10 Feb, 2012

India-ASEAN Links Grow: Myanmar A New “Bridge”, Bangkok A New Hub

Imtiaz Muqbil

BANGKOK – The Look East Policy of India and the Look India Policy of ASEAN will combine the 600 million population of ASEAN and the 1.2 billion population of India into a multi-dimensional cooperative network. Two important developments to watch are the emergence of Myanmar as a bridgehead between South Asia and Southeast Asia, and Bangkok as a major hub of Indian companies operating in ASEAN.

In recent months, this partnership has gained traction with a flurry of high-level visits – President of Myanmar, U Thein Sein’s visit to India in October 2011 and Thai Prime Minister Yingluck Shinawatra’s visit to India in January 2012. The following information listing key policies, plans and projects emanating just from these two visits has been compiled from the public statements issued by the respective governments. As implementation progresses, the end result will be more travel for business, leisure, MICE events, seminars and training programmes.

Two key infrastructure projects to keep an eye out will be the India-Myanmar-Thailand highway, and the Dawai deepsea port in Myanmar. (see map identifying the strategic locations of these projects.)

First India – ASEAN Commemorative Summit planned in December 2012

India’s partnership with ASEAN is one of the cornerstones of its foreign policy. India sees important opportunities emerging in the establishment of the ASEAN Economic Community by 2015 to promote greater integration and prosperity in Southeast Asia. That in turn will contribute to an emerging Asia and help build an Asian century.

The twin East-West policies will strive to build on the civilisational linkages between India and East Asia; seek to merge the views and concerns of countries; take advantage of the complementarity of capacities and of individual economies and business environments. Other forms through which India-ASEAN contacts are being pursued are the ARF, the Bay of Bengal Initiative for Multi-Sectoral Technical Cooperation (BIMSTEC), the Mekong Ganga Cooperation (MGC) and an East Asia Summit.

The functional aspects of ASEAN-India relations are driven by the ASEAN-India Plan of Action, 2010-2015. India has pledged US$50 million to the ASEAN-India Cooperation Fund, an initial corpus of US$1 million to ASEAN-India Science and Technology Fund and US$5 million for the ASEAN-India Green Fund. India has suggested a number of projects/proposals for ASEAN-India collaboration to the ASEAN Secretariat which will utilize a substantial part of this amount.

This year marks the 20 years of Dialogue Partnership between India and ASEAN and 10 years of Summit Partnership. An India – ASEAN Commemorative Summit in December 2012 will be hosted by India in New Delhi. The Delhi Dialogue IV will be held on February 13-14, 2012 on the theme “India and ASEAN: Partners for Peace, Progress and Stability”. An Eminent Persons Group to fashion a vision statement for India-ASEAN relations has also been formed.

Following the FTA on Trade in Goods, total trade between India and ASEAN reached US$ 57.87 billion in 2011, realistically close to the target of US$ 70 billion by 2012, efforts are underway for the early conclusion of a commercially meaningful FTA in Services and Investment preferably by March 2012.

The inaugural ASEAN-India Business Fair was held in New Delhi in March 2011 and the Commemorative Year will see the 2nd ASEAN-India Business Fair in December 2012, accompanied by the ASEAN-India Business Council and the ASEAN-India Business Summit meetings.

ICC Kolkata and FICCI are to partner with the Government of India in its initiative to take a Sail Training Ship “Sudershini” on an expedition to ASEAN countries and organise “marker” events in the different ports of call. CII is assisting the Governments of India and ASEAN countries in organising an ASEAN-India Car Rally 2012 which will start in Indonesia and reach India in time for the ASEAN-India Commemorative Summit in December 2012. DIPP would also be organising Investment Round Tables in some ASEAN cities during the Car Rally.

Indian Companies Seeking to Set Up Shop in Bangkok – Ambassador Anil Wadhwa (See full story at the bottom of this dispatch.

The first meeting of ASEAN and Indian Agriculture Ministers took place in October 2011 in Jakarta. The second meeting is planned for New Delhi in October 2012, along with an Agri Expo. The 1st ASEAN-India Ministerial Meeting on Environment is also planned for the same month. ASEAN-India Ministers of New and Renewable Energy are to meet in November 2012. The 1st Meeting of the ASEAN-India Ministers of Small and Medium Enterprises is also planned.

Special emphasis is being given to people-to-people linkages. ICCR is drawing up an intensive calendar of cultural activities. India is to extend over 600 scholarships to ASEAN nationals on a bilateral and multilateral basis. The Entrepreneurship Development Centres (EDCs) and Centres for English Language Training (CELTs) set up by India in CLMV countries have been appreciated. There is a request to set up additional centres. India is to increase the number of exchange students hosted from ASEAN countries from 100 to 250 per year.

Talks are under way to institutionalise the ASEAN-India Media Exchange Programme with India hosting two groups of 20 ASEAN journalists every year for the next 3 years and ASEAN countries hosting India journalists in return. The Foreign Service Institute of India conducts a special training course for 50 ASEAN diplomats annually. India has also been participating as an observer in the ASEAN Inter Parliamentary Assembly (AIPA) General Assembly and at the last meeting in September 2011 in Phnom Penh, Indian Parliamentarians extended an invitation for an AIPA Delegation to visit India in 2012.

At the ASEAN-India Tourism Ministers Meeting in Manado on January 12, 2012, an MoU was signed to strengthen tourism cooperation. India is also seeking active participation of ASEAN countries in the Nalanda University Project.

A trilateral highway project linking India, Myanmar and Thailand is also in progress (see map below). This land connectively would provide immense boost to India’s trade with Thailand and the region. An extension of this Highway to Laos and Cambodia and the Mekong India Economic Corridor are to be approached in an integrated manner.

India-Thailand: 65 Years of Diplomatic Relations

Thai Prime Minister Ms. Yingluck Shinawatra visited India from January 24-26, 2012 as the Chief Guest for India’s Republic Day celebrations. The visit coincided with the 65th anniversary of establishment of bilateral diplomatic relations, as well as 20 years of India’s enhanced engagement with ASEAN.

Thailand wants to be a gateway for Indian businessmen into the ASEAN market. India sees Thailand as playing a positive role in India’s efforts to develop its Northeastern States and improve connectivity with the ASEAN region. Both are in a position to play a key role in shaping the future of Asia. The advantages of geography reinforce this relationship.

Links between the peoples of India and Thailand go back thousands of years. The abiding message of Lord Buddha inspired generations of scholars, monks, pilgrims and common people in the two countries.

The following agreements were signed during PM Yingluck’s visit:

• Treaty on Transfer of Sentenced Persons
• Memorandum of Understanding on Defence Cooperation
• The 2nd Protocol to amend the Framework Agreement for Establishing Free Trade Area between Thailand and India
• Programme of Cooperation in Science & Technology
• Cultural Exchange Programme for 2012-14
• MoU between Chulalongkorn University and ICCR for setting up a Chair at the India Studies Centre of the University.

A Comprehensive Agreement on Trade in Goods, Services, and Investments is to be completed by mid-2012. The two leaders agreed that ASEAN and India should conclude their regional Trade in Services and Investment Agreements by 2012. A revised Double Taxation Avoidance Agreement has been concluded.

India is inviting Thai investments in sectors such as infrastructure development including ports and highways, computer hardware, automobile components and parts, food processing and power generation, as well as tourism and hospitality facilities in the Buddhist circuit.

In turn, Thailand is inviting Indian investments in information technology, manufacturing, electronics and automotive industry.

Developing road and shipping infrastructure will focus on establishing an economic corridor linking India with Thailand and Southeast Asia. A joint working group on infrastructure and connectivity is to be set up to help expedite various development initiatives in these fields in both countries as well as in third countries. Projects such as the India-Myanmar-Thailand trilateral highway are to be expedited. Energy and infrastructure companies to work together including in third countries.

Bilateral trade has multiplied more than six times since 2000 to cross US$ 8 billion. The year 2011 saw trade rebounding to US$ 8.19 billion. The India-ASEAN FTA on goods, in force since January 2010 and the comprehensive bilateral FTA being negotiated will further contribute to healthy trade figures. The target is to double it by 2014. There is considerable anticipation among the business communities on both sides to make these Agreements broad-based and to include in its ambit services and investments.

Indian FDI into Thailand is estimated to be around US$ 2 billion since 1970s whereas Thailand’s FDI in India is approximately $US 91.4 million since 2000. India is witnessing more investment in infrastructure sector, pharmaceuticals, food processing, automobiles, information technology and hospitality sectors, chemicals and allied industry.

India today, along with international partners, is developing its road network, airports, ports, railways and power grids. The challenge of overcoming the bottleneck of infrastructure deficiencies is being turned into a great business opportunity. The next 5 years will see investments of over US$ 1 trillion in this critical sector. The Delhi Mumbai Industrial Corridor, a landmark project of India, offers excellent opportunities for Thai companies to set up manufacturing facilities.

Thai investment is sought in the agro-processing sector to curb post-harvest wastage, which India says is unacceptably high (30-35% of total produce). Thai investors with their strengths in food processing would be welcome in developing cold-chains, warehouses etc. 100% FDI is allowed in this sector. India expects investments of US$ 200 billion in this sector and growth of 20% in the next five years.

SCIENCE AND TECHNOLOGY: The two sides agreed to enhance cooperation on science and technology, information and communications technology, agricultural science, natural resource management, biotechnology, and marine & space sciences.

CULTURE, EDUCATION, AND PEOPLE-TO-PEOPLE EXCHANGES: An “India-Thailand Foundation” is to be established. Both sides agreed to consider possibilities of audio-visual co-production. An India-Thailand Parliamentary Friendship Group has been formed in the Indian Parliament that would facilitate parliamentary exchanges with its counterpart group in Thailand’s National Assembly.

Thailand has pledged a contribution of USD 100,000 towards the revival of the Nalanda University as a leading regional academic institution as endorsed during the East Asia Summit. Further contributions are to be made by Thai private sector.

To address issues related to travel, visa facilitation, employment, and safety of tourists, an ad hoc Joint Working Group is to be set up to focus on all visa and consular matters.

Thailand participated as Partner Country in the Surajkund Crafts Mela 2012 at Faridabad between 1 – 15 February 2012 by sending a Thai cultural and crafts demonstration troupe.

MULTILATERAL COOPERATION: The two sides agreed to enhance cooperation in the United Nations and other international fora on matters of mutual interest. The two leaders reiterated strong support for the ongoing reform of the United Nations and its principal organs with a view to making the United Nations more democratic, transparent and efficient so that it can deal more effectively with the myriad challenges of the contemporary world. They emphasized the importance of an early reform of the United Nations Security Council so that it reflects the contemporary realities and functions in a more accountable, representative and effective manner.

The Thai side acknowledged India’s credentials for permanent membership of the UN Security Council, and commended India’s active role and continued constructive contributions in the field of global security.

India – Myanmar: Helping Both Democracy and the Economy

The President of Myanmar, U Thein Sein, visited India from October 12-15, 2011. It was the first State visit to India following the swearing in of a new Government in Myanmar in March 2011 that marks welcome progress in moving towards an open and democratic framework.

Myanmar being a natural bridge between the ASEAN and India, the Indian side reiterated its intention of building upon the commonalities and synergies between the two countries to advance its ‘Look East’ Policy.

India has offered to help strengthen Myanmar’s democratic transition and the ongoing efforts at political, economic and social reform. Both countries recognise their shared history, civilizational ties and close religious, linguistic and cultural affinities and their responsibility to promote peace, security and stability in the region.

A number of infrastructure development and cooperation projects that are being undertaken in Myanmar with technical and financial assistance from India, including in the field of roads, waterways, power, health, education and industrial training, telecommunications, and others.

India has extended Lines of Credit to Myanmar amounting to nearly US$ 300 million, including for the development of railways, transport, power transmission lines, oil refinery, OFC link, etc. India announced the extension of a new concessional facility of US$500 million Line of Credit to Myanmar for specific projects, including irrigation projects.

The Kaladan Multi-modal Transit Transport Project is now in progress, especially the port development and Inland waterways. It has been decided that the road component of the project be started at the earliest, a study be undertaken on the commercial usages of the Kaladan project and necessary agreements to operationalise the route. It has been agreed to open an additional Land Customs Station / border trade point on the India-Myanmar border to allow for the smooth flow of goods generated by the Kaladan Project.

Both sides are pursuing an early implementation of the Rhi-Tiddim Road Development Project with grant assistance from India.

The road from Moreh in India to Mae Sot in Thailand via Myanmar is still in progress. Progress has been achieved in the preparation of a DPR for roads and causeways in Myanmar.

A Programme of Cooperation in Science & Technology for the period of 2012-15 has been signed. India is to support training of Myanmar researchers in the areas of mutual interest and twinning of Indian and Myanmar institutions under India-Myanmar Programme of Cooperation in Science & Technology.

Burma’s agricultural sector supports over 70% of its population. A contract for the supply of agricultural machinery under the US$ 10 million grant assistance from India has been awarded. India is to extend technical and financial support for the following new projects:

Setting up an Advanced Centre for Agricultural Research and Education (ACARE) in Yezin; and

Setting up a Rice Bio Park demonstrating the various techniques in rice biomass utilisation in the Integrated Demonstration Farm at Nay Pyi Taw.

India announced support for setting up an Information Technology Institute in Mandalay.

An Industrial Training Centre has been set up in Pakokku, with India’s assistance, and another Industrial Training Centre is being set up at Myingyan with technical support from M/s HMTI.

To promote trade, investment and economic cooperation, a Trade and Investment Forum is to be established. Agreement has been reached to expand the basket of goods under border trade. An Indian banking delegation will visit Myanmar to facilitate better trade and payment arrangements, etc.

To promote border trade, the two sides agreed that meetings between Indian and Myanmar customs, immigration, border chambers of commerce, officials of bank branches at the border, border trade officials (Tamu and Rhi – OSS Team) and Government officials would take place at Tamu-Moreh and Rhi-Zowkhathar at regular intervals. The business representatives of the Manipur/Sagaing Region and of Mizoram/Chin State will also participate in these meetings.

It was agreed to consider opening up new Border Trading points to consider better functioning of the existing points and to facilitate bilateral movement of people and goods. At the same time, their institutional and border management mechanisms will be strengthened for sharing of intelligence to combat insurgency, arms smuggling and drug trafficking.

Heads of Survey Department of India and Myanmar met in November 2011 to jointly work out and implement a schedule for inspection and maintenance of boundary pillars in the open season in 2011-12 in a time bound manner.

India and Myanmar are to cooperate in the implementation of the Tamanthi and Shwezaye power projects on the Chindwin River Basin in Myanmar. The DPR on the Tamanthi project has been updated and a final DPR for Shwezaye is be ready by March 2012.

Indian companies such as GAIL, ESSAR, ONGC and others have invested in off-shore and on-shore blocks, and construction of natural gas pipelines. Myanmar agreed to encourage further investments by Indian oil and gas companies, both in public and private sector.

Expanded air connectivity will soon be necessary, with more carriers, flights and destinations. Both sides agreed to examine feasibility of establishing railway links, ferry and bus services. They will examine commencement of ferry services on the Kolkata-Yangon and Chennai-Yangon routes.

The two leaders agreed on an early upgradation of the microwave link between Moreh and Mandalay or other necessary link under the Indian line of Credit, and directed the concerned officials to work towards establishment of the new Optical Fibre link between Monywa to Rhi-Zawkhatar with Indian assistance.

Both sides agreed to support joint research projects and exchanges of a historical, archaeological, cultural and educational nature. In this context, it was agreed to enter into a comprehensive Cultural Exchange Programme to promote bilateral exchanges with special emphasis on the four Indian states of Arunachal Pradesh, Nagaland, Manipur and Mizoram and cooperation in the fields of art, archaeology, museology, sports, media, etc. A high level International conference of Buddhist Philosophy is to be jointly organised in Myanmar in 2012.

India agreed to Myanmar’s request to facilitate allocation of land in Bodh Gaya for setting up a Buddhist monastery for use of pilgrims and monks from Myanmar.

Two teams of professionals from the Archeological Survey of India (ASI) visited Myanmar and carried out detailed studies on the conservation and restoration of the Ananda Temple in Bagan. Restoration work on the site is to start at the earliest based on the report by ASI.

The two sides emphasized the importance of an effective multilateral system, centred on a strong United Nations, as a key factor in tackling global challenges. In this context, they stressed the urgent need to pursue the reform of the United Nations including the Security Council, to make it more representative, credible and effective. The President of Myanmar reiterated his country’s support for India’s candidature for the permanent membership of the United Nations Security Council.

India-Myanmar-Thailand Highway

Source: Tanvi Pate, Research Intern, IPCS email: tanvi@ipcs.org

The Trilateral Highway project is an ambitious undertaking which was initially launched under the vestiges of the Mekong Ganga Cooperation (MGC) and later incorporated into the transport sector of Bay of Bengal Initiative for Multi-Sectoral Technical and Economic Cooperation (BIMSTEC). The construction of the 1,360kms highway at the cost of US$700 million was distributed in three phases so as to connect Moreh (India), Mae Sot (Thailand) through Bagan in Myanmar. The inherent logic of the road was to fulfil the ambition of creating a ‘link’ between Northeast India and Southeast Asia.

The project however faces many problems. Financial problems remain a contentious issue. India and Thailand have upgraded some of the link roads but due to financial scarcity in Myanmar, much work remains incomplete.

The completion of the Trilateral Highway will forge greater connectivity between India and Southeast Asia and the positives will outweigh the negatives in every sense. Connectivity will bring its share of problems but will certainly open up avenues for cooperation with the neighbouring states and provide effective mechanisms for dealing with cross border problems which hitherto have remained unresolved.

Additionally, the Trilateral Highway will connect India to the Asian Highway Network and trade between India and ASEAN will receive a further boost which is already predicted to touch US$100 billion in the next five years and also boost trade potential of India, Myanmar and Thailand that is largely carried out through sea routes at present, adding to the substantial cost. Moreover, India’s Northeast region will be repositioned as a regional trading hub. .

Dawei Port

The capital of Tanintharyi Division is the southern most administrative region in the country, 384 miles south of Yangon, adjacent to Mon State to the north and Thailand to the east. Tanintharyi Division occupies a long narrow coastal plain bounded by the Andaman Sea in the east, which runs to Kawthaung, the most southerly point of Myanmar and which then continues to the Malaya Peninsula. The coast is dotted with more than 800 islands. The site has numerous venerated pagodas. A 243-foot long reclining Buddha image occupies the Lawka Tharaphu Pagoda.

Dawei was first established as Thargaya town some 1256 years ago. Remnants of the old city are still visible to the northwest of the city.

The port lies on the isthmus shared between Burma and Thailand, and which separates the Andaman Sea from the Gulf of Thailand. It would be a boon for both nations, and would give India much quicker access to Southeast Asian markets as talk of an ASEAN-India Free Trade Agreement gains pace.

Thailand would gain a quick route for its central and western plains through a major deep-sea port, able to accommodate 300,000-tonne ships without having to circumnavigate the Straits of Malacca beneath Singapore. Eventually, Dawei could be at the hub of trade connecting Southeast Asia and the South China Sea, via the Andaman Sea, to the Indian Ocean, receiving goods from countries in the Middle East, Europe and Africa, and spurring growth in the whole ASEAN region.

In November 2010, the Italian-Thai Development, Thailand’s biggest construction company, signed a US$8.6 billion contract with Myanmar to develop Dawei as a deep-sea port and a 250-square-kilometre industrial estate with sea, road and rail links with Thailand, Cambodia and Vietnam.

The industrial estate will contain a steel mill, fertiliser plant, power plant, petrochemical industries, an oil refinery, shipbuilding and ship maintenance yards and other utility services, as well as a pipeline linking Dawei to Pu Nam Ron in Thailand’s Kanchanaburi Province. There will also be residential and commercial developments, a tourist resort and a recreation complex, the company said.

If completed, the project would reduce logistical and labour costs for Thailand as well as create job opportunities for Myanmar. The project was mooted 10 years ago with a study by the Thai government of possible alternative routes to the Straits of Malacca. An accompanying landbridge involves two phases: the first commencing to construct a four-lane road; and the second, the building of eight-lane roads. These two phases are expected to be finished by 2015. The highway would begin from Phu Nam Ron in Kanchanaburi province to Dawei – a distance of 160km.

The development plan will be implemented in three phases up to 2020. The project could reconfigure shipping patterns, opening up large markets in South Asian countries such as India and Bangladesh and ending the need for goods shipped out of Thailand’s Laem Chabang port, which are going west, to detour via Singapore and the Malacca Straits.”

The development would bring the greater Bangkok region to within 500 kilometers of the Indian Ocean via Dawei-Tavoy, bringing trade markets in South Asia, southern Africa and the Middle East much closer.

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Indian Companies Seeking to Set Up Shop in Bangkok – Ambassador Anil Wadhwa

More Indian companies are set to open shop in Thailand to explore business opportunities here and across the ASEAN region in the wake of the wide-ranging economic, cultural and educational agreements signed between the two countries last month. That will pave the way for a boom in Indian leisure and business travel, convention and exhibition delegates and VFR travel to, from and within the India-ASEAN circuit.

“We’ve already started getting a number of inquiries about procedures (to establish companies here),” Indian Ambassador to Thailand Anil Wadhwa said in an interview. The key business sectors of interest are pharmaceuticals, automotive, agriculture and agricultural machinery, gems & jewellery and information technology.

Asked why Indian companies were choosing Bangkok as against any other ASEAN capital to take advantage of a future Indian-ASEAN Free Trade Agreement, he cited the ease of connectivity, especially with cities such as Kolkata, as being one reason. Indians also felt more comfortable living in Bangkok from a social and cultural perspective.

Mr. Wadhwa said the agreements would boost people movements between the two countries. To facilitate this, the two governments are sorting out looming issues related to visas, work permits and criminality.

Tourism is one major area. With nearly one million Indian arrivals to Thailand last year, the ambassador said several issues have emerged and need sorting out, such as hassles with the visa on arrival formalities at the airport and rip-offs by the jet-ski operators in Pattaya. Indians also have complained about being denied entry inspite of holding a valid visa.

The ambassador said he had discussed this matter with the head of the immigration to try and identify the precise reasons why the problems were occurring, which sometimes could be due to misunderstandings and/or language problems. In turn, Immigration officials have said that the Indian visitors themselves are not blame-free in their attempts to duck providing proof of having sufficient funds to cover their costs.

Mr. Wadhwa said he was told by the Immigration officials that with so many Indian visitors coming to Thailand, a few hundred problem cases can be expected but the ambassador feels it is important to try and reduce even that number. He has also taken up the jet-ski ripoffs with the mayor of Pattaya.

In all cases, assurances have been given that rectifying measures will be taken. New joint committees have been set up to meet regularly, discuss specific cases and take follow-up action. The Indians have also given the immigration department the phone number of the consular chief at the Indian embassy with instructions to call at any time.

On the commercial side, the ambassador said, Thai and Indian businesses would be tapping into their respective strengths to seek more opportunities in the other country. This would require movements of people with specific skill-sets, removal of impediments and help with cutting through the bureaucracies.

For example he said, Thai spas and restaurants are in demand in India, but staff at Thai spas don’t get the salaries which are the minimum required for getting a work permit in India. The same with chefs working in Thai restaurants. Thai companies also want help with the procedures for buying or leasing land in India. And Thais are also asking for visa-on-arrival facilities at Indian airports.

In order to narrow the gap between Indian visitors to Thailand and Thai visitors to India, the Thai side has asked for improved facilities at the Buddhist holy spots Bodhgaya, more long-term visas for Thai businessmen and more scholarships to facilitate higher studies in India.

“It is now a complete package,” the ambassador said. “We had a lot of pieces lying around for a long time but have now brought them together. This visit (by Prime Minister Yingluck Shinawatra) gave the entire package a long-term focus but there’s a lot of follow-up work to be done. If you marry your skills together you can do much better as a whole.”

The ambassador said stepped up activities are planned on the cultural and educational front. A Thai-India CEOs forum planned for this year will raise the level of business and economic discourse. A Thai-India Foundation will see eminent people from both sides lecturing on a broad range of issues to make people better aware of each other’s countries. A Chair to be set up at the India Studies Centre at Chulalongkorn University will boost bilateral contacts amongst academia.

“We want to lift the image of India beyond Bharat Natyam (a traditional Indian dance-form) and Buddhism, beyond the stereotypical images into something a little bit more modern. We want to bring in a higher grade of theatre, movies and artistic performances.”

The ambassador also indicated there was a heightened sense of urgency for the completion of the road from Moreh in Manipur to Mae Sot in Thailand via Burma, which would boost economic development in India’s restive Northeast region by providing access to ports in both Burma and Thailand.

He said it is now hoped that the long-delayed project would be finished within two years. An India-ASEAN car rally is planned for this year to highlight the tourism and transportation potential of this vital piece of infrastructure.