Moreh-Tamu: An Unfulfilled Potential

For India, Myanmar is a vital neighbour, located at a cusp connecting the region of South Asia to Southeast Asia. In the wake of India’s increasing engagement with the Southeast Asian neighours including the ASEAN countries, the Myanmar connect is rather significant. From strategic partnership to trade to cultural links, the connections have increased over time. Indian outreach has been both through the regional platform as well as bilateral framework and the tiers of meetings and trade figures bear testimony to that commitment.

Paradoxically, the Indo-Myanmar ties although remain strong it is yet to reflect the ground potentials. Despite India’s thrust on the ‘Act East’ policy, the two sides are trudging along without any significant turnaround. Commonalities of history, geography, culture lends the Indo-Myanmar relation a distinctive flavour and the contiguous borders that Myanmar shares with Manipur, Mizoram, Nagaland and Arunachal is unique not only due to the ethnic overlap but also because the border zones have an environment that is distinct from the mainland for both the neighbours.

These borders have seen free movement for decades and none of the political developments of 1940s has changed that ethos. The international borders although delineated (except with China) were largely open and allowed for free movement without visas upto a certain point into each other’s territory. While this flexibility has now been extended to 16 km on both sides and people-to-people movement has picked up but not the cross border trade. As is well known the population continue to maintain strong cross-border ethnic linkages which has been the source of several of the insurgent movements in India’s Northeast. Free movement also has led to huge informal trade including smuggling in drugs, weapons and other contrabands. The continued traditional headloads of goods moving across the border has been used by some elements to indulge in many malpractices.

However, over the years Indian security forces, with 15 battalions of the Assam Rifles deployed in that border region and ably supported by the security establishment in Myanmar, have been able to bring under control many of these insurgent groups. Presently, ceasefire exists between three of the Naga groups of the National Socialist Council of Nagaland (Neopao Konyak/Kitovi) and the National Socialist Council of Nagaland/Reformation (NSCN/K/Khango till April 2020. Through different mechanisms, the Indian Government has largely been able to stabilise the security environment, and subsequently decided to give a fillip to the existing cross-border trade, especially at the Moreh (Manipur’s Chandel district) -Tamu (located in Sagaing in northwest Myanmar) border.

While Zhowkatar -Rih Dil is also a designated border point, it has not generated much goods traffic. The third border at Lungwa village between Nagaland Avakhung-Pansat/Somra Myanmar does not yet have any formal structure, although it is also proposed for cross-border trade. While several connectivity and infrastructural projects are being developed at these points, cross-border trade at Moreh -Tamu remain rather low.

The recently inaugurated (January 2019) Integrated Check Post (ICP) at Moreh has not facilitated border trade as expected, although people’s movement stands at 3056 during 2018-19, marginally higher than past years. The Indo-Myanmar stands at a mere US$ 2.1b. More importantly, cross-border trade is even more insignificant barely at US$ 87m (India exports $78 million and imports totalled $9 million during 2018-19); which in fact dipped to US$ 85.8 million in recent months (March 2019). As the data indicates, there is greater demand for buying from across the border. Namphalong market in Tamu shows very little demand from traders to enter Moreh to buy Indian goods.

Where is the problem? Manifold actually. Firstly, border trade exists but not through the formal channels. The items on the formal list have little demand and this is despite India lowering the tariff to zero for majority of the goods. Items like electronic good, timber, gems and minerals, readymade garments, shoes, slippers, edibles, apart from many banned drugs, find their way to Indian homes. Thus, third country goods, from China, Thailand, Korea etc. are in demand from across the Myanmar border into India. While trade rules have impeded formalising the ongoing informal trading that takes place, there is demand for products required for infrastructure, like cement etc., from India. There is inherent reluctance on traders on both sides to operate through the official system. It is also true that some products being traded are not part of the formal items. It is possible to consider other products which have demand in Myanmar, like dairy products, construction materials, motor vehicle parts etc. for inclusion in the trade list. It needs to be acknowledged that the illegal sector is so well organised and entrenched that the transition to formal trade is still facing resistance. But there is also a larger question whether the agriculture and production centres in Manipur are reflected in the border trade items.

Secondly, apparently, ad hoc decisions from India about raising import duty on some of the agro products have stymied the flow of crossed border trade. One such instance was in 2017, when India increased the import duty on betel nut from 4 per cent to 40 per cent. Similar issues have arisen vis-à-vis import of rice and other pulses. In wake of bumper harvests in India, the demand drops and Myanmar farmers are affected. There is a need to address this issue to ensure that the trading basket has continuities.

Thirdly, the banking sector is still a problem. The ban on the barter trade, which was functional until 2015 to permit up to $20,000 per transaction, reduced the present border trade transactions drastically. The transition to formal trade has not been easy and due to some issue arising out of the change in the system, several trading accounts still remain irreconcilable and traders find it difficult to continue with their operations. Despite agreements between the United Bank of India with banks of Myanmar, the problem persists. The inability of the State Bank of India branch at Moreh to handle forex transactions has also been cited as a problem hampering the growth of border trade. Thus, the banks on the Indian side are not yet issuing letters of credit. Many of these issues can only be addressed by the Reserve Bank of India, which is yet to happen despite many requests.

Fourthly, it has also been pointed out that many of the small and medium businessmen from the border areas on either side do not have the ‘capacity to fulfil the criterion and observe the norms’. For the local business people, the paperwork appears complicated and given the inadequacies in the banking sector, there has been suggestions that if convertibility of Indian rupees was introduced, the existing border trade would receive a greater fillip.

Fifthly, despite the opening of ICP, full it is yet to be functional. The goods terminal is not yet operational, and the new land bridge which will facilitate the two-way trade is still under construction. Presently, cross-border trade is moving across the Indo-Myanmar Friendship Bridge which, given its limited capacity, is unable to support the potential volume of movement.

Sixthly, there remains a concern over the cross-border peoples’ movement. This has increased with the opening of the passenger terminal at the ICP. In the wake of security issues at large, India has been asking Myanmar government to provide identity cards to populations living in adjoining border areas who can avail the easier visa regime now operational. Fluid domestic environment within Myanmar has impeded the momentum of trade and people’s movement as expected. India has initiated gratis visas for Myanmar citizens, while Indians still have to pay a steep visa fee to travel to Myanmar.

As of now, while many private initiatives have come up to support the cross-border trade, many of the past practices are holding back the full actualisation of real potential. Besides the inordinate delays in projects and incomplete and inadequate structures, systems not improvising to address the local needs is also a problem affecting border trade at Moreh. Also, traders on both sides need to work with formal systems, and move away from the past informal trade practices to reinforce the formal channels of trade which are conducive for peace and stability of this border region. This border region offers tremendous potential waiting to be tapped. But policies that reflect the ground realities need to be formulated and implemented.