External Affairs

The Case for Stepping Up Economic Cooperation With Myanmar

As Myanmar’s economy opens up, India must capitalise on its proximity, to avoid falling behind the US, China and others in the region.

Aung San Suu Kyi is set to visit India for the BRICS summit. Credit: Reuters/Soe Zeya Tun

Aung San Suu Kyi is set to visit India for the BRICS-BIMSTEC summit. Credit: Reuters/Soe Zeya Tun

It has been six months since the democratically elected National League for Democracy (NLD) took office in Myanmar. The party spent the initial months of its tenure on government formation at the central and state levels, while also looking for ways to limit the military’s influence on governance. Creating a high office with due protocol status for Daw Aung San Suu Kyi within the constitutional constraints was also a priority.

The recent shift to governance has precipitated some bold moves by the party. Fortunately, the NLD government has not succumbed to the politics of reversing earlier decisions, such as renaming the country or shifting the capital, even though it had criticised many of these changes while in the opposition.

The NLD government has recognised ethnic reconciliation and unity as a key priority. While it was largely non-committal to former President Thein Sein’s initiative on this issue, the NLD has picked up where the previous government left off on the National Ceasefire Agreement, which had been signed by only eight ethnic armed groups last year. While more groups have joined the process since then, progressing with the 21st century Panglong Conference (as the process is now called) will still be an arduous task. This was evident even at its first meeting, which took place a month ago, when representatives of the prominent and heavily armed Wa group walked out because they felt slighted by the government’s decision to only grant them observer status. Three other groups, including the Kokang, which were involved in an open conflict with the military last year, were also barred by the military from the agreement due to their refusal to disarm.

Getting all the ethnic groups to move towards peace, reconciliation and an accommodative political dialogue is essential for Myanmar’s future development. Achieving this is also crucial for the government’s efforts to reduce the military’s role in governance. Suu Kyi perhaps understands this more than anyone else. However, the speeches delivered by the representatives of the various groups at the conference made it evident that there exist many visions when it comes to moving Myanmar towards a federal structure; some even suggested plans to safeguard against Burmese dominance. These ideas surfaced even as representatives from the military and the former ruling party Union Solidarity and Development Party (USDP) underlined the need to work within the framework of the 2008 constitution and to move the country towards disarmament, demobilisation and reintegration. Will Suu Kyi be able to mould and navigate the process while taking everyone along?

The government has also turned its attention towards the controversial Rohingya issue. Suu Kyi has shown political courage in setting up a nine-member commission led by former UN Secretary General Kofi Annan to do some fact finding and come up with recommendations. Even though the advisory commission only has three foreigners including Annan and also includes two from the Rakhine Buddhist group (and two Muslims, though not Rohingyas), the commission has already invited a lot of protestation.

Suu Kyi recognises that the current situation – several tens of thousands of Rohingyas living in abject conditions in camps – is simply not sustainable. ‘This is an issue that we have failed to meet squarely and fairly and to which we have not been able to find the right solution,” she said during her first meeting with the commission.  She will, however, get little domestic support. For instance, radical monks could whip up trouble. Eleven opposition parties, including the military backed USDP, recently criticised the NLD  for establishing a foreigner-led commission. Therefore, Suu Kyi will certainly be looking for support and international assistance for her plans, including the development of the Rakhine state.

Boosting ties

Suu Kyi also opened a dialogue with China during her visit to that country in August. China is keen to revive the Myitsone dam project, which was suspended by Thein Sein following environmental protests against the dam’s construction. China is also interested in re-establishing itself as Myanmar principal partner and reviving their robust economic partnership.

Suu Kyi has demonstrated her commitment to upholding legal and contractual fairness against popular pressure, which became evident in her handling of the Letpadaung copper mine case. In this case too, she has already set up a commission to review all the hydro-power projects currently under consideration, including the Myitsone dam. But she will need to be mindful of the widespread public opposition to the project and unhappiness about the large scale ingress of Chinese economic interests into Myanmar. Her political instincts will face off against the challenge of balancing her government’s need for Chinese support on a variety of matters, including the ethnic peace process, against the interests of the various armed groups, like the Was, Monglas and the Konkangs, who too have links with the Chinese.

Suu Kyi was also received with great warmth by US President Barack Obama, who then announced that the US would lift its remaining sanctions against Myanmar. This action should pave the way for greater trade and investment between the two countries. The resumption of generalised system of preferences concessions for Myanmar in the US market could also help Myanmar attract more investment in labour intensive sectors such as garment making.

The NLD government has also come up with a new economic policy and is liberalising the procedures for foreign investment. A Bill that is currently pending in parliament will enable decentralised decision-making on investment proposals and also incentivise investment in priority sectors and relatively backward regions in Myanmar.

This context will also frame Suu Kyi’s upcoming visit to India later this month to attend the BRICS-BIMSTEC outreach summit in Goa. This will be her first visit to India since the NLD came to power. India must take the opportunity to make her visit an important one for bilateral relations. This could be a significant opportunity following President Htin Kyaw’s visit to India some weeks ago when the two sides held wide-ranging discussions and also signed some agreements.

With Myanmar opening up and opportunities aplenty in the resource-rich country, it will not lack business opportunities. Japan and Singapore have already made considerable headway on this front. It is instructive that in both these cases their governments worked closely with the Burmese government to develop business plans and create comfort zones for their private sector. In cases like Myanmar, where commercial law and enforcement still need to make progress, such measures are important.

The removal of US sanctions is expected to free up dollar denominated transactions, allowing more countries to pursue business prospects with Myanmar. During this global economic slowdown, Myanmar is seen as one of the few bright spots of economic interest.

India must step up

The larger Indian business groups, barring a few, however, have not shown much appetite for conducting business in Myanmar despite the two countries’ proximity. Given the slow implementation of ongoing bilateral assistance projects in addition to the lack of private investment, India may fall behind other countries in its relationship with Myanmar in a few years’ time.

The time has come to infuse more strategic depth into our economic relations and incorporate a ‘Focus Myanmar’ policy within our larger ‘Act East’ policy. Where necessary, the private sector’s efforts need to be supplemented or assisted by the government in the form of concessional finance, technical cooperation support or bilaterally determined trade and investment zones marked for participation by Indian companies. Providing a degree of comfort for Indian companies will be important for getting them to step up.

India’s Northeast region and Myanmar’s western region are both relatively less developed compared to the other regions of the two countries. Are there ways through which joint efforts in these contiguous regions and better strategising could benefit both countries? India is already extending assistance to Myanmar in building the trilateral highway, the Rhi-Tiddim road and the Kaladan project. India is also involved in extending assistance for border area development projects in the Chin state and the Naga self-administered zone within Myanmar. There are also several ongoing rail, road and other capacity-building projects in the Northeast. Can all these projects be made part of a broader development framework vis-à-vis Myanmar, with trade, investment and infrastructure development driving one another? Capacity building for skill development, higher education and healthcare could be important supplementary projects for deepening bilateral relations.

Suu Kyi’s forthcoming visit may be a good opportunity to introduce these ideas to her and thus the NLD government. At a time when she is trying to bring peace and reconciliation to the Rakhine state, the Kaladan corridor, if suitably developed, could also be a source of significant support.

V S Seshadri is Vice Chairman of Research and Information for Developing Countries. The views expressed in this article are his own.