Indian Embassy in Yangon
The SAIS study group met with the Embassy representative from the Commerce and Investment department with whom we were lucky to both hear from and discuss matters of business development and current political issues with. As a major trading partner of Myanmar, India has held an important role as the 3rd largest export destination and the 5th largest source of imports into Myanmar. Sharing a border that stretches nearly 1,000 miles long and and a trade agreement signed in the 1970s, the two countries have enjoyed bilateral trade which generated up to $2.1 billion in 2013-14.
Regarding the composition of trade, agricultural products in the form of pulses and beans generated nearly $600 million of India’s imports from Myanmar. Other secondary agricultural trade products were imports of timber and wood products. In line with Prime Minister Modi’s initiative to promote different economic corridors such as the Corner Station Highway and the BCIM Corridor, investors have been looking to support infrastructure to help facilitate transportation for trade. The lack of Infrastructure as evidenced in the banking sector, the inefficiency of movement in the shipping industry, and the small number of passenger flights between the two countries (presently only 3 daily flights) highlight some of the present challenges Indian investors face when conducting commerce.
India’s assistance to Myanmar was estimated to be about $1.5-$2.5 billion as reported by our speaker, with a majority funneled towards the construction of Yangon’s new airport, expansion of the country’s highway, and a buildup of “soft zones”, such as the IT sector. The diplomat expressed that India was also engaged in capacity building in the natural resources sector through skills and technical training and corporate social responsibility initiatives (mainly in the oil and gas industry) as part of their investment activities. To further encourage investment into Myanmar’s economy by not only India but by the rest of the global community, the diplomat emphasized that improvements could made to the country’s investment regulations to avoid double taxation as well as their real estate market to prevent prohibitively high prices from increasing.
Our discussion with the diplomat illustrated important themes of international development that SAISers are well familiar with: the development of a country cannot be done overnight or even within the span of a few years. There is also no set model of development for a country- the unique political, economic, social elements of the environment should all be considered and taken into account as they influence what can be expanded upon.
India’s political engagement with Myanmar has remained consistent through the years despite political turmoil and regime changes in Myanmar. Bilateral trade between the two countries currently stands at $2.1 billion in favor of Myanmar with India importing nearly $600-700 million worth of rice and pulses. Other significant imports include wood logs and timber. However, following an April 2014 order by the Myanmar government banning export of logs, the timber trade has come down substantially. On the other hand, nearly 33% of Myanmar’s pharmaceuticals imports comes from India.
In terms of investments, India has committed nearly $400 million in the oil and gas sector. Indian oil majors such as ONGC and GAIL are active players in the Burmese oil and gas sector: the two Indian companies are part of the international consortium led by Korean firm Daewoo to build the Shwe Gas and Oil Pipeline from Myanmar’s western coast all the way up to the China-Myanmar border. India is also actively involved in building the India-Myanmar-Thailand tri-lateral highway in order to enhance connectivity and expand New Delhi’s engagement with ASEAN. The project has attracted funding from ADB, JICA and the Indian government and is expected to be completed by 2016. The Sitwe Port Development project is also of significant interest to India and is being executed by an Indian firm, Essar. The port is likely to be commissioned in early 2015. However, building support infrastructure from the Sitwe port to the inner mainland will be crucial for the success of the project. Overall, Indian investment commitments in Myanmar total $1.5-2 billion.
Other areas of cooperation between the two countries include student exchanges through the ITEC program, double taxation avoidance agreement and tie-ups between India’s IT sector and Burmese banks and telecom companies.
Chinese Embassy in Yangon
After spending a hot midday at the Bo Gyoke Aung San Market, Professor Knight and six of us students attended the meeting with Ambassador Houlan Yang and Mr. Zhu Bin, attaché in political and information section. The number of visiting delegates was capped at seven perhaps due to the setting of the meeting room— two chairs at the end of the room, facing the door. In the background, there was a folding screen decorated with a traditional Chinese painting. On the left and right, were chairs for the rest of delegates, three on each side.
Having listened to our self-introductions, the ambassador gave a brief overview of Chinese investment in Myanmar and answered our questions. In recent years in Myanmar, Chinese investment in energy and industry has been increasing. As for agriculture, China has sent Chinese agricultural officers and farmers to Myanmar to exchange ideas and provide training, as well as provided technology transfers.
Ambassador Yang mentioned with concern that throughout these years, many big programs invested by the Chinese have faced local challenges. Such challenges rose from a few reasons. First of all, Myanmar people may be discontent about some agreements signed between Chinese companies and the military government during the junta era which were not transparent. In that era, signing contracts with the military regime was the easier and fast way to do business. However, this is no longer the case in today’s Myanmar. Amb. Yang said that Chinese companies should follow and respect local business rules, culture and religion, as well as take on more social responsibilities.
Another reason is environmental concerns. Many hydropower projects are protested by local residents who fear that such projects will destroy the eco-system. In the hydropower sector, Chinese investment is much bigger than other countries, which makes it more difficult and costly for the former to withdraw from projects amid demonstrations. The ambassador mentioned that a commission has been set up by the China and Myanmar to help deal with conflicts between Chinese investors and local communities and NGOs. However, given the inertia of public opinion and the hindrance from some media that make news without having done comprehensive researches, the work is not easy
When stressing the importance of Myanmar to China, the ambassador said that China and Myanmar share a border of over 4000 km. Myanmar’s development is of great significance to the strategic opening of the Chinese hinterland, especially Yunnan Province. The Myanmar government has suggested building cross-border economic zones. China welcomes the idea, nevertheless, with concerns about the difficulties to control such a long border line and ongoing ethnical conflicts in north Myanmar, it remains prudent and supports ceasefire among ethnics.
Furthermore, Amb. Yang also talked about the challenges for Myanmar’s development: A lack of electricity (70 percent of the population has no access to electricity), infrastructure and connectivity. These shortages not only severely hinders residents’ living standard, but also investment activities. To solve these problems, both Myanmar and China support the building of the Bangladesh–China–India–Myanmar (BCIM) Economic Corridor. The BCIM, consists of a network of roads, railways, waterways, and airways, aims to improve connectivity, infrastructure, trade and investment in South Asia. In February, Myanmar will host a BCIM talk focusing on road connections which faces some local rejections due to fear of a large inflow of Bangladesh Immigrants.
When asked about the potential of Myanmar becoming a test ground for China-India business collaboration, the ambassador said such cooperation is already happening— The Shwe gas project, invested by corporations or government entities from China, India, South Korea, and Myanmar. There is also potential for cooperation between the two countries in building the BCIM corridor.
Overall, this was a very informative talk about the Chinese perspective in terms of doing business in Myanmar. I really appreciated the ambassador’s hospitality, approachability, and above all, candidness.