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25 November 2011, Gateway House

Land of the Golden Pagodas

Shipra Tripathi, Vice President - International Business for Kirloskar Brothers, writes from Myanmar on India's relationship with its neighbour and also the changes taking place in the country due to increasing investments, business opportunities and China's influence in the region.

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Every morning I would look out of my hotel room and stare at the Golden Pagoda, whose gilded walls house the ‘Holy Relic of the Hair’ – eight strands of the hair of Gautama Buddha himself. As a religious symbol, the sheer beauty of the pagoda is breathtaking. Lit up at night, its serene majesty is a constant reminder of the religion that has created this gentle society.

A first time visitor to Yangon, I was here as part of the November 2011 Confederation of Indian Industry (CII) delegation to Myanmar. My initial impressions had a strong Indian tang to them. Attempts to procure a cab at the airport instead produce a sudden congregation of people, all of whom start to loudly and simultaneously negotiate fares with the driver. Transport in the city is mainly comprised of the rickshaw – one with the bicycle attached to a side seat, much like the scooter with a side car in Sholay.

But some things are uniquely Myanmarese. Such as the local speciality to use English with a selective degree of economy. Thus Myanmar is pronounced as ‘Myama’.  So much simpler, no? I was also immediately charmed by the architecture of the city. Largely colonial style buildings line the marketplace, imbuing the bustling space with style and character. The gems in the country, with their vibrant hues, attract even the most uninterested shopper. Particularly irresistible are the lustrous rubies. It was hard to be in Myanmar to do ‘business’ when you could do so much more!

But there is no denying that the country is now opening up to business. Perhaps, as in several other cases, we Indians are already rather late. When the UN sanctions were announced against Myanmar , for suppression of democracy, India endorsed the sanctions and supported the pro-democracy stand. It was only China which maintained its diplomatic relationship with the government of Myanmar and reaped the benefits of its long and dominant foreign investor presence in the country.

India’s move to forge close relations with Myanmar is motivated by a desire to counter China’s growing influence as a regional leader and enhance its own influence and standing. Concerns and tensions increased in India over China’s extensive military cooperation and involvement in developing ports, naval and intelligence facilities and industries – specifically the upgrading of a naval base in Sittwe, a major seaport located near the Indian city of Kolkata.

We can take some solace in the fact that the investment laws of Myanmar have been formed on models imported from India. These include the laws governing the Special Economic Zones (SEZ).

Today, colour and a sense of purpose seem to dominate the pace at which Myanmar is developing. Government structures are evolving as we speak. The change in political focus is palpable. I was told that Aung San Suu Kyi was in the hotel where we were staying, addressing a session being held by the European Union on strengthening  financial  structures to support developing economies. Everyday there is a photograph of this great leader in the major dailies. Articles that eulogize her thoughts are given prominent space in magazines and papers. The press in Myanmar is slowly moving towards liberation.

A trip to Nay Pi Tow, the official capital of the country, gave us a deeper understanding of the intent and will of the military rulers of Myanmar. Armed with our pink, hand-written paper tickets, we flew into the city from Yangon in a propeller-driven aircraft that must have seen better days. Nay Pi Tow, established as recently as 6th November 2005, is very well laid out with wide roads and ministries spaced out over acreage that is impressive in its sheer size.

We had the pleasure of meeting with several ministers. Prominent among them were the Ministers for Industry, the Deputy Minister for Commerce and the Minister for Agriculture. Each one of them received the delegation warmly and was keen to discuss ways to collaborate with India.

The economy of Myanmar is at a strange point in time. While the official exchange rate for the Kyat (pronounced Chat) is $1=MMK 7, the unofficial market rate is anything between MMK750 to MMK 800. This wide discrepancy does not boost the confidence of new business entering Myanmar.  But the fact that the repayments of all the loans to India have been either on time or even ahead of schedule, shows the commitment of the Myanmarese government to ensure a constant flow of capital for its development needs.

On its part, the Indian government has recently announced a $500 million line of concessional credit for irrigation and infrastructure projects to Myanmar.

Agriculture is an area of viable Indo-Myanmarese cooperation. Myanmar’s economy is dominated by agriculture; it contributes 32% to GDP and employs 70% of the population.  The country produces large quantities of beans and pulses of which almost 90% is exported to India. The number of crops per year can be increased threefold to take advantage of the field holdings with new and improved technology for farm mechanization, better seeds and irrigation.

Although land ownership in Myanmar is in local hands, at the highest levels of government there has been some talk about corporate farming. With land ownership well regulated, it may be viable for Indian companies to have joint ventures with local farmers. This is an option that needs more debate; what could work better is a transfer of technologies and sustainable solutions for the various issues facing Myanmar, to help generate long term results.

Oil and gas is an area of strategic bilateral importance. The discovery of the offshore North-West Myanmar Gas Field, estimated to contain reserves of between 4–6 Tcf of gas, has sparked renewed interest in the proposed Myanmar-India Gas Pipeline. New Delhi’s Punj Lloyd is part of a group that is constructing the gas pipeline between Myanmar and India. The proposed offshore pipeline will run 950 km from Block A-1 in Myanmar through Bangladesh and into India. Various design options are being considered including a land route via the eastern Indian states of Tripura and Mizoram, an offshore route through the coastal areas of Bangladesh, and a deep-sea route with landfall in the state of Orissa. A northern route, which by-passes Bangladeshi territory, is also under consideration. The proposed pipeline has been under discussion for the past 13 years, but has been repeatedly stalled by political tension between the two countries. However in March 2010, the Bangladeshi Prime Minister Sheikh Hasina Wajed finally gave the go-ahead for the construction of the pipeline.

Bilateral trade between India and Myanmar is currently just over $ 1bn, growing at 8%; it is expected to double by 2015. Several new measures are being announced to increase existing border trade including increasing the number of trading points from three to six, strengthening border roads and infrastructure and creating integrated logistics hubs to provide water, land and air routes for easier trade access. A constraint is the lack of banking arrangements between India and Myanmar; we have much to learn from the Chinese and the Thais who seem to have cracked the problem by trading in Yuan and Bhat.

Shipra Tripathi, one of India’s leading experts on Africa, is Vice President – International Business for Kirloskar Brothers.

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