Mumbai (Business Times (subscription)
MYANMAR, called Asia's "next economic frontier" by the International Monetary Fund, is the new battleground for Indian companies seeking to wrest business from Chinese firms.
Export-Import Bank of India, the state-controlled trade financing institution, has pledged US$800 million in Myanmar, which includes funds to upgrade the Yangon-Mandalay railway and a plant for Tata Motors to assemble vehicles in the South-east Asian nation, Executive director david Rasquinha said. China, which has beaten Indian companies in the race to invest in energy assets from Kazakhstan to Venezuela, has agreed to lend more than US$2.4 billion in Myanmar.
Exim Bank of India faces an uneven contest as China Development Bank, which has a loan book more than three times the size of the World Bank, and the Export-Import Bank of China offer cheap loans to snare business. The Indian lender plans to sign credit agreements of as much as US$500 million by next month to participate in an economy that the IMF forecasts will expand 7 per cent over the next five years.
"We shouldn't get pessimistic because competition is there," Mr Rasquinha said. "We should be seeing the size of the pie and fighting smart."
State-run Chinese companies have spent US$19.5 billion this year acquiring energy and resources assets overseas versus India's single US$2.5 billion investment by Oil & Natural Gas Corp.
Exim Bank of India has been focusing on Africa. About 60 per cent of the Indian lender's lines of credit are for countries in the continent, Mr Rasquinha said. It has so far signed 172 lines of credit with commitments of about US$10.5 billion, covering 75 nations, he said. That compares with a US$219 billion loan book at Exim Bank of China.The Indian lender expects to mirror some of its African success in Myanmar. Exim Bank is trying to "excite" Indian companies to conduct business in Myanmar, Mr Rasquinha said.
The lender charges a floating 50 basis point over the London interbank offered rate to a fixed 2 per cent on overseas lines of credit, Mr Rasquinha said.
Bharti Airtel, India's biggest mobile carrier, was among companies that had bid for a telecom licence in Myanmar, the nation's selection committee said on its website in April.
Norway's Telenor ASA and Ooredoo QSC of Qatar won licences to expand telecommunications in Myanmar, one of the world's last remaining untapped markets where only about one in 10 people has a mobile phone.Myanmar needs US$650 billion of investments by 2030 to support an 8 per cent gross domestic product growth potential, according to McKinsey Global Institute, the research unit of McKinsey & Co.
Myanmar's liberalisation may reduce the nation's traditional dependence on China, according to Olivia Boyd, a Beijing-based energy analyst at IHS Global Insight.
"Myanmar's dependence on China is lessening," Ms Boyd said. "Chinese companies now wield less bargaining power, meaning they may face further contract revision of this sort in the future." Bloomberg
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