Myanmar – emerging logistics and business hub of Southeast Asia

Myanmar, among the fastest growing Asian economies situated at the crossroads where India meets East Asia, has the potential to become one of India’s successful trading partners


Dipankar Dey is an academic and business analyst

The Republic of the Union of Myanmar, classified by the United Nations as a low-income country, is a geographical space where East Asia meets with the rest of the world. It is a country where the world’s two most populous nations, namely, China and India, meet each other. Myanmar’s importance is not limited to geopolitics only; it has the potential to emerge as a significant manufacturing and logistics hub for global corporations.

Myanmar is situated at the ‘crossroads of Asia’ where China and other East Asian countries meet India. India and Myanmar are bound by a shared history. At present, formal economic and cultural relations exist between the two countries, and they are both members of several South Asian cooperation initiatives. It is a unique country which features in three regional trade groups – ASEAN-India FTA, BIMSTEC, and BCIM. Besides, Myanmar is also an integral part of GMS, SASEC, ACMECS, and MGC.

Though India and Myanmar enjoy long and peaceful common border and centuries’ old cultural and trade links, the present economic engagement between these two countries is very low. From India’s point of view, Myanmar is not a significant business partner. Indo-Myanmarese trade swings around $2 billion per annum and Myanmar’s share in India’s exports and imports is less than 0.05 percent, revolving around 33 product categories (Table1). Out of a total of around $79 billion FDI approved by the Government of Myanmar, India is ranked at 11th with an insignificant share of 0.97 percent.1 The energy sector (power, oil, and gas) has attracted nearly 57 percent of approved FDI in Myanmar. The manufacturing, transport, and communication sectors follow next. China is Myanmar’s major partner in trade and investment.


Source: Author’s calculation and WITS

In addition to strengthening good neighbourly relations, India has many economic reasons for more active engagement with Myanmar.

EMARHUM has listed at least eight main reasons2 why investing in Myanmar could lead to wildly profitable results. These are:

  1. Myanmar’s strategic location
  2. Its growing affluent population
  3. One of the fastest growing economies of Asia
  4. Competitive labour cost
  5. Increasing exports
  6. Incentives to attract FDI
  7. Reforms in company laws to facilitate investment
  8. Successful operations of foreign companies in Myanmar


Myanmar has the potential to emerge as a major logistics hub due to its geographical advantage. It is located at the crossroads of North-South and East-West Asia. A vast coastline (2832 km) on the Bay of Bengal and the Andaman Sea connects Myanmar with the Indian Ocean and beyond. It has also entered into many multilateral trade agreements with various countries.

Free trade agreements

Myanmar is a founding member of the WTO and, on the regional level, has been a member of the Association of Southeast Asian Nations (ASEAN) since 1997. Myanmar’s export-import data with ASEAN member countries reveal a strong association of Myanmar with other members of ASEAN.

Due to its ASEAN membership, Myanmar also participates in ASEAN’s preferential agreements with countries, including Australia and New Zealand, China, India, Japan, and the Republic of Korea. Bilaterally, Myanmar has signed four memorandums of understanding on establishing bilateral joint trade commissions with neighbouring countries of Bangladesh, India, Thailand, and Vietnam. It has also signed five border trade agreements – with China, India, Bangladesh, Thailand, and the Lao People’s Democratic Republic (Lao PDR). Myanmar has signed and implemented the following major FTAs:3

  • ASEAN Free Trade Area (AFTA), 1 January 1993
  • ASEAN Trade in Goods Agreement (ATIGA),1 July 2010
  • ASEAN-China Trade in Goods Agreement (ACFTA), 18 June 2004
  • ASEAN-Korea Trade in Goods Agreement (AKFTA), 1 June 2007
  • ASEAN-Japan Comprehensive Economic Partnership (AJCEP), 1 December 2008
  • ASEAN-Australia, New Zealand Trade in Goods Agreement (AANZFTA), 1 January 2010
  • ASEAN-India Trade in Goods Agreement (AIFTA), 1 January 2010

Service trade initiatives

In addition to implementing various measures to boost investment in manufacturing and promote trade in commodities, Myanmar has also opened up its services sector under the WTO’s GATS’ (General Agreement in Trade in Services) commitments. As per GATS/ SC/59 15 April 1994, Myanmar has offered ‘market access’ to two main services categories:

(i) Tourism and travel related services:
(a) Hotels (CPC641-643); and (b) Travel Agencies and Tour Operators Services (CPC 7471)

(ii) Transport services:
(a) Services Auxiliary to all Modes of Transport; and (b) Tourist transport operation: exclusively operating a tourist business by motor vehicle, watercraft, or both.

Being a Member of ASEAN, Myanmar enjoys various provisions of the ASEAN Framework Agreement on Services (AFAS) which allows for mutual recognition in various professions and Movement of Natural Persons (MNP) among the ASEAN states.

(i) ASEAN currently has mutual recognition agreements (MRAs) that facilitate the mobility of professionals in six sectors – engineering, nursing, architecture, medicine, dentistry, and tourism; and framework agreements for two other sectors – surveying and accountancy.

(ii) The ASEAN Agreement on Movement of Natural Persons (MNP) entered into force in 2016. This agreement enables persons engaged in the trade of goods and services, investors, business visitors, contractual service providers, and intra-corporate transferees’ easier access for temporary cross-border stay.4

As Indonesia has also ratified the ASEAN-India Services and Investment Agreement, India will get access to the vast ASEAN service market, including in Myanmar, if the remaining ASEAN member – Cambodia – ratifies this.5

Unlike in merchandise trade, Myanmar had a positive trade balance in services trade in 2016. Travel contributed 59 percent of the service exports earnings. On the import side transportation service was responsible for 60.4 percent of the total service imports in 2016.

Freight and logistics market

Myanmar’s freight and logistics sector is expected to reach a market value of $7.52 billion by 2023, registering a CAGR of 10.5 percent during the forecast period (2018-23). Major international players operating in Myanmar are: Surbana Jurong Corporation, DB Schenker, DHL, Yusen Logistics, Bollore Logistics, CEA Project Logistics, EFR, Ceva, among others.6

Realising its geographical importance as a potential global business and logistics hub, the Government of Myanmar, in collaboration with the multilateral organisations, has initiated many programmes to modernise its transport infrastructure.

(i) Major international road linkages crossing Myanmar: Asian Highway, ASEAN Highway, GMS Highway (The North South Economic Corridor and East-West Economic Corridor), China-Myanmar Corridor Project.

(ii) Major international rail linkages connecting Myanmar: Myanmar is a signatory of the Intergovernmental Agreement on Trans-Asian Railway Network. This network proposes to connect 28 countries of Asia.7 Myanmar's three major cross-border railways are:

  • India border: Kalay-Tamu (127.4 km)
  • China border: Lashio-Muse (141.8 km)
  • Thailand border: Thanbyuzayet-Three Pagoda Pass (110 km).

Another important rail route that would connect Myanmar with Singapore, one of its major trade partners, is the rail link between Kunming and Singapore which is likely to be completed by 2021. Once completed, Myanmar will have access to Singapore, Malaysia, and Vietnam through rail links.

(iii) Ports and airports: Currently, Yangon is the main international port. The nine ports along the Myanmar coast – few are under construction – are Sittwe, Kyaukphyu, Thandwe, Pathein, Yangon, Melamine, Dawei, Myeik, and Kawthoung. In addition to these, the Myanmar government has also initiated the construction of eight ‘dry ports’ in Mandalay, Tamu, Muse, Mawlamyine, Bago, Monywa, Pyay, and Yangon. There are three international airports at Yangon, Mandalay, and Naypyitaw, and 30 domestic airports are in operation connecting almost all the major districts of the country.8

Myanmar is getting ready to emerge as a major trade and logistics service provider to China and the ASEAN region. It has also initiated the liberalisation of quite a few logistic services (Table2)


Source: OECD (2017). Services Trade Policies and the Global Economy, OECD Publishing, Paris,


India and Myanmar share 1643-kilometre-long common border along the Potkai Hills running across four northeastern states of India – Mizoram, Manipur, Nagaland, and Arunachal Pradesh.

The bilateral border trade agreement of 1994 provides framework facilities by which trade is carried out between India and Myanmar. Under the agreement trade is currently carried out through three designated border points – one each in Manipur, Mizoram, and Nagaland.

India’s border trade with Myanmar takes place mainly through Moreh, in Manipur’s Chandel district, which links with Tamu, located in Sagaing in northwest Myanmar. Tamu is also India’s entry point for Asian Highway and Trans-Asian Railway. There is another border trade point through Zowkhathar in Mizoram with the corresponding point Rhi in Myanmar, but Moreh is the biggest border trade point. The Nagaland border points at Pangshm, Lungwa, and Avakhung districts are almost non-functional.

In January 2020, a ‘border haat’ on the India-Myanmar border with a pilot project at Pangshau Pass (Arunachal Pradesh-Sagaing) was inaugurated. Subsequently four locations – Hnahlan, Zote, Vaphai (Saikhumphai), and Sangau (Pangkhua) – in southeast Mizoram were identified for the construction of border haats. All the border states are now pressing for more border haats. The policymakers have realised that border communities, often sharing ethno-linguistic ties, have much to gain from the border haats. There is a saying in Manipur that the state will prosper only if the Eastern Gates open, meaning when they can trade freely with Myanmar.9 In August 2020, India provided Myanmar $5 million as the annual contribution under a border area development programme that was started in 2012. The programme was initially meant to last five years, and it was later extended till 2022. It has led to the implementation of around 140 projects in Myanmar’s Chin state and Naga Self-Administered Zone.10

But the major area of concern for India is the poor road and railway infrastructure within Indian territory. In addition to that, political unrest and insurgency problems in the northeastern region are the major challenges the government of India faces now to harness the true potential of the vast ASEAN market.11

Though India and Myanmar signed the border trade agreement on 21 January 1994, and it was made operational the following year, the bilateral border trade figure stands at $50 million – a poor comparison to Myanmar’s trade with China, which was around $6 billion in 2016. Border trade data for the period 1 October 2018 to 17 May 2019, compiled from 17 border trading points of Myanmar, managed by the Ministry of Commerce, Government of Myanmar, indicate that border trade with India constitutes only 2 percent. In this period, Myanmar’s four border posts with China registered 61.8 percent of the total border trade. Besides the difficult terrain and militancy that adversely affect border trade at Moreh-Tamu, India in December 2015 officially put an end to the barter system, or trading of goods without exchange of money. According to Myanmar’s media reports, the ending of barter trade ‘killed’ India-Myanmar border trade.12

India-Myanmar marine route

The other alternative trade route before India is connecting through sea. As the cost of marine transportation is still the cheapest of all other existing alternatives, the old trade routes along the Bay of Bengal between Kolkata-Sittwe, Kolkata/ Chennai-Yangon, Kolkata/Chennai-Melamine, may be revived. Waterways using the mighty rivers of Myanmar may also be used to trade with major onshore domestic markets of Myanmar.

Assam itself enjoyed one of the highest growth rates under the colonial economy built on trading tea, timber, and oil with Calcutta, to which it was linked. The epicentre of growth radiated down the Bay of Bengal via ports of Calcutta, Chittagong, Akyab (Sittwe), Rangoon, Moulmein, Tavoy, and Singapore. If transport through old Bengal and present-day Bangladesh was crucial in the growth of the old Assamese economy, then every diplomatic effort must be made to restore such connectivity for the present-day Northeast.13


Clearly, the ‘business as usual’ approach is not working. Instead, India’s engagement with Myanmar should be guided by a few broad principles. The focus should be on development through investment and trade. Investment induced development should be the primary focus. Improved trade would be a logical consequence of the same. India’s approach towards Myanmar should be:

  1. Investment and trade for sustainable development. Myanmar is very sensitive towards keeping their environment green. Citizens have strongly protested against large hydro projects of China.
  2. The thrust should be on the MSME sector The skill development programmes (local skills) should be an integral part of the policy strategy.
  3. People-to-people contact has to be formalised through:
    1. The opening of more border haats across the Indo-Myanmar border
    2. Students’ exchange programmes at the undergraduate and postgraduate levels. Regular faculty exchange programmes between designated institutions and universities should be formalised.
  4. India should leverage the investments already made in Myanmar, say, in Sittwe port, and a Kolkata -Sittwe cargo service may be initiated. Four14 trade routes have the potential of local and export markets for Indian investments in Myanmar:
    1. The Trilateral Highway R1 (Thailand-Myanmar-India)
    2. The Sittwe-Mandalay Road R2
    3. The Sittwe-Yangon Road R3
    4. Sittwe-Paletwa Waterways R4 (using Kaladan River) and Kaladan Multi-Modal Transit Transport Project.

Sittwe could be the major entry point for India in Myanmar.The local business leaders and members of the Rakhine Chambers of Commerce expressed the need for frequent meetings between business communities of both the countries. To begin with, they have suggested forming a joint business forum – Kolkata-Sittwe Trade Promotion Initiative (KSTPI). It can be initiated following the same Track II approach followed during the implementation of Kolkata to Kunming (K2K) Forum.

5. ONGC should explore the possibilities of utilising their discovered gas for manufacturing fertiliser. Around 90 percent of the Indian FDI in Myanmar has been invested in the oil and gas sector only. At least four Indian public sector undertakings – ONGC (Videsh), Oil India Ltd, Indian Oil Corporation, and GAIL – are engaged at different stages of activities in Myanmar. With India’s vast experience and expertise in the oil and gas industry, from exploration to exploitation and from refining to distribution, India may focus more extensively in this highly potential sector.

6. Investments may be made in products like HS03, HS07, HS08, HS10, HS12, HS17, HS27, HS40, HS44, HS62, HS64, HS71, and HS74, where Myanmar enjoys clear comparative advantage. Many of these products may be imported back to India as Myanmar’s export. India, a net water exporting country,15 can save lots of water by transferring the production of water-intensive products to Myanmar. The country is very rich in water resources and the total utilisation of the nation’s water resources is only about 5 percept of the potential.16

7. Investments may be made in products that are widely imported by Myanmar. These are HS15, HS17, HS27, HS30,HS39, HS55, HS72, HS73, HS84, HS85, and HS87. Stakeholders of these sectors would welcome any package (technology and capital) that would help to reduce their import dependence.

8. Indian firms may take advantage of cheap labour to remain competitive with countries like China, Vietnam, Bangladesh, et al. Man-made staple fibres (HS55) are a potential sector for India. Due to its strategic location and cheap labour Myanmar is emerging as a major competitor to Bangladesh as a garment manufacturing hub.

9. A large number of people of Indian origin, mostly from Bihar, live in Zayawaddy city (Bago division) of Myanmar. They are very actively involved in the cultivation of pulses and sugarcane. During the British period, a sugarcane factory was started in 1934-35 by an Indian zamindar, Rai Bahadur Harihar Prasad Singh and his son, Chandradeva Prakash Sinha, which was nationalised by the government it 1954. Myanmar imports sugar (HS17), even from Brazil, to re-export to China. Indian entrepreneurs may explore the potential of investing in a sugar factory and sugarcane cultivation in Myanmar.

10. The services sector, like tourism, healthcare, hotels, insurance, school education, geological survey, and computer education, are few areas where Indian expertise may be extended to Myanmar for creating a strong service industry in that country.

11. In the near future, fund-rich Stateowned Economic Enterprises (SEEs) are likely to be privatised through the public private partnership (PPP) mode. Indian firms may bid for SEEs related to oil and gas, minerals, etc. where India has already acquired proven expertise.


Myanmar is a nascent democracy. Parliamentary, state, and local elections were held on 8 November 2020. The national elections were Myanmar’s first since 2015, which resulted in a landslide victory for the National League for Democracy (NLD), and the second contested election since 1990, when the military annulled the NLD’s overwhelming victory. However, electoral problems include discriminatory citizenship and other laws that bar most Rohingya Muslim voters and candidates; reservation of 25 percent of parliamentary seats for the military; criminal prosecution of government critics; unequal party access to government media; and the lack of an independent election commission and complaints resolution mechanism.17

The 2008 Constitution, as well as other laws, has created a legal framework for decentralisation in Myanmar that tried to establish the balance of authority between the centre and sub-national actors. There are various grey areas on rules and regulations which might create problem for investors. Non-state actors are still very active and military presence in business and politics is substantial. Some global rating agencies are sceptical regarding investments in Myanmar. But business leaders may take a calculated risk to get a foothold in this strategically important country. Century Ply’s experience in Myanmar is a case in point.


Myanmar’s think-tanks and business leaders want more active participation of the Indian government and private firms in Myanmar business. They are apprehensive of the increasing involvement of China in their economy. Myanmar has strategic and economic importance to both India and China. India should engage more sincerely with this neighbour with a clearly stated objective of extending financial and technical support for Myanmar’s long-term economic development. If India does not act now, it might miss the Myanmar bus!


  1. country123_0.pdf (accessed on 7.10.2020)
  2. on 8/10/2020
  3. Daw Shin Saw Thu, Assistance Director, Department of Trade, Ministry of Commerce, Government of Myanmar, discussed An Overview of Trade Preferences Granted to Myanmar at the workshop on ‘Understanding the US Generalised System of Preferences,’ held on 13 December 2016, available at: mm/en/document/1774
  4. ‘ASEAN Framework Agreement on Services (AFAS)', Global Forum on Migration and Development,https:// (accessed 18.11.2018)
  5. Rachmadea Aisyah and Marchio Irfan Gorbiano, ‘Jokowi ratifies seven trade agreements,’ The Jakarta Post, 14 November 2018, http://www. 2018/11/14/ jokowi-ratifies-seven-free- tradeagreements.html (accessed 18.11.2018)
  6. Myanmar Freight and Logistics Market – Growth, Trends, and Forecast (2019- 2024), Mordor Intelligence, https:// (accessed 22.11.2018)
  7. Ibid
  8. Htike Htike, ‘Status and Future Plan for National Logistics Master Plan,' https://www. files/Myanmar%20-%20Logistics.pdf (accessed 22.11.2018)
  9. Subir Bhowmick, pdf/briefing-papers-border-haats-onindia-myanmar-border-opportunitiesand-challenges.pdf (accessed on 10.10.2020)
  10. html (accessed on 10.10.2020)
  11. ‘Jiribam-Tupul-Imphal rail link: How Indian Railways is working on big Manipur project amid militant threats,’ The Financial Express, 11 May 2018, infrastructure/railways/jiribam-tupulimphal-rail-link-how-indian-railways-isworking-on-big-manipur-project-amidmilitant-threats/1163847/ (accessed 24.11.2018)
  12. 2 million-as-china-s-hits-6-billion/storyr6agQjivrJe8cOpSSPENnM.html
  13. G Mukhopadhaya, ‘North East, Act East,’ Occasional Paper No. 80, India International Centre, 2017, New Delhi
  14. For the time being the 1800-km-long Stillwell (Ledo) road built during WWII, which connects Ledo in Upper Assam, with Kunming in Southwest China's Yunnan Province, and passing through Kachin and Shan states of Myanmar, may not be considered as most parts of this road are under the political influence of non-state actors where Myanmar government does not have much control
  15. articles/trading-virtual-water accessed on 10.10.2020
  16. policies/state/myanmar/myanmar. htm#:~:text=Myanmar%20 is%20a%20 country%20endowed,constitute%20 national%20water%20resources%20 annually (accessed on 9.10.2020)
  17. news/2020/10/05/myanmar-electionfundamentally-flawed (accessed on 10.10.2020)

Dipankar Dey is an academic and business analyst. Views are personal. He can be contacted at drdipankardey1964@ Dr Dey expresses his gratitude to Dr Kallal Banerjee for assisting him in compiling trade data