Myanmar, with its vast resources, is developing as an important destination for companies across the globe to invest or, at the least, study for future investments or trade. This is because the US and the European Union seem inclined to remove the sanctions against the country soon.
This augurs well for the Indian industry that should look at capitalising on building strategic partnerships in that country to add value to the rich resources that are available in Myanmar, while harnessing the resources to fuel the increasing demand in India. As a part of the Association of Southeast Asian Nations (Asean) region, Myanmar offers tremendous potential as a base to tap other third-country markets as well.
However, it is important that this partnership from the beginning should be based on the fact that India has been continuously working closely with Myanmar over the years. There is need for building partnerships that generate employment and prosperity for the local population. This is crucial for capitalising on the relationship that has been built over the years.
The government as also the private sector in India has been actively involved in over a dozen projects in Myanmar, both in infrastructural and non-infrastructural areas. These include upgradation and resurfacing of the 160-km long Tamu-Kalewa-Kalemyo road; construction and upgradation of the Rhi-Tiddim Road in Myanmar; the Kaladan Multimodal Transport Project; a project for high-speed data link in 32 Myanmar cities. ONGC Videsh Ltd (OVL), GAIL and ESSAR are participants in the energy sector in Myanmar. RITES is involved in development of the rail transportation system and supply of railway coaches, locos and parts.
Though bilateral trade has grown over the years and has expanded from $12.4 million in 1980-81 to $1207.56 million in 2009-10, the numbers are too small and do not reflect the potential of the two countries. India’s imports from Myanmar are dominated by agricultural items (beans, pulses and forest-based products form 90 per cent of India’s imports), while India’s main exports to Myanmar are primary and semi-finished steel and pharmaceuticals. India has a Bilateral Investment Promotion Agreement (BIPA) and a Double Taxation Avoidance Agreement (DTAA) with Myanmar, which will help companies that may look at investing in that country.
Since 1997, New Delhi has given Myanmar $10 million line of credit even as the western bloc intensified its economic sanctions. India also played an important role in ushering BIMSTEC, a trade bloc that gave Yangon access to economic benefits. It is now looking to deepen the relations through a series of measures.
Realising the potential of the two countries, industry associations like the Confederation of Indian Industry have been working to build platforms in Myanmar to develop a healthy and strategic partnership. Large industry groups from India have been active in Myanmar but with a host of American and European countries making a beeline to the country, a variety of opportunities will also emerge for the small and medium sector in India.
There is need for a three-pronged approach by the small and medium sector in India to tap the vast potential in terms of resources as also team up with large corporations to make Myanmar an important market. The approach should be first promote, then participate and finally partner. Promotion companies, especially in the small and medium sector, have to look at promoting Indian products as also their need to value add for growth. Then they need to participate in all platforms that are available for partnering with large firms in developing quality products to Myanmar.
The next few years would be important for deepening the economic relationship with Myanmar since it will be wooed by several countries. Indian industry has been engaging with Myanmar over the years but now it is in a position to look at Myanmar to deepen the engagement with Asean. Since the two countries share a land border, it will be easy to build value chains across the boundary.
Asean is an important economic partner for India and Myanmar can be an important country for India to link up with that region better. Industry should continue to deepen its presence in Myanmar to the benefit of both countries.
The author is principal adviser with APJ-SLG Law Offices
