Southeast Asia - Articles

During his four-day visit to Assam, Meghalaya and Tripura from 21-25 June 2007, Thailand's Commerce Minister, Krik Krai Jirapet expressed interest in investing in the region and identified it as a zone of convergence between Thailand's Look West and India's Look East policies. Earlier, Jirapet was invited as the chief guest for the valedictory session of the 3rd Northeast Business Summit, held in April 2007 in New Delhi. In his speech, Jirapet had offered to collaborate with India in various investment efforts in the northeastern states covering areas of road construction, inland water transport and rubber production. With this Thailand has become the first ASEAN country to agree to invest in the northeast.

Three key sectors have been identified, which offer immense opportunities for Thai investment in the northeast, and which are extremely important for overall economic development of the region. First, Thai companies are willing to invest in the agro-based and food processing sectors since the region is rich in terms of raw material and also in terms of an a large market. A leading Thai food-producing company, the C P Group, has decided to negotiate directly with the provincial government of Tripura regarding investment in this sector. Among the agro-based industries, rubber and bamboo has drawn maximum attention from Thai companies.

Infrastructure, especially energy and the transport sectors, is another area, which has drawn attention of Thai investors. Among a 50-member business contingent of the Thai minister, some 15 private companies, which specialize in the development of infrastructure, have shown interest in investing in the region. While the development of infrastructure is essential for operationalizing Thailand's production facilities in the region, they also offer huge incentive for investment due to growing demand in India. Over the years, Thai companies have gained expertise and manpower in developing roads and waterways in the similar mountainous terrain as that of northeast India.

Tourism is the third important thrust area in the proposed Thai investment in the northeast. There are two basic aspects of Thai investment in this sector - to make the region attractive to tourists and to facilitate diversion of tourists arriving in Thailand to the northeast. Such considerations have actually given birth to an acknowledgment that Southeast Asia actually starts from India's northeast.

Thai willingness to invest in the region seems to be influenced by various short and long-term considerations and strategic choices. First, the geographical contiguity of the market and resulting low-labour cost considerations weigh heavily in favour of Thailand's proposed investment in India's northeastern states. The resource-rich region with large-scale skilled labour would enable Thai companies to create overseas production facilities catering to the external market. Second, Thai investment in the northeast would provide the former an important foothold to gain access to the huge market not only in immediate eastern India but also the rest of India. Such a possibility gains greater prominence in the light of the 'finalized but yet-to-be signed' India-Thailand FTA.

Taking cognizance of the urgency of the development of the northeast and its strategic potential for advancing the objectives of the Look East policy, India has adopted a three-pronged approach of - offering incentives, developing infrastructure, and marketing assets. The central government, under the North East Industrial and Investment Policy (NEIIP) has offered various financial, fiscal and investment incentives for ten years. The proposed Accelerated North-East Road Development Project and the proposed four-laning of the East-West Corridor will connect various capital cities and district headquarters both within the northeast and with mainland India. Further, the Ministry for Development of North Eastern Region (DoNER) will be organizing a North-East Investment Week in Bangkok in the first week of October 2007.

Thailand's proposed investment in the region along with India's facilitating role can pave the way for economic development of the entire northeast by supporting local industrial entrepreneurship and creating an enabling atmosphere, which would draw further industrial investment from Indian companies. Various private companies in India, especially Karnataka-based companies have already agreed to invest in developing the IT and vocational training sectors in the region.

A tentative sketch of the proposed Thai investment strategy reflects a complete economic package, combining ample supply of raw material, an assured local market of 38 million people, huge energy supply and a sustainable transport network. However, this rosy picture of investment, market integration and local economic development can disappear if three important potential risks - lack of infrastructure, challenges posed by the insurgency and local versus migrant tension - are not managed. The NH-39, which connects Moreh on Myanmarese border to Numaligarh, covering the states of Manipur, Nagaland and Assam, is in very bad shape. There also exists the fear of inefficiency, lack of implementation, huge time-lag, and of shifting the blame, which are sadly hallmarks of India's development programmes. The ground-level scenario brings our attention to the small-scale but rampant problems of kidnapping, ransom, small thefts, robberies, and illegal tax collection, which both the Indian and provincial governments have not been able to address effectively. Finally, the government has to make sure that the pattern of investment and development gives appropriate representation to the local people and does not widen the gap between the dispossessed natives and exploitative migrants.