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Following the Yunnan model

Rangan Dutta |

The Global Investment Summit at Guwahati to showcase Assam as the “Expressway to Association of  South East Asian Nations” with Advantage Assam” as the focus, must go down in economic history of the state as “a landmark” as rightly suggested by chief minister, Sarbananda Sonowal, for multiple reasons.

First, Narendra Modi’s emphatic statement that “the North-east region will be the growth engine of the entire country” is the first such statement ever made by any Prime Minister. This has gone down very well with the people of Assam as it would help the region to move on to a high and sustainable growth path to be able to join as partners in the Act East Policy designed to raise India’s all round trade, technology, development and cultural interaction with the Asean.

And it is also very much in the interest of the Asean, as the great Singaporean statesman, Lee Kuan Yew argued, that “Without India there would be no South-east Asia, only a greater China and that while India and Asean may not count for too much in the global stage together they could be a counterweight to China.” This prescient view seen in the present context when India’s trade with the Asean is only about $ 71billion while the latter’s with China is $ 714 billion, shows geo-politics for Asian stability and demands rapid growth of India’s Asean trade, technology and development interaction. The region has a strategic role of immense importance because of its historical economic and cultural links with Myanmar and Thailand and the fact that in the past the North -east was part of the second Silk Route from Sichuan to Iran and beyond.

While hosting global business summits by states has by now become a common strategy to attract investment, the Guwahati summit stood out as one that brought about projects for expansion of not only public but also that of private corporates already operating in the region. Of the memorandum of understanding signed during the summit of Rs 100,000 crore, five central public service units in the energy sector are to invest Rs 5,000 crore for expansion. This will include laying of 1,500km gas pipeline from Guwahati to Tinsukia.

Likewise, Reliance plans to expand its Jio network and petrol pumps from existing 27 to 165 to bring in a total investment of Rs 5,000 crore and through its foundation will set up an academy for protection of wildlife and a second academy for promotion of football, the most popular game in the region.

East Century Plywood, a major player, has already committed Rs 100 crore and Oil India a hefty investment of Rs 10,000 crore. In the health sector the Tatas will supplement the Assam government’s investment of Rs 1,000 crore by a support of Rs 802 crore to establish a cancer care centre to meet a long-felt need of the North-east.

The promised investment apart, the summit has broken a jinx about Assam and the region having a low absorption capacity for investment. It is thus interesting to note the suggestion of the India Director of the Asian Development Bank, Kenechi Yokoyama’s comment that Assam should try to replicate the “Yunnan and Mekong infrastructural development models” to make it an Asean -India hub. He said, “A strong trade relationship with neighbouring countries enabled Yunnan reach what it is today in terms of growth. A similar growth trajectory is possible for Assam provided it is replicated here”.

What should be the strategy for Assam? Yokoyama’s suggestions are straightforward — priority should be on certain specific areas like transportation, urban planning and infrastructure, human capital, energy, agriculture, food processing, IT and IT-enabled services, tourism, health care and higher educational skills.

He also pointed out that to act as the “real” sub-regional hub; Guwahati should have an “expansion plan” to become a city of five million plus with modern infrastructure. From this perspective, the state capital region plan and the construction of the new terminal building at the Guwahati airport, at an estimated cost of Rs 1,232 crore, are steps in the right direction.

However, Yokoyama’s main suggestion to adopt the Yunnan model would require restructuring of the development strategy. Yunnan’s population of 45 million is close to that of the North-east but with a GDP of $191, is much bigger. It is more diversified with strong tobacco agriculture as the main cash crop and wide-ranging manufacturing and mining activities, especially tobacco processing, electrical equipment, processed food and agricultural produce. Tourism of all types has been developed on professional lines. The strategy has been to set up special zones for specific activities and not to put diverse activities under one “umbrella” as is done often in India.

Thus Yunnan has five economic and technological development zones engaged in technology development and transfer in bio-technology, tobacco processing including the hi-tech industrial development zone at Kunming and Kunming Airport Economic zone. Six tourism and vacation zones have been set at locations known for scenic beauty. Further, to promote border trade with Myanmar and Thailand economic cooperation zones have been set up at Ruili and Hekoung.

The emphasis is just not only on border trade, as in India, but on cooperation as well, which means establishment of  “economic complementarities” across the border to generate multiplier effects in the border region benefiting all and more significantly, building constituencies for peace and economic cooperation in this process. These zones have really turned Yunnan into a sub- regional hub that Yokoyama’ suggests Assam should adopt to be a part of the Act East policy.

The chief merit of the Yunnan model is its decentralised development approach with emphasis on technology transfer and its continuous upgradation for keeping the value chain competitive both in manufacturing and services.

Thus the areas that Yokoyama suggested for Assam may as well be taken up as specialised activities or subjects which could be taken up under a similar zonal approach in different parts of the state. For instance health care zones in Dibrugarh and Guwahati , education zones at Tezpur, Guwahati and Silchar and tourism and vacation hubs at Kaziranga and Manas, close to the Guwahati airport, as well as rejuvenation of Deepor Beel holds the potential to make the lake a tourist hub for Guwahati city.

Turning Guwahati into a Kunming might appear to be a pipedream now but it could be a reality provided there is a will to take the initiative. The Assam chief minister’s decision to set up a separate entity to promote investment is a step in the right direction but to be effective this should be a multi-disciplinary investment planning body looking beyond facilitating investment and ensuring that investment flows to priority areas essential to turn Guwahati into another Kunming and Assam an “Indian Yunnan” with connectivity and capabilities in the areas highlighted by Yokoyama.

The MoU’s signed during the business summit are no doubt welcome but together these will not achieve the objects of the Act East policy unless there is a coherent synergy in these efforts with the vision of turning Guwahati into a sub regional “hub”.

And that requires a sectoral planning within a framework, which cannot be left to market forces and hence the importance of the role of the state cannot be stressed enough.


The writer is a retired IAS officer of the Assam-Meghalaya cadre and has served as a scientific consultant in the office of the principal scientific advisor to the government of India.