGESTED REFORMS

Special Economic Zones to allow more foreign direct investment to improve competitiveness. This would reduce both informal market activity and prices.

The Central Bank of Myanmar (CBM) is already studying ways to reform the complex exchange rate system to lift constraints on economic growth.

Modernisation of the financial system, including; expansion of bank networks in rural areas, nurturing stronger commercial banking through price competition, interest rate liberalisation and allowing joint ventures with foreign banks, to prepare for Asean integration in 2015.

Reform of the agriculture sector through increased bank lending to farmers and micro finance. Planned land reforms should also allow farmers to use their land titles as collateral. Investment in rural infrastructure, including through community driven development initiatives. Spending on health and education are also essential.
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Re: Burma

Post by dozer » Mon Jan 30, 2012 5:38 am

PTT and PTTEP are moving in mass and Ratchaburi Electricity Generating Holding has been there since the mid 90’s, interesting times ahead indeed.
The Western majors are in for a fight, they are not going to get it all their own way, which could be a good thing, not sure, we will have to wait and see.
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Re: Burma

Post by PeteC » Mon Jan 30, 2012 7:50 am

Burma vows tax incentives
PANA JANVIROJ
THE NATION ,ASIA NEWS NETWORK
Davos January 30, 2012 1:00 am

http://www.nationmultimedia.com/nationa ... 74755.html

Burma vows tax incentives
IMF helping kyat unification, bigtax changes to come, minister tells CEOs at Davos summit

The Burmese government is drafting a tax incentive law which will be the most attractive in the region, as it prepares to achieve a six-per-cent growth target in 2012, according to an economic minister.

U Soe Thein, Burma's Industry Minister, told international journalists the tax incentive law could be passed by the end of the upcoming Parliamentary session next month.

A plan is also underway to boost international business confidence in the kyat - the Burmese currency - in consultation with the International Monetary Fund (IMF).

U Soe Thein led a delegation, which also included Rail Transport Deputy Minister Thura U Thaung Lwin, to their first participation at the World Economic Forum.

"We were very busy meeting global policymakers, officials and CEOs," the minister said.

The Burmese delegation's trip followed a recent visit by WEF chairman Klaus Schwab to Burma, where he met both Thein Sein, the president, and opposition leader Aung San Suu Kyi. He invited both to attend the Davos forum.

U Soe Thein said he received a lot of ideas and learnt about many issues at WEF sessions. They included the Eurozone crisis, job creation, sustainable energy and green policy, resource management, population and growth, poverty eradication, refugees and displaced people, women and children, SMEs, anti-corruption and good governance.

"We learned what we shall (need) to do in the future...We were honoured to attend," he said.

In his meeting with CEOs, the minister said they extended recognition to what the Burmese government was doing in its reforms, and were interested in the country's growth and investment potential, plus the peace process with ethnic minorities. He reiterated that the reform process was not due to external pressure or economic sanctions but followed the desires of the Burmese people.

He said Burma was centrally located to engage in trade and investment with China, India and Africa. It had markets as well as skilled labour, plus availability of energy resources, including gas and hydroelectricity.

"Like Norway and Sweden, we also have access to two seas and have fishing potential," U Lwin said, noting that his country was also the world's biggest producer and exporter of rice in the pre-war era.

U Soe Thein said his government was working, with assistance from Japan, on tax investment incentives, which would be the most attractive in the region. The package would include an eight-year tax exemption, with a possible extension, if the ventures proved profitable for the country. The law could be passed during the parliamentary session next month.

The minister said consultations with the International Monetary Fund in December and this month were helping the authorities work on "currency exchange unification" and mechanisms for implementing fiscal and monetary policies.

He said the government planned to upgrade the central bank, now a department under the Finance Ministry. It had been proposed to give it independence.

The Burmese industry minister said three economic zones were being set up: one of which would be Dawei (undertaken by Italian-Thai Development) and another near Yangon aimed at facilitating firms from China, Japan, Korea, Thailand and the rest of the world.

"Yes, we are in a hurry…" he said, citing preparations for the 2013 Southeast Asian Games, and 400 meetings scheduled for it to assume chairmanship of Asean in 2014, plus the Asean Economic Community in 2015, and to achieve the UN Millennium Goals.

"Tourism is booming and we need more hotels, certainly," he added.
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Re: Burma

Post by dozer » Mon Jan 30, 2012 9:14 am

http://www.mmtimes.com/feature/energy/01.htm

The coloured history of the Burmah Oil Company


Originally known as The Burmah [Myanmar] Oil Company Ltd, Burmah [Myanmar] Castrol PLC is the oldest oil enterprise in the United Kingdom. It is best remembered for having survived in 1975 the most serious crash hitherto in the business history of the United Kingdom and for achieving what was termed by John Davis of Money Observer, November 1988, “one of the greatest corporate comebacks of all time”.

While it once aimed to be a multinational integrated petroleum concern, Burmah [Myanmar] Castrol transformed itself in the late 20th century into a firm focusing exclusively on marketing lubricants and specialty chemicals. Through the Castrol brand, the company is the world’s leading supplier of automobile and motorcycle lubricants, including engine oils, transmission fluids, and brake fluids.

The company has more than 150 subsidiaries operating in about 55 countries. Approximately 10 percent of the company’s revenues are derived within the United Kingdom, 27pc within the remainder of Europe, 31pc within the Americas, 17.5pc within Asia, 12pc within Australasia, and 2.5pc within Africa.
The company derives its name from the centuries-old oil works in Myanmar(Burma) – spelled with an “h” in the Victorian era – which in 1886 became a province of the Indian empire. Founded that year in Glasgow by David Cargill, a Scottish-born merchant with lucrative trading interests in Ceylon, The Burmah [Myanmar] Oil Company Ltd. introduced new technology into the Burmese operations, such as mechanical drilling at the oilfields and continuous distillation in the Yangon refinery.


The oilfields and refinery were connected by a 275-mile pipeline in 1909. Initially all the oil was sold in Myanmar, apart from some wax for the United Kingdom, but the company was soon shipping products to mainland India, using its own tankers after 1899.

Following its entry into the subcontinent, Burmah [Myanmar] Oil came to the attention of the Committee of Imperial Defence, the United Kingdom’s top strategic policy-making body, which alerted the appropriate government departments to the company’s vital importance as the only oil company of any size in the British Empire.

In 1905 the Admiralty concluded a long-term contract to purchase Myanmar fuel oil, as it was beginning to convert its warships to run on oil. Admiralty officials also sought to interest Burmah [Myanmar] Oil in acquiring a 500,000-square-mile oil concession in Persia, granted in 1901 to William K D’Arcy. Since D’Arcy was short of money, the concessions might well have had to be sold into non-British hands. Burmah [Myanmar] Oil agreed to the purchase, and in 1908 its drillers struck oil in Persia.

The following year it established the Anglo-Persian Oil Company (renamed Anglo-Iranian in 1935 and British Petroleum in 1954), an almost wholly owned subsidiary. Difficulties over refining and transporting the Persian oil proved costly for Burmah [Myanmar] Oil, and in 1912 the chairman, Sir John Cargill, son of the founder David Cargill, refused to finance Anglo-Persian any further.
Winston Churchill had recently been appointed first lord of the Admiralty, and was seeking reliable sources of naval fuel oil to supplement those from Rangoon. In 1914 the UK authorities and Burmah [Myanmar] Oil concluded an agreement which overcame their respective problems. The government acquired from the company a majority share in Anglo-Persian, while in turn the Admiralty obtained long-term fuel oil supplies from Anglo-Persian. During World War I, Burmah [Myanmar] Oil concentrated on keeping India supplied with kerosene.

After 1918 it became more widely known through its newly appointed managing director, Robert I Watson. Energetic and highly respected throughout the oil world, Watson helped to devise the market-sharing international agreements that supported oil prices during the Depression between the wars and rationalised distribution methods throughout much of the world.

In particular, he negotiated the Burmah [Myanmar]-Shell agreement of 1928 that created a common distribution system for the subcontinent of India, and acquired for Burmah [Myanmar] Oil a four percent shareholding in Shell, of which he became a director in 1929.

Burmah [Myanmar] Oil came to the attention of the world in 1942 when Japanese forces overran a poorly defended Myanmar. To prevent its strategically crucial assets from falling into enemy hands, Watson authorised the destruction of the Yangon refinery and all the installations at the oilfields.
The Allies’ reconquest of Myanmar in 1945 permitted the company to start work again on its devastated properties there. The scale of its efforts was modified, however, by the declared intention of the newly independent republic of Burma to work toward taking over all oil assets. After a short-lived joint venture arrangement, Burmah [Myanmar] Oil agreed to an outright sale of its interests in Burma in 1963, obtaining relatively generous compensation since mutual goodwill was maintained to the end.

Its progressive withdrawal from Myanmar, although not from India or Pakistan, effectively turned the company into an oil investment trust. By the mid-1950s less than a third of its income was derived from trading, the rest coming from its 25pc stake in British Petroleum (BP) and its 4pc stake in Shell, both earning buoyant profits from their worldwide activities.

Consequently in 1957 the chairman, William E Eadie, launched a policy of diversification, notably in the western hemisphere. Attempts to secure fair compensation from Whitehall for the Myanmar assets destroyed in 1942, over and above a nominal ex gratia payment, failed, when in 1965 the government of Harold Wilson, by a War Damage Act, blocked the Burmah [Myanmar] Oil claim that had been successfully upheld in UK courts.

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