Vibrant Gujarat Global Summit 2017: Bigger & Better
I recently read the 2017 ASEAN
Business Outlook Survey published by AMCHAM Singapore and the US Chamber of Commerce with a lot of interest. The survey confirmed what I have been hearing from businessmen as well. 53% of the respondents stated that the ASEAN markets have become more important in terms of their companies' worldwide revenue over the last two years. A large majority of over 87% respondents expressed that their companies' level of investment and trade in ASEAN would increase over the next 5 years and a significant 49 % expected their workforce to increase in the region.
This optimism is only understandable as the figures speak for themselves. The GDP of the ASEAN as a single entity has already grown to over US$2.6 trillion making it the seventh largest economy in the world. It is projected to become the 4th largest economy by 2050. The GDP has almost doubled in 7 years from US$1.35 trillion in 2007 to US$2.6 trillion in 2014 reflecting the rapid growth achieved by the region. The per capita income has also proportionately increased by over 76% during the same period reaching almost US$4000 creating a huge middle class population of over 65 million.
The optimism of the global market in ASEANs potential was reflected by the sharp growth in FDI inflows with it reaching a peak of US$136 billion in 2014, almost 11% of the global FDI. However the most impressive growth was on the trade front with the total trade increasing by almost US$1 trillion from 2007 to 2014 reaching US$2.5 trillion.
The ASEAN Economic Community which formally came into being on 31st December 2015 not only creates new opportunities but provides a platform for enhanced investments for business in the ASEAN region. The AEC is the realisation of the region's goal of economic integration. It envisions ASEAN as a single market and production base, a highly competitive region, with equitable economic development and which is fully integrated into the global economy. By transforming Asean into a single market and production base, the AEC will also boost the competitiveness and connectivity of the region as a whole.
The Association of Southeast Asian Nations (ASEAN) has indeed been a role model for regional integration since it was set up in 1967. As it celebrates its 50th anniversary this year it can look back with pride on its accomplishments. Each of those achievements were accomplished in the characteristic ASEAN style viz., through consensus and consultations. The most commendable of its achievements has been the reduction of poverty from 40% (1990) to Less than 8% in 2012.
The ASEAN must also be complimented for providing stability to the region especially on the political front. It has come a long way in transforming a region that was conflict prone to one of
The bright side to the challenge of skill development is that the government recognizes India's favourable demographic dividend and is shouldering the responsibility of providing employment to millions of youth in a big way.
peaceful economic integration. It has worked actively towards creating an ASEAN Community. The peaceful and stable environment that ASEAN created has not only benefited the member states but also the region at large including India.
It's a matter of satisfaction that our engagement with ASEAN has also grown over the years with 2017 marking the 25th anniversary of the Strategic Partnership between India and ASEAN. Since becoming a full Dialogue Partner in 1995 (became a Sectoral Dialogue Partner in 1992), there have been regular interactions between the leaders of ASEAN and India through the annual Summits, Ministerial meetings, Senior Officials Level meetings etc.
On the regional front, India and ASEAN also work closely through the other ASEAN led fora such as East Asia Summit (EAS) process, Asean Regional Forum (ARF), etc. India has been actively supporting ASEAN's initiatives and specially the principle of “ASEAN Centrality” which acknowledges the criticality of the role played by ASEAN in the region.
While the partnership on the political and security front has been strong and growing, the engagement on the economic front has been lagging considerably and has not realized its full potential. While ASEAN's trade with the world was growing rapidly (US$2.5 trillion in 2014), our trade with ASEAN grew from US$12 billion in 2003 to only US$68 Billion in 2014 which again dropped to US$ 58 Billion in 2015. At the 10th ASEAN – India Summit in 2012, the leaders set a trade target of US$100 billion by 2015 which is yet to be realized. We signed the ASEAN- India Trade in Goods Agreement in 2009 and the Agreement on Investment and Services in November 2014. The Asean – India Trade in Goods Agreement created one of the world's largest Free Trade Areas with a combined GDP of US$5 Trillion and a population of 1.8 billion. Hence the platform has been provided for the businessmen of the two sides to utilize to their benefit and interalia to strengthen the ASEAN –India Economic Partnership.
The booming middle class of ASEAN is set to double to 125 million in a few years' time. This is a middle class with a high per capita income and hence it is not surprising that it is already emerging as a key consumer market. The ASEAN consumers are increasingly more brand savvy and willing to spend more on leisure activities. With the growing urbanization, consumerism is also on the rise with online retail market expanding rapidly in tandem with internet penetration. This urbanization and growing consumer market naturally provide varied opportunities for our industries and service providers.
ASEAN is the 4th largest exporting region of the world and well placed in the global trade flow map connecting various dots. It has also become a sophisticated exporter with the member countries identifying niche areas for manufacturing and exports. This growth has been fueled by both intra-ASEAN investments as well as investments from outside the region. While India has started to attract greater investments as compared to the past, evidently we need to explore newer ways and means of attracting more investments from ASEAN into India as intra ASEAN investments amounted to more than US$ 50 billion in 2014.
A key area that perhaps India needs to tap into is in attracting tourists from ASEAN. ASEAN today receives over 100 million tourists with almost 50% being intra ASEAN travelers thanks to the rapidly rising middle class. Indeed many countries have started to actively woo the ASEAN traveller recognizing the growing spending power of the ASEAN Community.
India along with the ASEAN is also actively involved in negotiations on the Regional Comprehensive Economic Partnership (RCEP) which when established will have a combined GDP of US$23 Trillion with a 32% share of world goods exports. The 16 member grouping will be a potential game changer for not only the economic landscape of the region but also indeed of the world as it would have a share of 28% of global GDP and enable the trade, services and investment flow within the region even further.
India is also emerging as the big growth story of the region and of Asia. Its economy has been rapidly expanding and the various initiatives such as Make in India, Digital India, Startup India etc are providing further momentum to this growth.
The time has come to realize the potential of the India ASEAN partnership. This shared aspiration of mutual prosperity and socio economic growth is possible if our businesses and importantly our Chambers and Export Promotion councils start engaging with the large ASEAN market more actively. This is also needed if we are keen to become part of the regional supply chain feeding into the global supply chain. This will strengthen our, Make in India and other initiatives and make them a huge success.