India–Myanmar–Thailand Trilateral Highway: An Investment Opportunity in the Making

January 7, 2016 Posted by India Briefing Reading Time: 5 minutes

By Kimberly Momin

The India–Myanmar–Thailand Trilateral Highway is an ambitious project of 1990 miles (3200 km) that will connect India with the ASEAN region. The highway will link Moreh in Manipur state (India), via Mandalay city (Myanmar) and to Mae Sot district (Thailand). It is a part of India’s upgraded “Act East” policy, which seeks to strategically build India’s link with the Southeast Asian region. The project comes off the heels of the Bangladesh, Bhutan, India and Nepal Motor Vehicle (BBIN MV) Agreement, signed in June 2015, and the proposed India–ASEAN trade center.

Under the Trilateral Highway project, about 48.4 miles (78 km) of new roads will be constructed, and the existing 248.5 miles (400 km) of roads will be upgraded along with the construction of all–weather approach lanes. In Phase 1, India will assume the responsibility of 48.4 miles (78 km) of missing links, upgrade 36 miles (58 km) of existing roads, and possibly improve a further 82 miles (132 km) of road. Thailand will upgrade a total of 119.3 miles (192 km) of road under this phase and will take up another 62 miles (100 km) under Phase 2. India’s Border Roads Organization (BRO) has already upgraded the Tamu–Kalewa–Kalemyo road (TKK) in Myanmar, and the Indian government is responsible for its maintenance. The Trilateral Highway project will be completed by 2018.

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Investment Opportunities in Northeast India

As part of the Eastern Himalayan region, northeast (NE) India is well known for its water resources, rich biodiversity and unique culture and ethnicity as compared to the rest of the country. The states of Arunachal Pradesh, Assam, Manipur, Meghalaya, Mizoram, Nagaland, Tripura and Sikkim make up this region. Geography ensures that the northeast is a ‘gateway’ to the ASEAN region. The historical linkages and trade relations of NE India confirm the longstanding relationship that the region shares with Southeast Asia. The completion of the India–Myanmar–Thailand Trilateral Highway will therefore expand trade and commerce opportunities, as increased connectivity is key to deeper integration with the ASEAN states.

The NE region has huge untapped investment opportunities. According to the 11th Five Year Plan of India (2007-2012), the GDP of the NE region went up by 9.95 percent as compared to the country’s total GDP, which was eight percent. The proximity of the NE region to Southeast Asia and China makes it a strategic area for India, particularly for private investment. This was highlighted by the North Eastern Vision 2020 policy document, released in 2008 by the Ministry for Development of North Eastern Region.

There are a number of conditions in the NE region that make it an attractive destination for investment, including:

Hydropower – The northeast has been termed the “Power House of India”， being abundant in water resources and hydropower potential. Investment in infrastructure and finance is key to utilizing the over 90 percent untapped hydropower potential in the region.
Bamboo – Bamboo is an important forest resource found in abundance in the region (28 percent of India’s total bamboo resource is in the NE). India is the second largest producer of bamboo in Asia, and Mizoram alone produces 40 percent of the country’s bamboo production. The world bamboo market is expected to grow by US $5.5 billion in 2015.
Rubber – Rubber is another cash crop that can attract a lot of foreign investment – about 46,000 tons of rubber is produced annually in the northeastern states, and India ranks fifth in rubber production in the world. Tripura has the potential to produce 10,000 hectares of rubber. Under the 12^th Five Year Plan (2012–2017), the Indian Rubber Board has proposed to double the existing areas of rubber cultivation in the northeast region.
Tea – The region is popular for its tea production. Assam is the largest tea producing state and accounts for more than 50 percent of the country’s total tea production.
Young Labor Force, SMEs – The northeast has a large and young labor force, a high number of traditional industries and small and medium enterprises (SMEs). However, the technology used in these industries is outdated. With the completion of the Trilateral Highway, there will be more scope for further investment in such SMEs.

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Conclusion

The northeast region has been one of the most underdeveloped regions in the country. However, it also has huge investment opportunities. The lack of development has been due to poor connectivity, negligence by the central government, and the presence of insurgent groups.

Connectivity is of key importance to the development of this region. The completion of the Trilateral Highway will be a major infrastructural project towards development and economic growth in the region. Stronger institutions and coordination for better regional cooperation will be necessary requisites for this to materialize.

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Asia Briefing Ltd. is a subsidiary of Dezan Shira & Associates. Dezan Shira is a specialist foreign direct investment practice, providing corporate establishment, business advisory, tax advisory and compliance, accounting, payroll, due diligence and financial review services to multinationals investing in China, Hong Kong, India, Vietnam, Singapore and the rest of ASEAN. For further information, please email india@dezshira.com or visit www.dezshira.com.

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