The government recently announced a bi-weekly bus service connecting India’s North-East to Myanmar. This is a good first step towards connecting with South-east Asia. Additionally, the Thilawa Special Economic Zone Development Project coming up on the outskirts of Myanmar’s former capital, Yangon, may be the impetus for India’s integration with South-east Asia under an economic development snowball effect. Japanese companies are already active across Vietnam, Cambodia and Thailand. Indeed, this $180-million Thilawa project is being promoted by the Japan International Cooperation Agency, and other leading trading houses.
Infrastructure and economic development are interlinked. For example, the first leg of high-speed rail, part of the pan-Asian connectivity plan, has been announced as a link between Singapore and Kuala Lumpur. Earlier this year, the Japanese expressed interest in providing their advanced Shinkansen system (bullet trains) for this project. This is relevant as India aspires for such highly developed national infrastructure.
The Thilawa project aim is to develop an industrial park that will attract corporate investments. Under the development snowball theory, the Thilawa project would help spread development from its highest point in Asia (Singapore) through Malaysia and Thailand and through the until-now-missing-link of Myanmar to India’s North-East.
Why Thilawa? Half the world’s manufacturing takes place in Asia. Thailand, the manufacturing powerhouse of South-east Asia, is witnessing outward flow. Political uncertainty has compounded the problem of labour shortages and rising wages. Components manufacturers can thrive in less-populated countries; for them, economies of scale are imperative for competitiveness. However, the bigger manufacturers need bigger markets, to manufacture locally and optimise logistics costs. These two roles of the small and big could be accomplished by Myanmar and India on the western periphery of a rapidly developing Asia.
With China as a hub, parts of Asia — such as Thailand, Malaysia and Cambodia — are being integrated into what The Economist termed as a giant ‘Factory Asia’. This cluster effect can ripple into India, provided Myanmar develops. India has announced a target of increasing the share of manufacturing in its GDP from 15% to 25% by 2025.
Internal uncertainty regarding an ageing China has prompted many to move to Thailand. The Thai floods of 2011 were a practical reminder not to keep all eggs in one basket. Since the Japanese are interested in developing India’s North-East, seamless connectivity with East Asia can be achieved through Myanmar, the only land bridge. The Thilawa industrial park holds this key through India’s North-East.
Ashok Ashta is managing director and CEO of NMB-Minebea India Pvt Ltd
The views expressed by the author are personal