The Export Import (EXIM) Bank will open a representative office
Monday in Yangon, former capital and commercial centre of Myanmar, as India
refashions its relations building diverse layers of contact with the
Southeast Asian country that will chair the ASEAN bloc next year.
The setting up of the EXIM Bank office is a follow up on Prime Minister
Manmohan Singh's visit to the country in May last year during which
India signed a credit line of $500 million to build railway and
irrigation projects. India has also sanctioned another $250 million for
various other projects. The Bank has asked the government to finalise
those, says David Rasquinha, executive director of the bank.
There also plans to use the credit scheme under the National Export
Insurance Account operated by the Bank under which government agencies
can import goods and services from India.
According the Myanmar government's 2013-2014 fiscal report, Myanmar will
implement several projects in sectors like agriculture, power,
communications and transportation. The McKinsey Global Institute says
Myanmar would need $650 billion in investment by 2030 to support growth.
The IMF predicts the country will expand 7 percent over the next five
years.
India is stepping up its development cooperation in light of Myanmar's
continuing reform process and its age-old interconnectedness. The
spread of ideas and trade across India's east coast, from Bengal,
Odisha and Tamil Nadu go back to millenia and as author Thant Mint-U
points out, that influenced its religion, language and culture.
Also, in the not too distant past when Myanmar was known as Burma and
Yangon was Rangoon, many in eastern India saw the country as an El
dorado. That, however, came to an end in 1962, when Indian businesses
were taken over and Indians expelled.
Today, India is trying to leverage its aid and loan programmes and
forstering economic and business links as part of its diplomatic effort
to weild "soft" influence and to counter what analysts say the Chinese
ingress into the country's economy and grabbing of mega project
contracts. In such a context, the role of EXIM Bank as an instrument of
economic diplomacy is seen as critical, especially when the government
in Nay Pyi Taw is looking to broaden investment and development in the
economy beyond the extractive and energy industries.
Mynamar is looking to attract foreign investment by reforming its legal
and regulatory framework, and has plans to open up its stock exchange
within the next two years.
Some analysts say Myanmar's ongoing liberalization could cut its
dependence on China. There have been protests against certain Chinese
companies for their violation of environmental laws as well as disregard
for local customs and traditions.
Officials say development is not a zero sum game (a situation in which
one participant's gains result only from another's losses), and there
is enough scope for partnership. China may have deep pockets and can
lend at very low rates, but it cannot finance every project.
India's investment in Myanmar is around $275 million.
EXIM office would extend advisory services and provide support to
investments by Indian companies. According to Rasquinha, Myanmar offers a
lot of business opportunities in various sectors and the bank is trying
to encourage Indian companies to do business there.
Companies that are upbeat about Myanmar are Ramco, Sun Pharma, CMC, and
New India Assurance. Tata International has set up an office for its
newly-formed agricultural trading vertical.
Opposition leader Aung San Suu Kyi has stressed the need for "democracy
friendly investments" in the country. She has also described education
as one of the keys to development and security.
As Myanmar takes steps to democracy, India can assist in institution
building and other capacity building. India is planning to set up an
IIT-type institute in Myanmar.
Myanmar is strategically-located as it also borders China, Thailand,
Laos and could be a bridge between the vibrant economies of India, ASEAN
and East Asia and offers huge scope for Indian companies to invest
across diverse sectors. There are areas where they would not face much
competition, such as education, healthcare, infotech, entertainment and
provide cost-effective alternatives.
The Confederation of Indian Industry (CII) has suggested that border
trade and investment facilitation as well as cooperation in services and
technology transfer must be addressed for greater economic linkages
with Myanmar. The two countries should conclude an agreement on
cooperation in banking and financial services to enable greater private
sector engagement.
In the mean time, reports said tax-free markets will come up at nine
places along the border to develop the areas around. According to the
New Light of Myanmar, a preliminary agreement has reached between Chin
State of Myanmar and India to open such markets which will allow
merchants to trade 40 commodities.
Two-way trade in 2012-13 was worth over $1.8 billion. The two countries have set a target of $3 billion by 2015.
source: Business Standard
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