Day Five
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.
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.
No comments:
Post a Comment