Indian ambassador talks ports, roads and solar power
By Clare Hammond | Wednesday, 22 July 2015
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As the first meeting of the India-Myanmar Joint Consultative Commission (JCC) concludes in New Delhi, Gautam Mukhopadhaya, ambassador of India to Myanmar, provides an update on ambitious plans to improve connectivity between the two countries.
Indian ambassador Gautam Mukhopadhaya. Photo: Aung Khant / The Myanmar Times
“We see tremendous potential in Myanmar. It has always been rich in natural resources, but now there is a new economic opening and dynamism which will allow for a much more productive relationship,” he said last week at his colonial mansion in Yangon, known as India House.
“This will not only be a resource based relationship but one that contributes to capacity building, industry, agriculture – all the things that can impact on the livelihood of the people,” he said.
India’s main focus in Myanmar over the past few years has been two major connectivity projects. The first is a highway connecting Moreh in India to Mae Sot in Thailand, running through Myanmar. The first section of the road, from Tamu to Kalay-Kalewa in Sagaing Region, was completed last decade.
“We expect to have the budget for the next section to Yargi sanctioned and to begin work in October,” said Mr Mukhopadhaya. This will cost around US$200 million. India will also upgrade the 70 bridges along the Tamu to Kalewa section of the road. Linked to this is the upgradation of the Rih-Tiddim road. These three projects together will cost over $350 million and will take two to three years to finish, he said.
The second project is the Kaladan Multi-Modal Transit Transport project, which will connect Mizoram in India to Sittwe, the capital of Rakhine State, via the Kaladan River. The project was originally due for completion in 2014, but has been delayed.
It has three components – upgrading Sittwe Port, developing the river for inland navigation, and building up the road network. The cumulative budget for the Kaladan project will be over $450 million, said Mr Mukhopadhaya.
“The port upgrade is 95 percent ready and the jetty is around 70pc done and should be finished by the end of the year. The road component hasn’t yet begun, because there was a revision of the scope,” said Mr Mukhopadhaya.
“Initially we thought of taking the river component further upstream, but decided to extend and broaden the road segment and limit the waterway at the Rakhine-Chin border,” he said, adding that the road section will take at least three years to finish taking into account the limited working season in Myanmar.
“If Sittwe was better connected inland you could open up the entire beans and pulses belt in the arid zone. This is for the government to consider, but I believe they are alive to the possibility.”
Once the project is complete, he believes it will benefit Rakhine and Chin states. “I see it boosting both trade and industry in Rakhine State around Sittwe and along the way,” he said.
“We see it as a way of contributing to the amelioration of the conflict. Right now you have a hot-house atmosphere, but if the economy can be stimulated through trade, it would enlarge the space for productive employment, which can indirectly contribute to cohabitation between the communities.” Another focus over the next year will be border trade infrastructure, he said. “We are working on introducing a normal trade regime, so that a lot more goods can be traded, stimulating the economy and generating more revenues for both sides,” he said.
“At the moment just over 60 items can be traded. Technically we have already introduced open trade, but we don’t yet have the customs and related infrastructure. The timing depends on procedures and clearances, but let’s say it will be ready within a year,” he said.
India has a free trade agreement with the Association of Southeast Asian Nations (ASEAN) for goods, services and investments, and a duty-free trade preference scheme for least developed countries (LDCs). “This gives 96pc of all tariff lines duty-free access to the Indian market,” said Mr Mukhopadhaya.
“We are also developing border markets,” he said, and over the next five years other trade points are likely to open, as road connectivity improves and “the habit of trade catches on”.India is Myanmar’s third largest export market, after Thailand and China, with $1.14 billion worth of exports in fiscal year 2014, according to data from the Central Statistical Organisation. In terms of imports, India was seventh in the same year, after China, Singapore, Japan, Thailand, Malaysia and South Korea.
“Our economic relationship suffered after the hiatus in our relations in the 1960s, but we were still Myanmar’s third-largest trade partner until 2013. Even though we may have slipped temporarily in the rankings, we expect that with the economic prospects of both our countries the scope for filling that gap is very large,” said Mr Mukhopadhaya.
India plans to work increasingly closely with Myanmar in the energy sector, he said. “Side by side with the growth of our own solar energy industry, we would like to promote solar energy here,” he said. In March, the Indian government committed to an installed renewable energy capacity of 175 gigawatts by 2022 – 100GW of which will come from solar power.
“We are talking to the Ministry of Electric Power [MoEP] and the Ministry of Livestock, Fisheries and Rural Development about rural electrification. We have also proposed a memorandum of understanding to the MoEP. We are looking at medium-scale projects which benefit the regions where they are located, rather than fundamentally extractive projects,” he said.
India is also looking at how to contribute to Myanmar in agriculture and information technology (IT), he said, including capacity building projects. “Myanmar is a largely agricultural economy and I think we can contribute in a large way to the next level of industrialisation. We encourage our investors to look at sectors that are organically linked to the economy rather than something alien – a spaceship from abroad.”
In addition, India is open to partnerships in the telecommunications industry, he said. “We don’t yet have any big contracts, but would encourage Myanmar to look towards us. With our domestic digitalisation program, we are developing a huge capacity for fibre-optic and broadband connectivity.”
There are two weak points that still need to be addressed, he said. “One is the financial channels, the banking sector in particular,” he said. When Myanmar awarded branch licences to nine international banks last year, India missed out, but India is hoping for a licence in the future, he said.
“From a development point of view our experience in financial inclusion and opening up the financial sector to the private sector and international banks could be useful for Myanmar. Our banks and insurance companies are prepared to assist Myanmar in this regard.”
The other is air connectivity – India is simply not as well connected to Myanmar as Myanmar is to its other neighbours, he said. “Tourism is a growing industry and we can consider how to link tourists who come to our northeast with those who come to Myanmar,” he said.
“All we need is an enterprising airline to connect Myanmar to Imphal or Guwahati. I don’t yet have success on this, but will continue to work on both sides until one takes off. If you start the connectivity, engage the tourism and travel trade, it can be magic. All it requires is a flight and a visa – this is something just waiting to happen,” he said.
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Rice exports planned to the Philippines
By Htin Lynn Aung | Monday, 20 July 2015
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Myanmar is in discussions to export rice to the Philippines, as it looks to diversify away from the Chinese market, according to U Ye Min Aung, secretary of the Myanmar Rice Federation (MRF).
The federation is working toward developing multiple export markets for domestic rice, he told media on July 15. “MPF believes that relying on exports to a single market will lead to difficulties in the long-term, so we need to diversify. The Philippines has shown a continuous interest in buying Myanmar rice, so we will try to export it during this year’s rice season,” he said.
China has long been the largest importer of Myanmar rice, accounting for around 75 percent of the market, despite an import ban by Beijing which was only lifted this April. However, trade with China has recently slowed, following the arrests of several Chinese buyers on the Myanmar border.
Much of the rice trade between the two countries is conducted through the border point of Muse in Shan State, which adjoins Ruili in Yunnan province, China. The buyers were arrested for tax evasion.
“Just six or seven Chinese buyers came and bought today. China is Myanmar’s main rice export market, so Myanmar is at risk if something happens there,” said U Aung Than Oo, vice chair of MRF, on July 15.
Rice exports from Myanmar to China have grown exponentially over the past decade, but the growth of the market may stall as China’s economy slows. GDP growth in China has fallen from 10.4pc in 2011 to 7.4pc in 2014. Annual GDP growth is likely to fall to less than 7pc by 2017, according to the World Bank.
The Philippines is one of the world’s largest rice importers, so Myanmar’s rice export prospects would be improved if trade links to the archipelago could be secured, said U Aung Than Oo. The Philippines was the world’s third-largest rice importer in 2014, behind China and Nigeria, according to data from the US Department of Agriculture.
Negotiations are now under way between the MRF and the Philippines’ National Food Authority, as well as between the Myanmar and Philippine governments, said U Aung Than Oo. “The two governments are discussing a memorandum of understanding,” he said.
The Philippines imports more than 2 million tonnes of rice per year, and Myanmar would ideally export around 200,000 tonnes to the Southeast Asian economy, said U Ye Min Aung. However, the Philippines is better linked with Vietnam in terms of logistics, so Myanmar must work hard to secure a market share, he said.
Myanmar is also in negotiations to export rice to European Union countries, and is trying to increase exports to Indonesia, Japan and Malaysia. In fiscal year 2014, Myanmar exported 1.19 million tonnes of rice – exports to China accounted for around 80pc, according to data from the Central Statistical Organisation.
Myanmar has the potential to more than double its rice exports by diversifying and increasing rice production, opening its rice milling sector to direct foreign investments, and reducing export procedure costs, according to a World Bank report last June.
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