Modi must make up with Myanmar

The tone was set by a former diplomat from Myanmar at a seminar in Yangon recently on India’s ‘Act East’ policy and bilateral relations with Nay Pyi Taw.

“You are late. Leave alone the Chinese and the Japanese who had been in Myanmar for long, even the Koreans have consolidated their position in Myanmar in the last 10-15 years,” he said.

Like it or not, this is true. And when Prime Minister Narendra Modi lands in Myanmar on Tuesday, his priority should be to correct Nay Pyi Taw’s image of India as inconsistent and lethargic and replace it with one that shows it having a more businesslike approach. India needs to act fast.

The job is easier said than done. Over 10 years, the UPA government barely acted on the neighbourhood policy that the Atal Bihari Vajpayee government had pushed aggressively between 1998 and 2004.

The missing road link for the Kaladan multi-modal transit transport project connecting Kolkata’s seaport with Sittwe seaport in Myanmar or the still unfinished Tri-Lateral Highway from the Moreh-Tamu border to Mae Sot in Thailand cutting across Myanmar are testimony to this attitude; over $500 million was spent without much use.

Worse, some of the investments made such as the upgradation of a 132-km road stretch from Tamu to Kalewa as part of the Tri-lateral Highway project didn’t last more than two monsoons, forcing the Indian authorities to call off a plan to start passenger bus services to Mandalay, in 2015.

Over the last two years, Modi has been aggressively pushing for completion of the projects initiated one-and-a half decades ago. Budgets have escalated manifold, and contracts have been awarded to start construction.

This is likely to bring results. The way it looks now, both the Kaladan project and the Tri-lateral Highway will be a reality in next two to three years. But a bigger question remains unanswered.

Will this mammoth development finance running into billions of dollars help improve India’s prospects in trade and commerce?

India now has a measly $2.2 billion trade with Myanmar and is the ninth or tenth largest investor in that country.

The Kaladan project was planned in 2003 to open an alternative connectivity option for the North-East bypassing the narrow Siliguri Corridor connecting West Bengal with Assam. That was the time Bangladesh was a non-cooperative neighbour.

With Bangladesh now offering India access to Chittagong port, the commercial viability of Sittwe port is in question.

The Indian establishment is now weighing various proposals to seed local economic activity. There are proposals to construct a road between Sittwe and Mandalay to tap agri-commercial activities.

But all these plans are hanging in the air more so because Rakhine is an economically backward and disturbed zone.

The Tri-lateral Highway may contribute to future economic prosperity in India’s North-East and the neighbouring backward areas of Western and Northern Myanmar.

But it is unlikely to have any impact on bilateral trade in the foreseeable future.

The reasons are easy to understand.

Both India’s production centres are located in close proximity to the coastal areas and Myanmar’s consumption centres are in the south, nearer the sea.

The tragedy is the that two nations are yet to revive the traditional maritime trade routes, which are way cheaper than sending products by road all the way from Delhi or Chennai to Yangon.

The recently introduced coastal shipping service between Kolkata and Yangon is irregular. And most of the trade takes place through Singapore, adding to the cost.

It would have been worthwhile if India focussed its attention on establishing regular coastal shipping operations, with a long-term agenda to bring down the cost of trade.

A direct shipping service is not the only prerequisite to increase trade and investment. The majority of India-Myanmar trade is cash-based and is operated via Singapore. This is due to the paucity of banking operations in Myanmar and lending restrictions on foreign banks.

However, other nations have converted this into an opportunity. Japanese or Korean banks ensure a heavy dose of finance to their respective set of companies. In comparison India has only one banking licence, held by the State Bank of India and traders allege limited finance flow. India’s planning poverty is more apparent in the healthcare and religious tourism segments. The entire Buddhist population in Myanmar lives the dream of doing the Buddhist circuit in India, centred around Bodh Gaya, at least once in their lifetime.

They also attach huge credibility to the Indian medical system. Besides, India dominates the pharmaceutical products market. However, only 1 per cent of the 300,000 medical tourists from Myanmar visit India.

The fault lies entirely with India: it charges a medical visa fee of $100 and doesn’t offer low-cost air connectivity.

Yangon currently has the best air connectivity with Kolkata, among all Indian cities courtesy Myanmar Airlines that recently introduced a twice-a-week service. For the record, Air India too runs two flights a week between Yangon and Kolkata. But ask any traveller and he/she will tell you the service is poor.

Compare this with 150 flights a week between Myanmar and Thailand and 60 flights a week between Myanmar and China. The difference is apparent.

Delhi should do better by investing in cheap air services connecting Yangon or Mandalay with Guwahati, Kolkata or Delhi to attract both religious and medical tourists and build a social equity that could be converted into more business.

“All we need is a package covering air ticket and stay to redirect medical tourists to India,” said Ravindra Jain of 4R consultancy who sends Myanmarese for treatment to Thailand.

Air services are also an indicator of the importance that Delhi attaches to Myanmar in terms of business. Over the last few years, Indian apex chambers such as CII have organised India-Myanmar business conclaves. However, whether these have translated into investment is open to question. Clearly, they have not.

A retired diplomat confides, “India’s big business is simply not interested in investing in Myanmar.” He had tried his best to attract Indian hotel chains to Yangon. There was no response. Unfortunately, the loss is India’s because now, foreign hospitality chains are readily and steadily filling the gap.

A prominent Myanmarese businessman has no hesitation in saying that all the businessmen that Modi or Manmohan Singh towed along with them to Myanmar were barely around; they were there simply to please the two prime ministers.

This businessman played a crucial role in getting a contract for an Indian company for a joint venture, fighting off stiff competition from Chinese companies.. He points out a significant difference in outlook between the Chinese and Indian companies.

“The Chinese companies put their weight in ensuring that the contract goes to the Chinese and their partner companies in Myanmar. Your companies prefer procuring products and services from Chinese companies overriding Indian interests,” he said. Pulling the rug from beneath the feet will get India nowhere.

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