Cover Story: Indian Splash In East

India-ASEAN

Despite progress made over the last 25 years in India-ASEAN ties, despite geo-strategic concerns there remains immense scope for further growth in the relationship

By Asit Manohar

As Prime Minister Narendra Modi made three-day visit to the Philippines on November 12 to attend India-ASEAN and East Asia summit, he took time to meet each head of state of the group and personally invited them to visit India to become chief guests at the country’s Republic Day function next year on January 26. It would be a significant departure from its past when all 10 heads of government from ASEAN countries, instead of just one, would grace the occasion as chief guests—a rare diplomatic initiative that New Delhi would undertake to commemorate 25 years of its engagement with ASEAN, comprising Indonesia, Thailand, Philippines, Malaysia, Singapore, Myanmar, Laos, Vietnam, Cambodia and Brunei.  

Given the tension filled face off with China on Doklam, some experts view the move to host a commemorative summit as India’s attempt to consolidate its position among ASEAN countries which equally share strained ties with China on the South China Sea issue. Also, some ASEAN countries are so worried about China’s “uncertain behavior” that they have started seeing Indian Ocean as zone of future war, instead of zone peace. “Following the uncertain behaviour of China, the Indian Ocean has become unpredictable and it might become the next battle ground,” AnakAgung Banyu Pewita who teaches at Indonesia’s President University said in her address at the Delhi Dialogue, an annual event which has been jointly organized by the Ministry of External Affairs and think tank Observer Research Foundation since 2008.

ACT EAST POLICY

AEP is the successor to the Look East Policy (LEP) that was put in place by then Prime Minister Narasimha Rao in 1992 under radically different geo-political and economic circumstances. LEP was primarily focused on strengthening economic ties between India and ASEAN states. The end of the cold war and disintegration of the Soviet Union in 1991 provided a welcome opportunity for India to reach out to South-East Asia to capitalize upon its historical, cultural and civilisational linkages with the region. As External Affairs Minister Sushma Swaraj said at the recently held ninth edition of the Delhi Dialogue, India’s age old ties with South-East Asia have been established through culture, trade and religion and not through ”conquest and colonization.”

The Look East Policy registered impressive gains for 20 years after its inception. Having become a sectoral partner of ASEAN in 1992, India became a dialogue partner and member of the ASEAN Regional Forum (ARF) in 1996. India and ASEAN entered into a summit partnership in 2002, the 10th anniversary of LEP, and launched negotiations for a Free Trade Agreement (FTA) in goods in 2003. These discussions culminated in a bilateral deal that was concluded in 2009 and become effective in 2010. Bilateral trade and investment showed impressive gains in the first decade of this century. While bilateral trade increased from $2 billion in 1992 to 12 billion in 2002, registering a growth of 12 percent annually, it zoomed to 72 billion in 2012 with a cumulative annual growth rate of around 22 percent over the preceding 10 years. India’s two-way trade with ASEAN now stands at approximately $76 billion. India and ASEAN missed out on achieving the two-way trade target of $100 billion set during the Commemorative Summit held on the 20th Anniversary of the bilateral partnership in 2012 in New Delhi.

The India-ASEAN Free Trade pact in services and investments, which was concluded in 2014 and came into effect a year later, has the potential to reduce India’s trade deficit with the region as also impart a strong impulse to bilateral exchanges. India is also a part of the ASEAN-led Regional Comprehensive Economic Partnership (RCEP), which, when concluded and implemented, will cover almost 40 percent of the world’s population, 33 percent of global GDP and 40 percent of world trade.

India and ASEAN are natural partners in their desire to create a free, open and inclusive regional architecture. They are active participants in the East Asia Summit (EAS), ASEAN Regional Forum (ARF), ASEAN Defense Ministers Meeting Plus (ADMM-Plus), and the Expanded ASEAN Maritime Forum (EAMF).

Currently, there exist 30 different dialogue mechanisms between India and the ASEAN states focusing on a range of sectors. These comprise an annual Summit and seven Ministerial meetings focused on a variety of areas that include foreign affairs, economy, environment, tourism, etc. The ASEAN-India Centre (AIC), established in 2013, has enhanced the strategic partnership by concentrating on policy research and recommendations as well as organising meetings between think-tanks and similar institutions in India and ASEAN countries. AIC seeks to bridge the existing information divide amongst the people of the two regions. Exchange programs have been put in place for frequent interaction between students, senior officials, diplomats, academics, media professionals, etc.

Challenges and Opportunities

Common concerns and aspirations as well as similar threats and challenges confront the ASEAN countries and India at a time when not only Asia but the whole world is in the midst  of an uncertain and unpredictable phase. Developments over the next few months and years could determine the final contours of relations in Asia and the world.

Connectivity between India and ASEAN, particularly Myanmar and Thailand, has emerged as a significant element in cementing bonds between the two regions. Better infrastructure connecting Northeast India and ASEAN has become the sine qua non for stronger economic and trade partnership and vital contributor to prosperity and economic development of the region. Two major connectivity projects, viz., the Trilateral Highway between north-east India and Myanmar and onwards to Thailand (and Laos and Vietnam) as well as the Kaladan multi-modal transit and transport project, have been under implementation for several years. The NDA government has taken it up seriously. It is highly likely that both will soon become operational. The allocation of $1 billion by Prime Minister Modi during his visit to Malaysia in September 2015 to support connectivity projects is testimony to the importance that the government attaches to rapidly developing infrastructure and brings the regions closer.

Stronger relations between India and Myanmar have also helped to quell insurgency and extremism in the north-eastern states of India. Peace, stability and security of north-east India will be further preserved and promoted with more robust ties and understanding with Myanmar. India has recognized that the success of the AEP will be determined by its contribution to security and economic development of Northeast India.

Relations with ASEAN have become multi-faceted to encompass security, connectivity, strategic, political, space technology, counter-terrorism and anti-insurgency operations, anti-radicalization, trade and investment, maritime security and defense collaboration, in addition to economic ties. Cooperation to curb terrorism especially in the face of the rising influence of the Islamic State has assumed priority. Defense partnerships with several ASEAN states are advancing rapidly.

The large Indian diasporas in many Southeast Asian countries help strengthen diplomatic, economic and security relations between India and ASEAN as they contribute to expand and intensify bonds. The Indian Diaspora comprises an important instrument of India’s soft power.

ASEAN continues to form the central pillar of India’s Act East Policy. This is evident from the very active exchange of visits that has taken place between India and the region. Prime Minister Modi has travelled to Singapore twice, once to attend the State funeral of Singapore’s first Prime Minister Lee Kuan Yew in March 2015, and again to mark the 50th anniversary of the establishment of bilateral relations and establish a strategic partnership in November 2015; to Myanmar twice, once to participate in the East Asia Summit (EAS) and the India-ASEAN Summit in November 2014, and again on the way back from China in September 2017; to Malaysia in November 2015 for a bilateral visit as well as to attend the EAS and the India ASEAN Summit; to Laos in September 2016 for the EAS and India ASEAN Summit; to Vietnam on a bilateral visit en route to China in September 2016; and, to the Philippines to participate in EAS and India-ASEAN Summit in November 2017.

He also made a short stopover in Thailand on his way to Japan in November 2016 to pay respect to the venerable, departed king BhumibolAdulyadej. Visits from India have been reciprocated by high level visits from ASEAN States to India. Relations, who were earlier seen as lackadaisical, are again assuming renewed vigour.

HURDLES FOR INDIA

India requires route to reach out to these ASEAN nations and hence role of Myanmar becomes important, especially the Dawei deep Sea Port. The Dawei deep Sea Port and special economic zone is slated to give a huge boost to connectivity and trade in the Southeast Asian region when it is commissioned in a few years. The $8 billion project is being developed jointly by Myanmar and Thailand.

“The Dawei deep sea port, when complete, will provide India an alternative sea route to Southeast Asia and reduce dependency on the congested Strait of Malacca and cut transport time,” an official told. The Dawei port is part of the southern corridor of the Mekong India Economic Corridor. India is concentrating on the southern economic corridor, which would connect Ho Chi Minh City in Vietnam, Phnom Penh in Cambodia, Bangkok in Thailand to Dawei in Myanmar.

“When Dawei port is ready, India is planning to connect it with Chennai. There will be no need to go through the Strait of Malacca then,” said the official. During Prime Minister Manmohan Singh’s visit to Thailand last May, the Thai government invited Indian business to invest in the Dawei Special Economic Zone, especially in areas where Indian companies have expertise, such as steel, manufacturing, power, petrochemicals and services.

The Dawei Special Economic Zone Development Co, jointly owned by Thailand and Myanmar, will be assigned to run the project. The Greater Mekong sub-region also has a North-South corridor linking cities of the Mekong basin countries – Cambodia, Laos, Myanmar, Thailand and Vietnam – to China. But India is not keen to join this. “That corridor cuts across to China and India is not very keen to join it,” said the official.

India is involved in the 1,400 km Trilateral Highway, linking India, Myanmar and Thailand, that was slated to become a reality by 2016 is yet to be completed. The highway from Moreh in Manipur to Mae Sot in Thailand via Myanmar would open up India’s landlocked northeast to Southeast Asia. The project is being funded by the ADB. The highway is expected to allow freight and container trucks to move across the borders from India to Myanmar and Thailand and play a crucial role in boosting trade and investment in the three countries.

The Kalewa-Yargi section of the highway in Myanmar, which India has offered to upgrade, is facing some problems due to the hilly terrain, said the source. “The major chunk of the Trilateral Highway has been completed. On the Kalewa-Yargi section and upgradation and repairing of 71 bridges, which India had agreed to undertake during Manmohan Singh’s visit to Myanmar in May 2012, work is on,” the official added.

Among other connectivity projects with the bloc, India is also helping Myanmar upgrade the 160 km Tamu-Kalewa-Kalemyo road, repairing 71 old bridges in Myanmar, besides building the Kaladan multi-modal transit transport project. The Kaladan project will connect Kolkata port with Sittwe port in Myanmar by sea and also link Sittwe to Mizoram via river and road transport. But, all these projects were shelved in 2013 which got restarted in 2015. Hence, when both India and ASEAN are celebrating 25 years of association, there should be some attempts from both sides to recognize the strategic importance of Myanmar projects mentioned above and engage in both Thailand and Myanmar to meet the deadline related to these projects.

GANGA-MEKONG ROUTE

The Mekong–Ganga Cooperation (MGC) comprising six member countries, Thailand, Myanmar, Cambodia, Laos and Vietnam and India was established on November 10, 2000, at Vientiane at the First MGC Ministerial Meeting. The four areas of cooperation are tourism, culture, education, and transportation. The organization took its name from the Ganga and the Mekong, two large rivers in the region. Development in this project was sluggish till 2012 but once the new government took over in New Delhi it worked as catalyst in this project back on track. At the seventh MGC in 2016, it was emphasized that collaboration under MGC must be given a sense of urgency since it actively supports the Initiative for ASEAN Integration, and the Master Plan on ASEAN Connectivity, and contribute towards the implementation of the ASEAN Community Vision 2025. The mutual agreements revolved mainly around trade enhancement, investments in projects, maritime connectivity, sharing information and cooperation in Pandemic management, concord food security in tandem with strong underpinning of cultural ties among the nations in the region.

With the exception of the years of global financial crisis, growth rates of this magnitude and duration are remarkable in Mekong history. Output in the region increased by 7.82 percent in the last decade. Cambodia witnessed the strongest GDP growth of 8.1 percent, followed by Vietnam (7.3 percent), Lao PDR (6.7 percent) and Thailand (4.1 percent). It has been observed that higher investment is pivotal to growth of some of the Mekong countries, and, therefore, attracting foreign direct investment (FDI) has been the major focus of policy reforms in the region. FDI can also have important positive effects on a host country’s development effort. In addition to the direct capital financing it supplies, FDI can be a source of valuable technology and know-how while fostering linkages with local firms, which can help improve an economy’s health. Based on these arguments, developing countries have offered incentives to encourage foreign direct investments in their economies, and subsequently carried reforms in order to sharpen the FDI policy.

However, FDI from India to Vietnam is low despite Vietnam possessing a large market and abundant labour force with relatively lower wages. According to the Vietnamese Ministry of Planning and Investment (MPI), FDI is inhibited in Vietnam due to poor infrastructure and low-quality work force, for example, out of 2 million employees working in the FDI sector, only 0.4 million (40 percent) are trained at vocational schools. Infrastructure systems like electricity, water, traffic and seaport in Vietnam are also very weak. Also, Vietnam does not have clear instructions on conditional investment sector (businesses need a license to operate in this sector). For example, there are about 70 conditional investment areas for which there are no clear-cut instructions. Although the Vietnamese economy is dependent on agriculture to a large extent, it has not been able to attract FDI in this sector, mainly due to implementation of old techniques that act as barriers to investment in this sector. Vietnam has not devoted enough money to make agriculture as an attractive sector for foreign investment.

One area where India can push is biotechnology. Biotechnology has become an integrated part of the world economy. With the growth rate of 16 percent per year, biotech market in Asia and the Pacific region holds vast potential for development and collaboration. Although in early stage of development, biotechnology in Vietnam has received special attention from the policy makers. A legislative framework has been established and measures have been taken to ensure that by the year 2020 biotechnology of Vietnam shall reach regional advanced level. India and Vietnam have long history of friendly relations and cooperation. Biotech joint ventures, collaboration in biotechnology education, environment protection, production of antibiotics and bio-fuel, commercialization of GM crops are promising fields for deepening that relationship.

CHINESE CONUNDRUM

In a rapidly evolving geo-political scenario marked by China’s assertive military, political and economic rise, the Act East Policy has imparted greater dynamism to India’s ties with ASEAN.

The issue of ownership, control, use and exploitation of oil, gas, mineral and fisheries resources in the South China Sea has emerged as a major dispute between China and several ASEAN countries like Vietnam, Philippines, Brunei and Malaysia. This is an issue that has divided ASEAN down the middle. There is no unanimity amongst them on how to deal with China on this issue. India is concerned because more than 40 percent of its trade passes through the South China Sea. It is also interested in harnessing fossil fuel resources in the region for meeting its energy needs. ONGC Videsh Limited (OVL) entered into an agreement with Vietnam to prospect in oil blocks 127 and 128 off the Paracel islands which fall within the Exclusive Economic Zone of Vietnam. In all recent discussions in regional and international fora, India and several other countries have supported freedom of navigation, ensuring maritime security, expeditious resolution of disputes according to provisions of international law, viz., the UN Convention on the Law of the Seas 1982, developing a Code of Conduct, and settlement of disputes through dialogue and peaceful means.

China’s increasing intemperance and intractability over the last many years has added to the anxieties and concerns of countries in South East Asia and beyond. They want India to play a more active countervailing role in the region. This interest and desire on the part of these countries meshes flawlessly with the efforts by India to pro-actively reach out to countries of the region for mutually beneficial engagements.

Hence, we can say that promotion of India’s geostrategic interests in the Indo-Pacific region depend on India’s bilateral and multilateral or regional engagements with the countries in the region. It is hence essential to strengthen collaboration with ASEAN as an organization as well as with individual Southeast Asian countries.

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