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India and Myanmar: Untapped relations

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modi in myan copy copy.tif The relations between India and Myanmar are rooted in shared historical, ethnic, cultural and religious ties. Myanmar occupies a critical geo-strategic position in the world. It is a meeting point of South Asia, East Asia and South-East Asia. India sees it as a gateway to ASEAN. Indian Prime Minister Narendra Modi and Myanmarese President Thein Sein met at Nay Pyi Taw, the capital of this eastern neighbour of India, and stressed the need to improve the connectivity to utilise the exiting potentialities. Both sides emphasised on the need for more direct air links, as well as an India-Myanmar-Thailand trilateral highway, and the Kaladan multi-modal transport project. The two nations are now not connected by direct flights. They signed an MoU for a bus service between Imphal and Mandalay only this year. A large population of Indian origin (according to some estimates about 2.5 million) lives in Myanmar. Four Indian states – Manipur, Mizoram, Nagaland and Arunachal Pradesh – share border with Myanmar. Work is apace on India-Myanmar-Thailand Trilateral Highway project which should be completed by 2016 and provide seamless connectivity among the three countries.

Key connectivity projects between India’s landlocked northeast and Myanmar, a crucial part of India’s Look East Policy; need to be completed on time to boost trade and partnership between India and the booming Southeast Asian region, especially with China stealing a march. A broad gauge rail line that is supposed to be built in Imphal by 2018 could be extended to Moreh and then on to Kalay in Myanmar’s Sagaing division with international funding. It will be a crucial link in connectivity. There is a proposal to develop Moreh in Manipur into a major township, equipped with hospitals, educational institutes and banking facilities that would go a long way in boosting connectivity and trade. An Integrated Check Post is set to come up at Moreh by the end of a year. Besides, Special Economic Zones could be set up in Mizoram and Manipur bordering Myanmar to boost trade.

Myanmar remains India’s gateway to the ASEAN nations. Geo-politically, Myanmar occupies an important place for India’s ‘Look East’ policies of building up relationships with South East Asia, as Myanmar shares common borders with Laos and Thailand.  India and Myanmar share a long land border of over 1640 km and a maritime boundary in the Bay of Bengal. Moreover, Myanmar being the only ASEAN Country having border with India, is an important link between India and South East Asia. It is pertinent to refer as there are no contentious issues looming over India-Myanmar relations. This provides a stage for viable strategic partnership. India has scope in tie-ups in Myanmar in the railway sector. Trains in Myanmar run on meter gauge and its rolling stock is similar to that of India. Myanmar is also keen to sell its surplus power to India. Apart from a boundary that stretches over more than 1640 kilometres and borders four North-Eastern states of India, there is a large population of persons of Indian origin in Myanmar. Bilateral relations are reflective of these multifarious and traditional linkages and the two countries live side by side as close neighbours based on the Five Principles of Peaceful Coexistence.

Positive aspects

  1. India launched its first shipping service to Myanmar connecting both nations under the ‘Look East’ policy to boost bilateral ties. The Shipping Corporation of India and the Ministry of Shipping has launched a direct service to Myanmar for the first time with the help of foreign and commerce ministries. With the commencement of the service the ‘transit time’ for Indian exports and imports to Myanmar stand to reduce considerably.
  2. Bilateral trade stood at US$ 2 billion for the year 2013. As part of the effort to encourage border trade and people-to-people contacts, India and Myanmar agreed to set up Border Haats at ten locations along the India Myanmar border. India being a major importer of fossil fuels for its energy security needs Indian companies, including ONGC Videsh and GAIL, were working in some blocks in hydrocarbon-rich Myanmar. India is also a major importer of pulses, including moong dal, from Myanmar, adding that both sides have potential for cooperation in palm oil and timber plantation in Myanmar. Both sides have two border trading points - Moreh-Tamu and Zowkhatar-Rhi - and another is to be opened at AvakhungPansat/Somrai.
  3. The 1,400-km Trilateral Highway, linking India, Myanmar and Thailand is still a work in progress. Some portions of the highway, which is a major connectivity project of India and the ASEAN, are still to be completed in Thailand and Myanmar. The highway - from Moreh in Manipur to Mae Sot in Thailand via Myanmar - is slated to become a reality by 2016.
  4. Mountainous northeast India would be connected to the railway network of neighbouring Myanmar to link up with the ambitious 81,000 km-long Trans-Asian Railway Network (TARN). To connect with the TARN, a 118-km railway track would be laid between (Manipur capital) Imphal and (border towns) Moreh and Tamu (the latter in western Myanmar). The proposed TARN covers 80,900 km of rail lines, including 22,600 km in South Asia, Iran and Turkey. The southern corridor begins in Kunming in China and Bangkok in Thailand and ends in Kapikule in Bulgaria. The length of the route between Bangkok and Kapikule is 11,460 km and provides trans-continental connectivity to China, Thailand, Myanmar, Bangladesh, Pakistan, India, Iran and Turkey. Kalandan.jpg
  5. India has offered $150 million of credit for project exports to set up a SEZ in Myanmar and has expressed hope that the neighbouring country would permit Indian banks to set up branches there. India has offered $150 million of credit for project exports for establishing a SEZ at Sittwe in Myanmar. In road sector, India has extended assistance for road development projects which include up-gradation of the Tamu-Kalewa-Kalemyo road (about 160 kms); Kaladan Multi-Modal Transit Transport Project which envisages development of road and inland waterways from Sittwe port in Myanmar to Mizoram. BRO has completed the resurfacing and maintenance work of 132 kms Tamu-Kyigone-Kalemyo stretch of the road and handed over to Myanmar. The remaining 11 km of the 28 km section on the Kyigone - Kalewa stretch is also to be handed over to Myanmar after completion.
  6. Indian airlines can now operate flights to Myanmar as the country has granted traffic rights to India-based carriers paving the way for air connectivity between the nations. The fifth freedom rights allow airline carry revenue traffic between countries as a part of services connecting the airline’s own country. At present, there is no direct air connectivity between India and Myanmar.
  7. In order to create greater connectivity with ASEAN countries, India is focussing its attention on a deep-sea port in southern Myanmar that would provide a much shorter sea route to the economically vibrant Southeast Asian region and help boost trade. The Dawei deep sea port and special economic zone is slated to give a huge boost to connectivity and trade in the Southeast Asian region when it is commissioned in a few years. The $8-billion project is being developed jointly by Myanmar and Thailand and it will provide India an alternative sea route to Southeast Asia and reduce dependency on the congested Strait of Malacca and cut transport time. The Dawei port is part of the southern corridor of the Mekong India Economic Corridor. The Dawei Special Economic Zone Development Co, jointly owned by Thailand and Myanmar, will be assigned to run the project. India is concentrating on the southern economic corridor, which would connect Ho Chi Minh City in Vietnam, Phnom Penh in Cambodia and Bangkok in Thailand to Dawei in Myanmar. Besides that India is also helping Myanmar upgrade the 160 km Tamu-Kalewa-Kalemyo road, repairing 71 old bridges in Myanmar, besides building the Kaladan multi-modal transit transport project. The Kaladan project, expected to be completed in 2014, will connect Kolkata port with Sittwe port in Myanmar by sea and also link Sittwe to Mizoram via river and road transport.

Negative dimensions

  1. Even as countries such as China, Japan and Vietnam are investing heavily in Myanmar, capital inflows from India is not up to the required level. The government of Myanmar has expressed displeasure at the lacklustre investment from India and delay in implementation of Indian projects there. Currently, Indian investments in Myanmar stand at about $273.5 million; it is expected this will soar to $2.6 billion in the next few years. By comparison, China has invested about $14 billion, Japan $3.5 billion and Vietnam $550 million.
  2. Myanmar has voiced concern over large scale poppy cultivation by Manipuri people in Myanmar and also hoped that Indian projects in Myanmar would address the concerns of the local people and not be like China, overlooking environmental concerns.
  3. Myanmarese troops have attempted to construct a defence post and fencing along the border in Manipur where there is no demarcation of boundary between the two countries prompting India to take up the issue. Construction materials were dumped for erection of fencing and the camp by Myanmar close to the international boundary in Manipur’s Chandel district near Moreh town recently. Myanmar had some days ago also tried to construct a base camp next to Holenphai village near Moreh but they were persuaded not to do so until a joint survey by the officials of the two countries. India has asked Myanmar to set up a Joint Border Working Group (JBWG) to address the issue of demarcation of border, extends to over 1,600 km, between the two countries in the backdrop of attempt by Myanmarese Army to construct a defence post near an un-demarcated border pillar. As per the understanding, there cannot be any construction within 10 metres from the boundary.
  4. The various political parties of India have demanded a joint re-survey of the borderline particularly near the border town of Moreh in Chandel district by Indian and Myanmar authorities and fix the boundary of Manipur and Myanmar based on historical documents adding that representatives of the committee who included village Chiefs of the border areas should be invited to join the demarcation of the international borderline.
  5. Bilateral trade stood at less than $2 billion in 2013. The land border trade between India and Myanmar is much lower than between Myanmar and China. While formal land border trade between Moreh in Manipur and Tamu in Myanmar and Zokhawthar in Mizoram with Rhi in Myanmar amount to around $35 million, the two-way trade between Muse in Myanmar and Jingao in China is over $2 billion.

Potential and prospects

  1. Strategically, Myanmar is important to India as it looks to counter Chinese presence in South East Asia by creating
    TRansBurmaPipeline-Map.jpg its own sphere of economic zones. Myanmar’s ongoing liberalization could cut its dependence on China. There have been protests against certain Chinese companies for their violation of environmental laws as well as disregard for local customs and traditions. In fact, the development is not a zero sum game (a situation in which one participant’s gains result only from another’s losses), and there is enough scope for partnership. China may have deep pockets and can lend at very low rates, but it cannot finance every project. India’s investment in Myanmar is around $275 million. India should use this opportunity to maximum and earn the confidence of the people and the government of Myanmar.
  2. The border trade and investment facilitation as well as cooperation in services and technology transfer must be addressed for greater economic linkages with Myanmar. The two countries should conclude an agreement on cooperation in banking and financial services to enable greater private sector engagement.
  3. It is believed that the tax-free markets will come up at nine places along the border to develop the areas around. According to the New Light of Myanmar, a preliminary agreement has reached between Chin State of Myanmar and India to open such markets which will allow merchants to trade 40 commodities.
  4. In oil and gas sector, Myanmarese government has shortlisted 59 companies for submission of final bids for 18 onshore gas blocks on offer and out of this seven Indian companies are shortlisted. OVL and GAIL have announced $1.33 billion investment in China-Myanmar gas pipeline project. The construction of two parallel pipelines for gas and oil has been awarded to Punj Lloyd, involving investment worth $475 million to build the 200-km Kyaukphyu-Kunming oil and gas pipeline. Jubilant Energy India has also won the government’s contract worth $73 million for exploring an onshore block in central Myanmar.
  5. Besides that the Myanmarese government opened tendering for exploration and production of onshore and offshore oil blocks. For the 18 onshore blocks, both public sector and private companies from India — ONGC-OVL, Jubilant, Cairn energy group, etc — have been qualified for second round of bidding process. The country is also estimated to have 3.2 billion barrels of recoverable crude oil reserve. Foreign investment in Myanmar’s oil and gas sector reached $14.372 billion in 115 projects at the end of February, accounting for 34.14 percent of the country’s foreign investment.
  6. In the telecom sector, India’s Bharti Airtel, along with its consortium partners, is one of the 11 final bidders for a telecom licence in Myanmar. India is also in talks with Myanmar to open more border trade points to increase trade through the land route.
  7. China is dominating Myanmar’s economy so far because most countries avoided dealing with it during the military rule. The country needs to favourably consider Indian companies in various fields to loosen China’s stronghold on the economy. Therefore, India needs to diversify the trade relations with Myanmar.
    8. Considering the Indian demand for imported natural gas has been rising as domestic production has steadily declined over the last two years to 111 million standard cubic metres per day (mmscmd) in 2012-13 from 143 mmscmd in 2010-11 mainly due to fall in production of the Reliance Industries’ KG-D6 block. At its full capacity, the Myanmar-China pipeline can supply about 12 billion cubic metres (bcm) per year. Block A-1 extends over an area of 2,129 sq km off the Rakhine Coast in the Arakan offshore field in north-western Myanmar, while the adjacent block A-3 covers an area of 3,441.
    9. It has been reported that Myanmar government is keen to attract more foreign investment, technical assistance and issuing production-sharing contract in the coal sector since most of its reserves are yet to be tapped. Myanmar has coal reserves of over 270 million tonne, but the country produces less than 2 mt annually. The government there has recently decided to form JVs to exploit around 44 per cent of its total reserves and wants to keep only 3 per cent exclusively in the state’s hand. It is open to give the rest of the reserves to private hands. This provides huge opportunity to India and Coal India (CIL) has decided to invest in Myanmar along with China and which could be very strategic for India as this could create scope for wider Indian investment in the country alongside Chinese investment. It could be noted that China has invested more than $ 8 billion in hydro electric, oil & gas production and coal mining.
    10. In the meantime, China has started receiving natural gas from Myanmar through an 870-km strategic cross-border pipeline co-invested by four countries, including India. The multi-billion dollar pipeline, that was inaugurated in northern Myanmar’s Mandalay. It will ship natural gas and petroleum all the way from the coastal port in Myanmar to China’s Southwest Yunnan Province.
    The gas pipeline, co-invested by six parties from four countries including India and South Korea, has a designed annual throughput of 12 billion cubic meters before off-loading in Myanmar. A parallel oil pipeline is also part of the project. China National Petroleum Corporation (CNPN) is a major partner in both assets. The designed annual capacity is 22 million tonnes for the oil pipeline and 12 billion cubic metres for the gas pipeline.