Hindustan Times (Delhi)

Asean is key to Indo-pacific stability

India and Southeast Asia must prepare for the future by focusing on services and connectivi­ty

- (For full article, visit http://read.ht/bffa) Sachin Chaturvedi is director general, Research and Informatio­n System for Developing Countries, New Delhi The views expressed are personal

As we celebrate the Silver Jubilee of the India-asean partnershi­p and 50 years of Asean, it makes sense to look at the new areas which could contribute to deeper ties in trade and investment between the 10-member grouping and India. These include: Global Production Networks (GPNS), new technologi­es, artificial intelligen­ce and services.

This year marks 15 years of summit-level meetings between India and Asean and five years of strategic partnershi­p. The latter received a thrust with India’s Act East Policy. There are 30 sectoral dialogue mechanisms and seven ministeria­l-level initiative­s to promote this partnershi­p.

Asean accounted for 10% of India’s total exports in 2001; this proportion declined to 8.7% in 2016. Imports in the same period expanded from 8.3% to 11%. India’s exports to Singapore and Indonesia are the highest among Asean countries. In 2015, Asean accounted for 22% ($18.4 billion) of the Outbound Foreign Direct Investment (OFDI) from India. India signed an FTA in goods in 2009 and an FTA in services and investment in 2014 with Asean countries that together account for approximat­ely 12.5% of investment flows into India since 2000.

Two agreements, the. Asean Economic Community (AEC) and Regional Comprehens­ive Economic Partnershi­p (RCEP), shape the contours of this economic engagement. There are four basic pillars of AEC engagement: a single market and production base; competitiv­e economic regions; equitable economic developmen­t; and integratio­n with the global economy.

Another important area of cooperatio­n is the promotion of GPNS. India and Asean will have to work closely to promote their parts or components industries as also the assembled products ones for the emergence of the GPNS. Currently, this includes electrical machinery, road vehicles and profession­al and scientific equipments and photograph­ic apparatus.

The India-asean partnershi­p should also be ready for the future as new technologi­es are reshaping the landscape . Technology plays an important role in trade facilitati­on.

Services is an important sector in which engagement between India and Asean is not going to be one-sided as is popularly believed . It ranged between 37% and 75% of GDP in Asean member countries in 2016. In Malaysia, its share in GDP is 56%, the Philippine­s, 62%, Thailand, 60% and Singapore, 75%. Trade in services has also expanded. Export of services from Asean expanded from $113 billion in 2005 to $306 billion in 2015; Imports from $140 billion in 2005 to $113 billion in 2015. The Asean Framework Agreement on Services (AFAS) may very well provide a reference point as more ratificati­on from members comes in for the India-asean agreement.

In this regard, the Mutual Recognitio­n Agreement provides the scope for reducing conflicts and helps in facilitati­ng trade. The greater understand­ing with Asean in the realm of services will also help us move forward with RCEP negotiatio­ns, where services are considered a major impediment. The quick starting point may be to commit at least what was accepted by Asean countries at the General Agreement on Trade in Services negotiatio­ns.

At the recently held Asean-india Network of Think Tanks at Jakarta, a paper explored the role of the Indian diaspora in Vietnam. It emerged that India is the largest FDI partner of Vietnam in central and west Asia, with 169 projects and total Indian investment is of $757 million. Out of 169 projects, 136 are fully owned by Indian enterprise­s. Tourism is another important sector in which both the regions identified priorities and the numbers have emerged increasing­ly well.

There are also specific lessons to learn from programmes such as Thailand’s ‘One Tambon (sub-district) One Product (OTOP). The OTOP has played an important role in rejuvenati­ng the rural areas with greater tourist and economic activities.

Prime Minister Narendra Modi has emphasised that connectivi­ty plays an important role in economic partnershi­p as the Act East Policy directly connects with the developmen­t of our Northeast. In this context, subregiona­l cooperatio­n through the Bay of Bengal Initiative for Multi-sectoral Techno Economic Cooperatio­n (BIMSTEC) would also be important. Manipur, Nagaland and Mizoram are keenly following the path of promoting this convergenc­e. Greater partnershi­p will give a fillip to land, water and air connectivi­ty with Asean. Specific initiative­s involving connectivi­ty, such as the India-myanmar-thailand Trilateral Cooperatio­n should be addressed on top priority.

Asean will also be an important connect as Japan and India work together for an open, peaceful and prosperous Indo-pacific region, in which the Asia-africa Growth Corridor (AAGC) has a major role to play.

 ?? ARVIND YADAV/HT ?? Prime Minister Narendra Modi with Singapore's Prime Minister, Lee Hsien Loong, New Delhi
ARVIND YADAV/HT Prime Minister Narendra Modi with Singapore's Prime Minister, Lee Hsien Loong, New Delhi
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