Connecting links

Prospects and challenges for the Trilateral Highway

The balance of power is consistently pivoting toward Asia as it enhances trade with the rest of the world. In the meantime, in Asia, there is an emerging trend of multi-modal connectivity projects, cutting through country boundaries to boost economic as well as strategic ties.

These projects are creating a strategic land and sea infrastructure in the region while they significantly alter the geo-political landscape.

Of these, one of the most important is the 3,200 kilometers highway connecting India and Thailand through Myanmar.

However, though the prospects that come along with such connectivity can hardly been understated, the trilateral highway has been in the pipeline for years.

Despite a strong political will for completing it, it faces challenges that must be addressed soon so that the benefactor countries can reap the benefits, avoiding unnecessary handicaps.

The trilateral highway plans to connect India with Thailand through Myanmar. The road network of the highway will connect Moreh in Manipur, India to Mae Sot in Thailand via Bagan and Rangoon in Myanmar.

Regional growth

It aims to create a new economic zone as a means to consolidate regional growth, cooperation and integration by linking the landlocked North-Eastern India to South-East Asia.

The Head of States of the three countries set the deadline for its completion at 2016. But the project suffered its fair share of setbacks for timely completion. However, with the feasibility study already complete, renewed commitment by leaders and a newly opened Myanmar, its construction is well underway.

Keeping in mind the unique importance of such logistical connectivity, the creation of the ‘Mekong-India Corridor’ has the inherent power to link India, one of the fastest growing markets of the world, with the new Asian Tiger economies.

With India concluding a comprehensive economic partnership agreement with ASEAN recently, avenues have opened for an overarching framework for enhanced trade and investment ties.

In addition, it will create economic opportunities for not only the towns along the route, but the sub- Mekong economy as well. This could certainly bring immense strategic value to the region.

It would also dramatically alter the significance of the Indian North-East and also its development, which shares 96 percent of its border with other countries and only 4 percent with India.

Thailand is making the most of the opportunity as well. Several Thai firms are apparently already beginning to look into prospects of investment and business with their Indian counterparts, via the highway.

According to reports, trade between India and Thailand grew by US $2 billion last year to US $8.2 billion. India has already invested US $2.5 billion in Thailand.

What has also given a considerable boost to the highway is the promise of a more open Myanmar.

Since international sanctions have been lifted against Myanmar following a series of democratic reforms by Thein Sein’s government, it has allowed the countries to push ahead with the project that has been in the pipeline for years.

In turn, Myanmar’s economy has the luxurious opportunity of attracting lucrative investments.

Reviewing the status of the highway during their talks in Bangkok, Prime Minister Manmohan Singh and his Thai counterpart Yingluck Shinawatra renewed their commitment to the project and vowed to ensure that the project is completed by 2016.

They also agreed to fund the construction in Myanmar, as Myanmar was struggling to find the resources which was obstructing construction and causing delay.

They also set up a Thailand-India Joint working Group on Connectivity and infrastructure to help expedite cooperation on the highway. Thailand is due to hold follow up meetings in July.

However, although India and Thailand have increased their air connectivity considerably, it needs further upgradation.

Even with around 160 flights between the two countries per week, their bilateral trade and investment can increase manifold by developing land and shipping infrastructure that will complement the existing logistics.

Emphasis on such infrastructure development will support and ensure fast and easy transit. This would increase trade, investment and tourism.

The highway is hugely important but it could have added value if it is accompanied by a multi-modal transport system that would link peninsular India to Thailand, Myanmar and South-East Asia via sea and air as well.

Economic cooperation

Such connectivity would certainly open new avenues for strategic, economic and political relations.

In this respect, Thailand and Myanmar have made considerable progress on the Dawei Special Economic Zone in southern Myanmar, which, once operational, would further enhance regional connectivity including port-to-port linkage with India and, at the same time, create enormous business opportunities for the region.

The Dawei Economic zone, which is very important to Yingluck Shinawatra, is a US $8 billion project that involves the construction of a deep-sea port, industrial estate, power plants and petrochemical terminals. These facilities will turn the region into a massive logistical and strategic hub.

Seeing that China has already established its footage in the Bay of Bengal by investing in ports in Myanmar and Bangladesh, India must eagerly take up this opportunity.

Thailand has already invited India Inc to invest in the SEZ, especially in areas that are traditionally considered Indian specialty such as steel, manufacturing, services, petrochemicals, etc.

The port could also serve as a viable alternative for Indian trade with South-East Asia which otherwise passes through the crowded Strait of Malacca. India must not procrastinate and should take up the opportunity eagerly.

In addition, such connectivity will open up further avenues for India. The oil and gas opportunities off the coast of Burma and Vietnam can ease much of India’s energy problems.

Also, Japanese products coming to India can have an easier transit via Thailand. Both Japan and India can enhance their newfound strategic alliance here as well. New economic opportunities will spring up in the relatively poor and marginalized North-Eastern region.

The region has been otherwise neglected from a business point of view, particularly due to the local insurgencies, armed conflicts and high security tensions.

The interest shown by countries like China, Japan, India and Thailand along the coastlines of Bangladesh and Myanmar proves that these countries are investing heavily in ports to gain direct access to the Bay of Bengal for easier maritime trade.

Therefore, they are muscle flexing in the region, each trying to gain a strategic edge over the other. Thailand initially had some trouble getting investors on board but eventually lured India. India also realizes the strategic opportunities that come with such investments.

Thailand also tried to lure Japan to support the project, but Japan’s immediate interest is focused on developing another port at Thilawa near Yangon in Myanmar.

Meanwhile, Chinese companies are developing deep sea ports with oil and natural gas terminals at Kyaukphyu Islands, near Rakhine in Myanmar.

Millions of tonnes of hydrocarbons will soon be transported across Myanmar into Southwestern China through a pipeline system. In Bangladesh, China is in preliminary talks with Dhaka to develop a deep-sea port at Sonadia Islands that could become a gateway into Southwestern China.

Therefore, while other Asian countries are excited at the prospect of developing the Bay of Bengal’s eastern sea coastline and reconfiguring the geo-economics of the region, Indian companies have been rather slow in responding to the trend.

While some might argue that already having a long coastline in the Bay of Bengal is enough, it is not so because India needs to seriously look eastwards to give a real shape to its Look East Policy.

Besides, China seems determined to challenge even the slightest proof of India’s rising power, which India needs to tackle head on. In this regard, India needs to look at Andaman and Nicobar in the Bay of Bengal as the most strategic asset. The challenge is to economically transform the islands.

The most interesting feature of the trilateral highway is that it by passes China, the fastest growing economy in the region. This is significant.

It is interesting to note that once the trilateral highway will be complete, it will form a so called East-West Corridor, linking India, Myanmar, Thailand and eventually Laos, Cambodia and Vietnam. It will almost match the current North-South Corridor that starts from China and ends in Singapore.

An ambitious highway like the trilateral highway has far reaching consequences which China is very well aware of. As China is the highest investor in development projects in Asia, the fact that it is bypassed on such a vital connection is momentous.

However, there is not much change in China’s balancing influence, particularly, via Myanmar because China seems to have exclusive rights over Myanmar’s energy security.

China is also, as mentioned, making its mark via Bangladesh. Therefore, at a time when China is pursuing expansionist policies with aggressiveness, such projects can act as silent but humbling counteraction.

Challenges ahead

The trilateral highway project is a zealous undertaking which was initially taken up under the ambitions of the Mekong Ganga cooperation (MGC) and was later incorporated into the transport sector of the Bay of Bengal Initiative for Multi-Sectoral Technical and Economic Cooperation (BIMSTEC).

Even then, the project is still in the pipeline and the target date of 2016 seems highly idealistic. For one, financial constraints persist.

Even though India and Thailand have financed some roads in Myanmar, there is still a long way to go. Also, because Thailand and India are bearing the financial responsibility in Myanmar, tensions have flared up.

Most importantly, security concerns remain a pressing issue. Security can prove to be a spoiler, particularly in North-Eastern India and along the Indo-Myanmar border as tensions are constantly high due to drugs, arms trafficking and insurgencies.

Moreover, China has a de-facto control over Kachin state bordering Arunachal Pradesh in India. Because China maintains that it is its territory, the threat from the Chinese will remain and probably escalate on the start of the trilateral highway.

Therefore, while analysing the long term benefits of such a highway to the countries involved, it is important to safeguard the interests that are threatened by the onset of such a project.

Building a road that has mammoth implications most certainly requires the company of strategies to tackle security issues and economic and political muscle flexing.

This would also require the close monitoring of the project by top bureaucrats from all the three countries. Because the balance of power is shifting to Asia, all eyes will be on this continent and, with the completion of the highway; all eyes will be on the Mekong region.