The last time Tatmadaw, the official name of the armed forces of Myanmar, assumed power in 1962, India sacrificed its dominance on the Myanmarese economy and literally rushed out of the country. The decision is still regretted by the Indian diaspora in the land of golden pagodas.
Narendra Modi’s India didn’t make that mistake. After the 1 February coup, almost all major economies scaled down their presence in the ASEAN (Association of South East Asian Nations) country, with the exception of two rivalling neighbours — China and India.
Delhi has not merely stayed put in Myanmar but it is trying to fast forward the development projects and is encouraging Indian corporates to remain invested.
Not An Easy Decision
The decision was not easy. The banking system is paralysed in Myanmar, and cash (both local currency as well as the dollar) is in short supply. Health risks are abnormally high, as medical staff joined the protests against the army rule.
Life is uncertain due to regular clashes between the two sides. Even the capital city is rocked by explosions and attacks on security personnel. Though officially none pulled out as yet, practically projects pursued by top multilateral or development agencies have come to a grinding halt.
Business is in serious trouble. Uncertainties forced many (like telecom service provider Telenor) to write off investments. Western companies scaled down presence. Those operating are re-routing transactions through a third country to ring-fence allegations of army connections.
Such connections, however, are near impossible to avoid, as Tatmadaw held all important ministries and had veto power, even in democratic rule. They operate as a conglomerate, ensuring their pound of flesh in almost all major business and industrial activity.
Indian companies are also feeling the heat. A Norwegian pension fund recently divested from Adani Ports and Special Economic Zone Limited. Adani is building a Rs 2,100 crore ($290 million) container terminal in Yangon.
The company won the crucial project in 2020 through a global tender. For India, this was a breakthrough foreign direct investment (FDI). But the fund alleged that the land of the terminal was leased from a Myanmar military-owned conglomerate.
Building On The Momentum
However, Delhi is standing firm. It denies giving China a free hand again, as it enjoyed during the five-decade-long army rule (1962-2011), when Tatmadaw handed over the country’s natural gas, copper, tin, precious stones (Jade) assets almost lock, stock, and barrel to Beijing.
According to ITC Trade Map, in 2019, roughly 32 per cent of Myanmar’s exports were directed to China, with natural gas being the top export item. India has zero control over these vast resources and shared less than 4 per cent of Myanmar’s export and import trade.
Barring some controversies — including the one regarding cost escalation of Kyaukpyu Port and the rising indebtedness of Myanmar — the Chinese run didn’t stop even during the democratic rule; as the all-powerful Tatmadaw had a vested interest in keeping the money flowing.
The only aberration to this trend is India’s recent efforts to strengthen its position vis-a-vis China.
The impact project of the Trilateral Highway Project, mooted by the Atal Bihari Vajpayee government (1998-2004), was finally awarded in 2018. Construction began a year later (after negotiating some court cases), and was going on in full swing when the military stormed to power in Naypyidaw.
India doesn’t want to lose this momentum. Implementing agency, the National Highways Authority of India (NHAI), remains fully mobilised in Myanmar to complete the highway. The coup didn’t affect the construction, but the rains did.
Meanwhile, in a recent decision, the government decided to start ship movement to Sittwe Port in Rakhine. The central government-operated Kolkata Port is asked to make preparations.
Located close to China’s Kyaukpyu, Sittwe Port is part of Kaladan multi-modal, initiated by the Vajpayee government. It was lying idle, as United Progressive Alliance (UPA) government forgot to build the road to Mizoram. The road project was taken up in 2018. But it suffered delays due to the Rohingya crisis and the resulting unrest.
Banking On Goodwill
India re-entered Myanmar a decade ago, along with democracy. Since then, it captured a dominant position in the pharmaceuticals business. Indian companies started dominating the nascent IT space in Myanmar in the last few years. Adani brought the latest breakthrough in logistics. Efforts to break open Chinese dominance in steel were yet to be successful.
Overall, India is still a marginal player. According to the Directorate of Investment and Company Affairs (DICA) of Myanmar, Yangon received $5.5 billion in FDI in 2019-20. Indian companies invested a mere $3.27 million as against $553 million from China.
India contributed barely $773 million in Myanmar’s FDI stock of $87.5 billion in 2019-20. In comparison, China invested $21.5 billion, Thailand $11.4 billion and Vietnam $2.2 billion. China and Thailand never left Myanmar.
Having said this India generated significant goodwill over the last couple of years. Myanmarese always regarded India for Buddhism, the quality of medicines and English education. Modi government was successful in leveraging all three and more.
On the one hand, the border trade and movements were normalised. Before November 2015, India allowed only barter trade through the land border. Land visa was opened in August 2018.
Though the border trade still remains low, visa movement has had a tremendous social impact. Poor Myanmarese travel down to North East India to access quality healthcare. Imphal, in Manipur, emerged as the latest health tourism hotspot.
Additionally, India’s significant development cooperation in restoration of ancient religious sites in Myanmar, programmes for English education, helping rice farmers achieve better yield, upgradation of state hospitals, etc touched lives.
The goodwill is particularly high as India has been bad in business. As against controversies regarding Chinese finance, Indian assistance came as soft loans or aid.
It is unlikely that India will acquire the desired space in Myanmar, riding on goodwill only.
The ASEAN country is important to India also for strategic reasons and, over the last couple of years, the Indian Army was visibly trying to close ranks with Tatmadaw. The recent delivery of a refurbished diesel-electric submarine, the first one to Myanmar, has been a case in point.
But, undoubtedly India is currently in an advantageous situation as protesters rate China as the power behind the Tatmadaw. As in March, there were a series of attacks, including arson and destruction, of Chinese factories and properties. In comparison, Indian projects were welcomed. There has been no untoward incident at any Indian establishment.
Myanmar suffered a lot. Their resource, culture was plundered time and again. But the country has an indomitable spirit to fight back. India is right in keeping its faith in Myanmar and trying to build on the recent momentum.
Democracy should return to Myanmar. But, we cannot help the cause by quitting Myanmar. Democracy cannot be exported.
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