May 28, 2012

Indian companies eye Myanmar's untapped natural resources

As Myanmar braces for an economic resurgence following decades of international isolation and military rule, Indian private sector are set to compete with other wide-eyed companies from across the world for a slice of the potentially promising pie of the country's largely untapped natural resources.

While India may be looking at the huge promise held out by opening up of Myanmar's economy, industrialists and businessmen familiar with the country point to the difficulties in getting returns for their investment in a place where the education and skill levels are low, rules are weakly enforced and acute power shortage is a chronic problem.

A 25-member delegation of Indian business and industry honchos, coverig key sectors of the economy, are now here coinciding with Prime Minister Manmohan Singh's visit and three Indian companies have already secured contracts in oil exploration, solar energy and gas pipeline projects.

In the delegation are Sunil Bharti Mittal of Airtel, Ravi Ruia of Essar Group, Hari Bhartia of Jubilant, Sanjay Kirloskar, Navin Jindal, Venu Srinivasan and B Muthuraman of Tata Motors.

India is Myanmar's fourth largest trading partner after China, Thailand and Singapore and 13th biggest investor.

Since President Thein Sein doffed military uniform and took office as the head of a nominally-civilian government in March last year, Myanmar's movement out of the diplomatic cold has been rapid.

International sanctions, especially by the US, European Union and other countries, aimed at isolating the military junta are being eased as the Myanmar government stretches the limit of freedom for political dissidents.

As the sanctions ease, a rush of firms are looking to tap a potential 62 million people and a young workforce in an economy projected by the International Monetary Fund to grow at 5.5 percent.

While the EU and Japan has abolished almost all the sanctions, Japanese companies are showing particularly strong interest. Japan announced last month writing off of 3.7 billion dollars of Myanmar's debt and resume suspended aid.

Some Japanese companies are also scouting for mining rare metals like tungsten and molybdenum.

Myanmar's two other next door neighbours Thailand and China are ahead of the pack, having done an estimated combined 9.4 billion dollars of business with Myanmar in 2010. China has bought vast quantity of oil, gas and timber from Myanmar.

Getting skilled employees, many of whom have left the country, and curbs on private ownership by foreigners are two major areas of concern, said Indian business delegation sources.

However, Myanmar has taken a major step towards attracting foreign investment by introducing last month a managed floating regime for its currency Kyat.

What foreign investors are looking at in Myanmar is expediting the political and economic reforms and enhance investment in infrastructure, education and health sectors.

Source: PTI