A delegation of Indian CEOs visiting Myanmar and the launch of a new India-Myanmar business chamber in Yangon have sought to inject life into stagnant economic ties between the two neighboring countries.
Since 2011, when the military junta launched political and economic reforms, Myanmar’s future prosperity has been predicated on its strategic location between India and China, two giant economies and population centers.
Yet, while China has poured billions into mega infrastructure and energy projects and continues to dominate trade with Myanmar, flagship Indian infrastructure projects in western Myanmar have run behind schedule and over budget.
Bilateral trade — topped by beans and pulses from Myanmar and sugar and medicines from India — has hovered around the $2 billion mark since 2011, less than a fifth of the trade volume with China and falling well below targets set by a Joint Trade Committee. Though Myanmar’s fourth largest trade partner, India is only its eleventh largest investor.
At an India-Myanmar Business Conclave on March 22 in Yangon, Myanmar’s commercial capital, Indian company directors mingled with Myanmar business leaders while senior government officials mixed frank acknowledgements of underperformance with affirmations of Myanmar’s potential.
India’s Minister of Commerce and Industry C.R. Chaudhary said, “Myanmar is our gateway to Southeast Asia,” recalling two pillars of India’s foreign policy, Act East and Neighborhood First, and stressed the need to “remove trade barriers.”
Next at the podium, Myanmar’s Deputy Minister for Commerce Aung Htoo, talked of boosting India-Myanmar trade to 5 billion over the next three years, as part of a Myanmar government plan made in 2016 to triple all exports by 2020.
Speaking to VOA on the sidelines, Gaurav Manghnani, the Myanmar country head of Credera, a trading and investment company with roots in Myanmar’s Indian diaspora, said he didn’t share in the growing pessimism of other foreign investors over the slow pace of economic reform in Myanmar.
“If they’re taking time to get the reforms underway and making sure these reforms are here to stay and forward looking, they won’t make the mistakes other countries have,” he said, citing the lengthy delay in the implementation of the new Companies Act, a law that allows for larger foreign stakes in local companies, as “the best thing that could happen.”
He acknowledged that India-Myanmar trade “has been stagnant at this level for a while now. To push it beyond the current volume of 2 billion requires something different to be done.”
Yet, beyond the formal launching of the new India-Myanmar Chamber of Commerce — aimed at speeding up interaction between Indian and Myanmar businessmen and advising on tie-ups — the March 22 conclave did not feature announcements of new investments or major breakthroughs in deepening ties.
Indian Ambassador to Myanmar Vikram Misri said that work was nearing the “final stage” in two separate infrastructure projects being built on Indian government grants.
These are a section of the Trilateral Highway, running from northeast India across Myanmar to Thailand, and the Kaladan Multi-Modal Transit Transport Project, linking India’s eastern seaport of Kolkata to its landlocked northeastern states via ports, inland water terminals and roads in Myanmar’s Rakhine and Chin states.
Speaking separately to VOA, the ambassador said he expected both projects, conceived respectively in 2002 and 2008, to be finished in 2021. Meanwhile, agreements on the legal movement of people and vehicles across the land border are still under negotiation.
One obstacle to closer ties is the measures taken by India to prop up its own market. In August last year, when monsoon rains produced a bumper harvest in India, causing local prices to plummet, the government imposed quotas on Myanmar beans and pulses, which account for more than 75 percent of Myanmar’s exports to India.
Myanmar’s Deputy Commerce Minister said at the conclave, “Due to recent restrictions by quota from India, Myanmar farmers have suffered a lot this year. I’d like to ask the Government of India to increase the quotas for Myanmar pulses and beans.”
Ambassador Misri defended the move to VOA, saying, “It’s not protectionism for the sake of being protectionist. It is something that is in fact foreseen under the WTO mechanisms in terms of protecting against surges and adverse market conditions.”
“It would have been a calamitous situation for imports to have continued and for the market price to fall even further,” he said, adding, “The longer term answer to this is a diversification of the trade basket that Myanmar has with regard to India.”
Vikram Nehru, an economist resident at the John Hopkins University School of Advanced International Studies, told VOA he was skeptical Indian investment in Myanmar would really take off.
“India is a very inward looking economy. It’s one of the most protected markets in the world. India is not part of the global or regional value chain, unlike China,” he said.
Most Indian investments abroad, he explained, “are designed to tap into markets,” and the Myanmar market remains comparatively tiny.
“Why would Indian firms be interested, unless they were really small firms? They’d much rather set up in the Indian market, of 1.3 billion people, with a per capita income that is higher than Myanmar’s,” he said.