May 28, 2012 / 6:28 AM / 8 years ago

India courts Myanmar as PM Singh makes historic visit

YANGON (Reuters) - India signed a raft of agreements with Myanmar on Monday in the first visit by an Indian leader in 25 years, aimed at shoring up its presence as rival countries line up to do business with its strategically located neighbour.

India's Prime Minister Manmohan Singh (R) and Myanmar's President Thein Sein inspect the guard of honour before their meeting in Naypyitaw May 28, 2012. REUTERS/Press Information Bureau of India/Handout

Manmohan Singh held talks with Myanmar’s reformist president, Thein Sein, in the capital Naypyitaw, where a $500 million line of credit to Myanmar was among 12 agreements signed, according to the foreign ministries of both countries.

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Singh’s trip comes as competition heats up between Asian powers keen to tap Myanmar’s abundant natural resources and its position as a regional crossroads. U.S. and European investors are also sizing up its potential following the recent suspension of most trade sanctions.

India’s advance on its eastern neighbour with offers of credit, the development of border regions, investment promotion and help on agricultural research comes after a year of dramatic reform in Myanmar that has opened it up to the outside world and started to reduce its dependence on China.

“The prime minister of India reiterated India’s readiness to extend all necessary assistance in accelerating the country’s democratic transition and developing the capacity of democratic institutions,” the two leaders said in a joint statement.

The two countries have had periods of difficult relations since they gained independence from Britain in the late 1940s.

India supported Myanmar’s pro-democracy opposition after the Myanmar military crushed a 1988 uprising. But later, apparently nervous about Myanmar’s close ties with China, India sought to mend fences with the Myanmar junta that ruled until last year.

The two leaders agreed to enhance transport links along their border to facilitate trade and tourism and said they would look into strengthening air, rail and shipping links.

As well as the energy sector, the agreement mentioned possible Indian investment in infrastructure projects such as the Dawei port being developed by top Thai construction firm Italian-Thai Development Pcl.

Two-way trade with India, Myanmar’s third-biggest export market after China and Thailand, is expected to swell to $2 billion from $1.4 billion within two years, according to Myanmar’s government.


State-run Indian explorer Oil and Natural Gas Corporation Ltd and tractor maker Escorts Ltd are looking to expand operations there, while Tata Motors, which makes the ultra-cheap Nano and owns Jaguar Land Rover, said on Monday it had signed a deal with Myanmar’s Apex Greatest Industrial (AGI) to distribute its vehicles in the country.

India is also funding the construction of a port in the western Myanmar town of Sittwe, part of a $214 million river and road network that will carve a trade route to India’s landlocked northeast. The project employs 600 Myanmar workers.

The leaders said in the statement they would work to remove impediments to trade and facilitate banking. They said their central banks would soon sign a memorandum of understanding on “currency arrangements”. They gave no details.

The moves to boost business ties in Myanmar come after decades of rocky relations in which their trade dwindled.

The military junta that seized power in Myanmar in 1962 nationalised Indian businesses and expelled tens of thousands of ethnic Indians. Ties were further dented when India gave sanctuary to pro-democracy activists after troops crushed the 1988 uprising.

Singh was due to meet Nobel laureate and recently elected parliamentarian Aung San Suu Kyi in the commercial capital, Yangon, on Tuesday.

Singh’s trip comes after visits to Myanmar by the leaders of Britain, South Korea, Thailand and Malaysia, as well as U.S. Secretary of State Hillary Clinton.

Reporting by Aung Hla Tun in Yangon and Satarupa Bhattacharjya in New Delhi; Writing by Martin Petty; Editing by Alan Raybould and Robert Birsel

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