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Operationalisation of Sittwe Port’s New Terminal: An Advancement in Maritime Prospects – IMPRI Impact and Policy Research Institute

Operationalisation of Sittwe Port’s New Terminal: An Advancement in Maritime Prospects - IMPRI Impact and Policy Research Institute

Prabir De

It was a dream of former Prime Minister (PM) Atal Bihari Vajpayee, who first envisaged opening an alternate sea route through Myanmar for the northeastern part of India in 2003. Bangladesh at that time was very non-committal on transit to India. The Ministry of external affairs (MEA) appointed the public sector consultancy company RITES to do a study in 2003. The operationalisation of Sittwe Port’s new terminal was the beginning of the journey.

India financed Sittwe Port in Myanmar

The operationalisation of Sittwe Port’s new terminal on May 9, 2023, on the 162nd birth anniversary of Rabindranath Tagore is a major milestone that India and Myanmar have achieved. It is an important component of the Kaladan Multi-modal Transit Transport Project (KMTTP) for which a framework agreement was signed between India and Myanmar as the contracting parties on April 2, 2008. Although it took over two decades from the year of planning to the operationalisation of the port, the revamped Sittwe port (the new terminal) is all set to play a bigger role in the Bay of Bengal.

More by the author: Twenty Years of Bimstec: Promoting Regional Cooperation and Integration in the Bay of Bengal Region

New Advancements in Sittwe Port

Sittwe Port is located at the Kaladan River Delta. The port was built with a grant-in-aid of around $ 500 million from the Indian government. The new terminal consists of riverside pier jetties, which can only handle small-sized general cargo vessels. The other existing jetties in Sittwe handle cargoes like rice, timber and pulses, mostly destined for Yangon. Given the current political situation in Myanmar, port connectivity between Kolkata and Sittwe is rather symbolic, but it carries some important ways forward.

Sarbananda Sonowal receives the First Indian Cargo Ship at the Sittwe Port- Photo: India Shipping News

First, the Kaladan project has two major components: the Waterways component and the road component. As of date, the waterways component has been completed. On the other hand, the road component, which includes the construction of a 109-km double-lane highway between Paletwa and Zorinpuri (Mizoram-Myanmar border), is still a work in progress. Until this highway is ready, northeast India’s access to the Bay of Bengal through Sittwe will remain incomplete.

Second, with the opening of the Sittwe port, trade between Myanmar and India is likely to get a boost. Exports from India to Myanmar through this new shipping route may include construction materials such as cement, steel and bricks, among others, whereas India’s imports from Myanmar would be rice, timber, fish and seafood. The trade-in rupees may help facilitate not only trade between Myanmar and India but also the procurement and shipment of project goods which are needed for the implementation of Indian projects in Myanmar.

Third, it is widely agreed that accelerating infrastructure investments in northeast India and neighbouring countries, along with connectivity projects with Bangladesh and Myanmar, hold high promise for unlocking the Northeast’s economic potential. Access to the Bay of Bengal may give new impetus to value chains in the Northeast, particularly the states of Mizoram and Tripura. Sectors like agro-horticulture, bamboo, rubber and processed food may gain from the opening of the Sittwe port provided the road components between Paletwa (Myanmar) and Zorinpuri (Myanmar) are completed on the fast track, and Myanmar allows third-country trade for India’s Northeast through Sittwe port. A new agreement in this line requires fresh negotiation between the two countries.

Fourth, maritime transport is still a dominant logistics in the Bay of Bengal region. Ports cannot run alone until they are connected with regular shipping services. With new ports joining the league, opportunities for short-sea shipping have expanded. Both Sittwe and Kyaukphyu ports are in Rakhine state and the distance between them is just 65 nautical miles.

However, Kyaukphyu enjoys higher navigable depth, and it is proposed to be a bigger port. There are a few more ports being planned along the Myanmar coast in the Bay of Bengal such as Dawei and some ports are lined up for redevelopment such as Thilawa, Pathein, and Myeik, all in Myanmar, and Ranong in Thailand. In Bangladesh, Matarbari Port is under construction, and India has planned an international transit terminal at Galathea Bay of the Great Nicobar Island in the Bay of Bengal. Each port is unique in terms of location, hinterland and development objectives. While some of the ports such as Sittwe have started operation, some are either in the planning stage or under construction. Promoting greater cooperation among the ports in the Bay of Bengal may lead to improved port performance and gain from their geographic locations.

Fifth, the current version of the BIMSTEC Agreement on Maritime Cooperation, which is expected to be signed in the coming BIMSTEC Summit to be held in November 2023, has provision for cabotage-free intra-BIMSTEC water transportation. But, it does not deal with the mandates of port cooperation. Bay of Bengal countries may implement activities that encourage dialogue among stakeholders in the maritime sector. For example, countries require dialogue on emerging issues like the greening of ports and shipping, digitalisation and competition policy. More dialogue per issue may help countries narrow the gaps in development and help them design the best strategy to deal with new challenges.

Finally, the operationalisation of Sittwe Port is a great achievement. However, dividends will be more once the Kaladan project becomes fully operational, which will then give Northeast Indian states complete access to the Bay of Bengal.

The article was first published in Hindustan Times as Operationalisation of Sittwe Port and the way forward on May 23, 2023.

About the author

prabir edited

Prabir De is a Professor at the Research and Information System for Developing Countries (RIS). He is also the Coordinator of the ASEAN-India Centre (AIC) at RIS. De works in the field of international economics and has research interests in international trade and development.

Read more about the author: Act East to Act Indo-Pacific: India’s Expanding Neighbourhood and Enhancing Relations between India and Mongolia: Tasks and Opportunities

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