Sep 26, 2014

Myanmar means business

Myanmar is changing fast and there are at least three changes that are currently visible. First, there is transition underway from a military system to democratic governance. Second, the economy is moving away from a centrally-planned superstructure to a market-led framework. Third, after decades of violence, we are seeing peace and normalcy return to this beautiful country.

All these put together are offering opportunities never seen before to investors near and far. Many countries have either initiated or are at an advanced stage of consultations to carve out an engagement framework that would offer their firms preferential access to one of the few final frontier markets in Asia.

A growing economy
Call it the ‘gold rush’ or simply a case of waking up to smell the coffee, the fact is these transitions have the potential to give Myanmar a chance to retrieve its place as one of the most dynamic economies in Asia. And given a history of robust ethnic, cultural and religious linkages as well as the close physical proximity, India, too, would do well to chalk out a more proactive agenda of engagement with Myanmar.

There are two imperatives for this. First, Myanmar — like the other CLMV countries (Cambodia, Laos, Myanmar and Vietnam) — represents a rapidly growing economy with rising consumption, strategic location and access, rich natural resources (oil, gas, teak, copper and gemstones), biodiversity and an industrious workforce with low wages. And it offers significant opportunities for trade in goods and services, investment and project exports.

Second, Myanmar’s strategic connectivity to India’s North-East through the land route and maritime connectivity through the Bay of Bengal make it a bridge between India and Asean , which is crucial in the context of our growing engagement with the region.

We get two benefits if we establish strong land and sea links between our North-East and Myanmar. One, it helps India and Myanmar bond better, and two, it creates gateways for our merchandise exports to Asean countries.

Trade and investment
The good news is that businesses are beginning to respond to these dynamics and emerging opportunities spanning agriculture, plantation, infrastructure, information technology, healthcare and education.

With bilateral trade at $2.18 billion in 2013-14, India and Myanmar are eyeing $3 billion turnover by 2015 and Indian investments in Myanmar, which amounted to $283 million till 2013, are expected to soar to $2.6 billion over the next few years.

India’s engineering sector is eyeing the Myanmar market to create a bigger presence for engineering exports, and oil and gas companies ONGC Videsh and GAIL are aggressively scouting for more exploratory blocks in Myanmar. United Bank of India, State Bank of India and Bank of India have set up representative offices in Myanmar and so has the Exim Bank of India.

These have brightened the outlook for trade and investment, even as we wait for larger scale full operations.

Need a big leap
However, India’s strategy in Myanmar now needs to move aggressively towards a big leap forward in economic ties, cooperation and investments. Other countries such as China, Japan, the UK, France and the US have been moving at a quick pace for prime slots in vital sectors such as energy, oil and gas, mining and manufacturing and unless we take some proactive measures to step up our presence, we will fall behind.

Infrastructure and connectivity are potential game-changers in India’s equations with Myanmar. In connectivity, a top priority is developing direct flights between India and Myanmar with the larger objective of expansion of our trade volume.

There is currently only one twice-weekly direct Air India flight from India to Myanmar, from Kolkata to Yangon (besides seasonal flights to Bodh Gaya for Myanmar pilgrims).

In contrast, there are nearly 100 flights from Yangon and Mandalay to Bangkok and over 40 to Singapore. The Indian aviation players would do well to explore the new destinations that are opening up and create direct air links which will also facilitate closer business interaction.

Myanmar’s growing need for infrastructure, for instance, ports, to enhance sea and land connectivity, offers a lucrative playing ground for India.

The Myanmar government has put huge emphasis on infrastructure development projects as it sees connectivity as a key factor in promoting trade and enabling Myanmar’s integration with the Asean Economic Union by 2015.

The two countries are working on extension of the India-Myanmar-Thailand trilateral highway project to Laos and Cambodia, which would enhance regional connectivity and commerce.

Port connectivity can be an asset and large Indian companies should consider investing in the development of the Kyaukphyu Special Economic Zone for its vantage point in the Bay of Bengal.

India has developed another port a little further north at Sittwe intended to link Kolkata with Mizoram and our North-East through an inland waterway and road along the Kaladan river.

It is also extending a road linking the Mizoram border to western Myanmar. These could well be developed into full-fledged economic corridors with industrial hubs in key locations benefiting trade and commerce. Of course, timely completion of such projects is the key.

Myanmar has opened doors to support the agriculture sector and companies can tap opportunities in the entire value chain including seeds, agri-machinery, pre- and post-harvest technology.

Further, in the energy space, companies should look at setting up power stations, transmission and distribution lines and supply of gensets.

As Myanmar further opens up and modernises, its needs will multiply and diversely so.

Indian companies are evaluating opportunities, but time is not on our side as the numbers of global players who want to put Myanmar on fast gear are growing. The Indian Government too will have to double its efforts in leading the critical connectivity projects. It is anybody’s game. Let it be India’s.

Source: The Hindu Business Line