Economic
Highlights
New
Delhi, 29 January 2018
Indo-ASEAN Summit
BOOST TO TRADE, BUSINESS
By Shivaji Sarkar
It is a leap forward. The Indo-ASEAN Commemorative
Summit is projected to pave way for an Asian prominence and double the present
level of India’s trade to around $125 billion with the 10 ASEAN countries by
2025.
This is not the only gain. The engagement
will be at many stages, right from defence to various levels of economic commitment,
beyond the region with Japan, Australia and New Zealand in the wake of India,
US, Japan and Australian round of talks on cooperation in the Indo-Pacific
region. Indeed, India sees ASEAN as the central pillar for its ‘Act East’
policy.
A significant involvement will be with
Philippines, with its President Duterte looking to free itself from the US
domination to develop independent ties with both China and India. This shall be
a process of reconnecting with East Asia through ASEAN -- Indonesia, Singapore,
Indonesia, the Philippines, Malaysia, Brunei, Thailand, Cambodia and Vietnam.
The Summit is in continuation of Prime
Minister Modi’s plenary address to the global community at the World Economic
Forum in Davos and his visit to Manila for the 15th ASEAN-India
summit, and the 12th East Asia summit in Manila last November. The
present commemorative meet brings India closer with ASEAN as their heads
discuss the future of Southeast Asia as well as becomes the bridge with both East
and the West paving way for a dynamic world that would have to look more
towards Asia for global progress.
Over time, trade with ASEAN has touched $71 billion,
25 times more that what it was at the onset of the relations in 1992. The Summit
and bilateral talks held with each of the leaders is likely to help increase
business of Indian IT companies and maritime involvement manifold, the latter
being very significant. It entrusts the Indian Navy with the task to aid Southeast
Asian nations’ resolve to eliminate piracy, as 52 per cent of the world’s piracy
takes place in this area.
Notably, the Indian Navy has been actively
involved in international efforts to control piracy around Somalia, western
parts of Indian Ocean and West Asia. The engagement is strategic and shall give
India’s defence sector a big boost. Additionally, it will help speed up
international trade, making Indian trade and shipping activities the major
beneficiary.
This apart, a major part of the engagement
with ASEAN would benefit the North-Eastern parts of the country. The trilateral
highway through Myanmar to Bangkok, to be completed by 2019 with huge Indian
investments will benefit the Indian construction sector. With many countries
increasing infrastructure activities, the highway is likely to emerge as brand
India icon to multiply the demand for building infrastructure and related
activities. In the coming year, it could even replace the Gulf as a job
destination for Indian techies.
Both the International Monetary Fund and
World Bank see Malaysia, Indonesia and Thailand having large economic potential
and fast growing economies. Apart from multilateral relations with these
countries, India also has bilateral ties. Thus, while these countries would
have direct trade with India, it would also help in multilateral action.
It’s no secret that the ASEAN engagement is
in the backdrop of an increasingly aggressive China, triggering insecurities
among its neighbours, with Beijing’s claims to almost 80 per cent of the
resource-rich South China Sea (SCS). At least four nations-- Vietnam, Malaysia,
Brunei and the Philippines -- are party to territorial disputes with China. And,
Singapore and Vietnam have repeatedly urged India to increase its security
profile in Southeast Asia. New Delhi’s recent tough stand with China at Doklam
has raised its potential further.
This apart, the present range of talks moved
around implementation of various projects in the field of agriculture, science
and technology, space, environment, human resource, capacity building, tourism
and connectivity. From ASEAN, the Philippines has particularly witnessed a
steep rise in services trade, as a result of which several Indian companies in
the past few years have opened offices in Manila in IT-enabled and R&D services.
Importantly, Philippines is also keen on having an Aadhaar-based system and is
looking for Indian assistance.
The rare mention of “countering cross-border
terror” by Modi at the plenary session reflects
ASEAN’s need and vision for peace and prosperity, through a rule-based
order for oceans and seas. This was critical, as both ASEAN and India reaffirmed
the importance of ensuring freedom of navigation and over flight in the region,
other lawful uses of the seas and unimpeded lawful maritime commerce as well as
to promote peaceful resolution of disputes. All these are in fact virtually in
the context of the SCS.
A free SCS and Strait of Malacca is necessary
not only for the larger interest of the region but for a fruitful engagement
with India and trade across Asia. While India has free trade agreements with
the 10 countries, its trade has been growing at a pace of 10 per cent--less
than deserving. ASEAN is keen it increases and insists on the Regional
Comprehensive Economic Partnership (RCEP), which has been on the table for some
time. In fact, both the Indonesian President Joko Widodo and Singapore Prime Minister
Lee Hsien Loong are keen this partnership is signed this year itself.
The RCEP is a FTA involving ASEAN nations and
India, Australia, New Zealand, South Korea, China and Japan. While ASEAN demands
tariff cuts, India is wary as it is building its indigenous manufacturing
sector. This apart, India has serious apprehension that it would lead to flooding
of its markets with Chinese goods, which will have an adverse economic impact
on the country, other than getting politically untenable.
However, Singapore is insistent as it feels this
would create an integrated Asian market comprising half the world’s population,
and a third of the GDP. In official circles, the ASEAN demand for RCEP and
inclusion of China creates an uncanny feeling and therefore there may be more
negotiations. Ideally, India would perhaps be more forthcoming with China’s
exclusion.
Notwithstanding the hiccups, the ASEAN nations
are eager to strengthen bilateral ties. Closer cooperation in the energy sector,
power, oil and gas exploration is one such possibility with Vietnam. Other
feasible areas are nuclear energy and mineral exploration. In the long run, the
Summit is likely to create an India aspirational spot in the neighbourhood. ---
INFA
(Copyright, India
News & Feature Alliance)
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