MIZZIMA News Group: Indo-Burma Trad (r)

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Subject: MIZZIMA News Group: Indo-Burma Trade, Part Three

INDO-BURMA TRADE

By MIZZIMA News Group

PART THREE: Indian Industry on Indo-Burma Trade

The big industries in India welcomed the formalized border trade between
Burma and India. In its published materials which are available for the
Indian companies and businesses interested to do business in the border
trade, the Confederation of Indian Industry (CII) mentioned below:

"There was increasingly a growing need for border trade in the recent
years. Besides the increase in two-way trade between India and Myanmar
(Burma) over the past years, another development has been that of
Myanmar (Burma) adopting an open-door economic policy and for moving
towards a market oriented system. The advantages of having a formalized
border trade arrangements is manifold:

? It would further the economic content in the relationship.

? The opening of the land routes would provide a natural market for
export of Indian products like textiles, consumer goods, light
engineering items, agro- products, etc., especially because surface
communications within Myanmar do not provide for easy access to these
areas from their far away manufacturing bases.

? A strong Indian presence would facilitate for the Myanmar territory of
west of the Irrawaddy River getting more closely linked to the Indian
economy. This would have far-reaching economic and political
implications.

? The establishment of a market for Indian goods in Myanmar would lead
to the overall development of our economically vulnerable border states
and in particular it would give a boost to the infrastructure
development in these states.

? There would be an increase in employment opportunities in our Border
States through the establishment of the small-scale and service sector
industries to cater to the needs of Myanmar; this may in due course
contribute to reduction in some of tensions presently prevalent in these
states.

? The import of certain commodities, especially timber, through the land
routes from Myanmar would be facilitated and rendered significantly
cheaper compared to the higher cost when imports are made via the sea
route.

? This would curtail the incidence of reported disorganized and illicit
marketing of spurious and sub-standard goods with Indian brand names
which later undermines the consumers' confidence on the quality if
Indian goods."



Indian industries think that Burma, being a member of ASEAN, is India's
access to South East Asian countries. They think that "Burma's strategic
location vis-à-vis India, cost competitive educated work force,
abundance of natural resources like minerals, energy and forestry, among
others, offer the country the potential to become a dynamic economy in
the medium term". As Burma has joined the newly formed trans-regional
grouping, namely BIMST-EC, comprising Bangladesh, India, Sri Lanka and
Thailand, Indian industry sees Burma as a potential regional partner.

In October 1998, the Confederation of Indian Industry (CII), the apex
industry association of India with a direct membership of over 3,800
companies, signed Memorandum of Understanding (MOU) with Union of
Myanmar Chamber of Commerce and Industry (UMCCI) and Myanmar Industries
Association (MIA). It also signed in February 1999 a MOU with Myanmar
Computer Federation (MCF). The MOUs agree to exchange professional
experiences relating to services rendered to their respective members
and agree to provide full cooperation to each other in the promotion of
Trade Fairs and Exhibitions in India and Burma.

However, the Indian industry thinks that the absence of regular shipping
services and fewer air links between India and Burma are the two major
constraints in the present trade. Both CII and FICCI has put forward
suggestions to concerned authorities to establish regular shipping
services especially between Calcutta and Rangoon and also to increase
the air routes of the current Calcutta-Rangoon Indian Airlines
connection to boost the trade.

In an exclusive interview in June this year, Ms. Rama Naidu, the
Director-International of the Confederation of Indian Industry expressed
some of the apprehensions of the Indian industry on the ways the Burmese
government is handling with the trade. These include:

* The economic reform process which started in 1990 has been rolled
back. Several restrictions have been reintroduced, for example, the
60:40 formula i.e. from the export earnings, 60% has to be used for
importing essential commodities and 40% can be used for non-essential/
luxury items.
* Sale of certain commodities including rice is now back with the
government in Burma.
* Repatriation of profits, which was earlier allowed, has now come under
severe restrictions. Now, the repatriation limit has been set at US $
50,000 a month.
* Severe restrictions have been imposed on border trade. Now all trade
through the border has to be Letter of Credit-based and in US $. As at
the borders there are no banks, therefore, till the banks are set up,
all cash transaction are to be carried out in US dollar. Earlier the
policy was import first, export later. Now the new policy is export
first, import later.
* The main problem in Burma is the foreign exchange crises. There is no
stability and repatriation of profits is very difficult. Investments are
mainly in hydrocarbon sector. Investment in tourism and hotels has
turned into dead investment as the tourism industry and commercial
property did not take off as expected.


Moreover, they suggest that border roadways should be upgraded and
exclusive Indian trade fairs should be organized more in Burma.

End of Part Three.