More Indian investments expected with better connectivity, bilateral ties
Saurabh Kumar, Ambassador of India to Myanmar. Photo: Aung Htay Hlaing/The Myanmar Times
With a target of becoming a US$5 trillion economy within the next six years, India could overtake the UK to become the world’s fifth biggest economy this year and even surpass Japan to be the third largest in 2025, IHS Markit noted in a report this month.
As the only ASEAN member state to share a border with India, Myanmar is poised to benefit from its neighbour’s expansion plans and policies.
“The growing connectivity and good political exchange between the two countries - Myanmar is the only country where India’s Act East Policy and Neighbourhood First policy converge - will provide the momentum needed to strengthen economic ties and see Myanmar growing along with India,” said Saurabh Kumar, Ambassador of India to Myanmar.
In a recent interview with The Myanmar Times, Mr Kumar revealed that Indian investor interest in Myanmar is rising as more companies seek strategic expansion abroad. He said trade and investments will take off once transport and border connectivity between India and Myanmar is further improved in the months ahead.
Things are already beginning to take shape, with strategic Indian investments coming onstream across Myanmar. This month, for example, India completed the construction of a sea-port and the inland water terminal in Sittwe, Rakhine State. This forms part of the $484 million Kaladan multi-modal transit transport project mooted in 2008 that would link Kolkata in India to Sittwe.
The Sittwe port will be linked to Paletwa in Chin State via the Kaladan River. Paletwa will be further linked by road to Zorinpui, Mizoram in Northeast India. The road is currently still under construction.
“People are waiting for the Paletwa road to be complete so they can supply to the Indian side. Meanwhile, we have floated tenders to select an operator for the port, which, once up and running will give a boost to economic activity in the area as well as create opportunities for trade and investment between Myanmar and India,” Mr Kumar said.
This came two months after Adani Yangon International Terminal received approval in April from the Myanmar Investment Commission on April 26 to develop, operate and maintain the US$290 million Ahlone International Port Terminal (2) (AIPT) under a 50-year Build, Operate and Transfer agreement with the government, in anticipation of higher sea trade volumes in the coming years.
Phase 1 of the development will involve enough capacity to handle between 100,000 and 150,000 twenty-foot equivalent units (TEU), or twenty-foot containers, when it is completed within the targeted 12 months. Phase 2, which will take an additional six months to construct, is expected to take the port’s total capacity to a maximum of 800,000 TEUs.
The project is one of India’s largest bets on Myanmar infrastructure, underscoring the country’s interest to position itself in Myanmar to benefit from future growth. “Total container throughput in Myanmar is currently 1.2 million TEUs but we are looking at GDP growth of around 6.5 percent, which will take the market to 2 million TEUs within the next four to five years,” Sunil Seth, CEO of Adani Myanmar, told The Myanmar Times in May.
Things are expected to pick up at the Myanmar-India border, too. In August 2018, both countries opened a new border checkpoint between Reekhorda town in Chin State and Zowkharthar village in Mizoram, allowing more flow of goods between the two countries.
“We have declared Reed-Zowkhartar as an official border crossing and it is a busy trading post with brisk trade totaling almost US$50 million taking place. However, the infrastructure needs to be improved to allow vehicles through. The bridge at the crossing has not been upgraded since the colonial era and currently a large volume of goods is unloaded and moved across the border on foot,” Mr Kumar said.
He added that the Japan International Cooperation Agency is currently upgrading a road linking Reed to Tiddim and Kalay in Chin State. “With the right infrastructure and linkages, trade will improve,” he said.
The Reekhorda-Zowkhartar post is the second trade gate between Myanmar and India. The other trading post is located at Tamu in Sagaing Region and Moreh in Manipur, India, which opened up for regulated trade last year. There is also an integrated check post (ICP) in Tamu-Moreh, allowing both Myanmar residents and foreigners to enter India as well as goods on vehicles.
“We are talking to Myanmar and have submitted drafts of a motor vehicle agreement on how to handle cars crossing the border. The ICP has been set up on the Indian side and we would be happy to collaborate to set up an ICP on the Myanmar side for Tamu-Moreh,” Mr Kumar said.
He added that India is working on increasing its direct flights to Yangon, with Indian low-cost carrier IndiGo planning a Kolkata-Yangon daily flight soon and Air India planning to increase the frequency of its New Delhi-Yangon flights. Air KBZ may also be starting a route connecting Mandalay to India, The Myanmar Timesunderstands.
Myanmar mainly exports betel nuts, beans and pulses as well as garments and plastics to India at the border. According to the government data, border trade between Myanmar and India as of March 15 in the current fiscal year reached US$ 85.8 million compared to US$51 million over the same period last year. Total trade between the two countries is US$2 billion, mostly by sea.
Meanwhile, a rising number of large Indian companies “are looking for opportunities to invest in Myanmar. Each week, the Indian embassy meets with at least 2-3 companies that are interested to set up units in Myanmar. Interest is really growing as connectivity improves,” Mr Kumar said.
He pointed out though, that there is a need for Myanmar to reach out to India and create awareness among Indian businesses. “There are positive developments taking place in Myanmar, of which businesses outside the country may not be fully aware. Myanmar should take the effort to ensure the reforms and changes happening are communicated to Indian investors. If they see opportunities, they will come, regardless of the political situation,” Mr Kumar said.
Besides infrastructure, Indian investors are interested in healthcare and pharmaceuticals. Around 40pc of Myanmar’s pharmaceutical requirements are currently imported from India or manufactured by Indian companies in Myanmar, Mr Kumar said.
The Indians are also interested in agriculture, particularly distributing agriculture equipment and machinery, such as tractors, as well as other two or three-wheeled vehicles in Myanmar, he said.
India is currently ranked the 11th largest foreign investor in Myanmar, with permitted investments from 30 companies totaling US$763.6 million so far, according to DICA. In comparison, Singapore and China have invested more than US$20 billion each in Myanmar so far.
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