New Delhi, 22 January 2010
“Enhancing India’s Connectivity with ASEAN: Prospects and Challenges”
Honourable Dr. Amit Mitra, Secretary-General of FICCI
H.E. Ms. Latha Reddy, Secretary (East), Ministry of External Affairs, India
Honourable Prof. Fukunari Kimura, Chief Economist, Economic Research Institute of ASEAN and East Asia,
Ladies and Gentlemen,
Namaste, Good morning.
I am honoured to be here today to share with you my thoughts and views on ASEAN-India connectivity and how I see it unfolding itself in the coming years with the growing ASEAN-India dialogue relations.
At the outset, I would like to thank the Government of India and the Federation of Indian Chambers of Commerce and Industry (FICCI) for continuing the Delhi Dialogue, which will help in promoting greater ASEAN-India engagement and bolster public interest in our strengthening partnership, especially with the coming into effect of our Trade in Goods Agreement under the ASEAN-India Free Trade Arrangement. I am also pleased to see the Institute of Southeast Asian Studies and the Economic Research Institute of ASEAN and East Asia (ERIA) from my part of the world co-partnering this important event.
What does “connectivity” mean in the context of ASEAN-India dialogue relations? In my view, it is not just physical infrastructure connections covering road, rail, air, sea and information communication technology or trade, commerce and tourism linkages. While they form the bedrock of ASEAN-India connectivity, to me, connectivity must cover people to people contacts, which include interactions between leaders, ministers, parliamentarians, officials, business community, intellectuals, academics, scientists, media personnel, artists, cultural experts, youth, children and many others to form a web of relationships that will buttress ASEAN-India relations in a substantive and sustainable way. As such, the hardware of connectivity must be reinforced with the software of interactions and dialogue for ASEAN-India partnership to blossom to its fullest.
Both ASEAN and India are located within an economically vibrant Asian region. I see our relations with India as an integral part of an Asian jeep supported by four robust tyres representing ASEAN; ASEAN Plus Three countries of China, Japan, Republic of Korea; India; and Australia and New Zealand. Of course, the driver of this jeep is ASEAN encouraged and supported by all the partners I have mentioned. The aim of the partnership is to collectively ensure peace, security and stability for national and regional development, and prosperity.
Enhanced Connectivity through Dialogue Relations and Collaboration
Amid the policy landscape and high-level political commitment, ASEAN-India dialogue relations have grown rapidly from a sectoral dialogue partnership in 1992 to a full dialogue partnership in December 1995. The relationship was further elevated with the convening of the annual ASEAN-India Summit since 2002. All these took place within a decade, which clearly signifies the importance of ASEAN-India dialogue partnership to ASEAN and India.
Come December 2010, ASEAN and India will celebrate 15 years of productive dialogue relations and cooperation. There is a cause for celebration as the partnership has attained a number of milestones. One, India’s accession to the Treaty of Amity and Cooperation in Southeast Asia (TAC) in 2003 is recognition of India by ASEAN as a major player in the region and the strong commitment and valuable contribution India has made and is making to regional peace, stability and prosperity. Two, the adoption of a Declaration on ASEAN-India Partnership for Peace, Progress and Shared Prosperity by our Leaders in 2004 signifies the will and readiness of both sides to elevate the partnership to a higher strategic level covering political and security, economic, social and cultural and development cooperation. A plan of action to implement the Declaration has been successfully implemented and a second plan is being developed for implementation, taking into account the current developments and realities, especially the global financial crisis and evolving political and economic landscape. India has and is contributing immensely by assisting ASEAN in bridging the development gaps among its lesser developed members of Cambodia, Lao PDR, Myanmar and Viet Nam (CLMV) through various projects such as Entrepreneurship Development Centres (EDC) and Centres for English Language Training (CELT). We also recognise India’s leadership in the ICT, pharmaceutical, biotechnology, and traditional medicines sectors and this are areas for greater engagement and collaboration that will greatly benefit ASEAN through technology transfer and know-how.
Developments in ASEAN
Let me take a moment and provide an update on the overall developments that are taking place in ASEAN. The creation and the entry into force of the ASEAN Charter on 15 December 2008 marked a new beginning for a rules-based ASEAN providing the much needed legal personality to facilitate the building of the ASEAN Community. The ASEAN Community will comprise the ASEAN Political and Security Community (APSC), the ASEAN Economic Community (AEC) and the ASEAN Socio-Cultural Community (ASCC). The Charter also provides for new organs to support community-building efforts in an integrated fashion supported by the revitalised ASEAN Secretariat. For each of the Community, a Blueprint has been adopted to serve as a guide for community building by 2015.
The uniqueness of the ASEAN Community is that it embraces open regionalism, transparency and inclusiveness in its orientation. ASEAN comprises trading nations and therefore places high value on regional security and economic growth for development. It also subscribes to the motto of “prosper thy neighbour”. As such, openness is a virtue for the ASEAN Community and whatever we do we are cognisant of the interests and concerns of our partners. In this connection, ASEAN community building will benefit its Dialogue Partners, including India.
In fact, under the ASEAN Charter, provision has been made for the accreditation of Ambassadors to ASEAN by its Dialogue Partners and other friendly countries for greater external engagement by ASEAN. India has also appointed its Ambassador to ASEAN who works closely with the ASEAN officials and the ASEAN Secretariat.
From the economic perspective, the core of the AEC is the creation of a single market and production base where there will be free flow of goods and services, investment and skilled labour as well as freer flow of capital. The Blueprint also provides for the creation of a competitive economic region with equitable economic development, and an outward-looking Economic Community plugged to the global economy. A scorecard has been developed to track the implementation of regional commitments to ensure the momentum for economic integration is maintained.
ASEAN’s External Outlook
On plugging into the global economy, one of the instruments that ASEAN has been successfully utilising is free trade arrangements (FTAs) while continuing to support and contribute to the various multilateral processes, including the WTO. We have in place FTA arrangements with China, Japan, India, Rep
ublic of Korea, Australia and New Zealand. In addition to this, ASEAN has a trade and investment framework arrangement with the United States, and is looking towards concluding one more with Canada. ASEAN will continue to expand and deepen its global linkages with all interested partners and regions.
1 January 2010 was an historic moment for ASEAN for several reasons. One, the ASEAN-China Free Trade Area has been realised as 90% of products traded between ASEAN-6 and China, with just a very few exemptions, would have zero tariffs by that date. The ASEAN-Korea Free Trade Area is now fully in place with the Agreement on investment coming into force. The Agreements on Trade in Goods and Trade in Services between ASEAN and Korea are already in force. The ASEAN-Australia-New Zealand Free Trade Area (AANZFTA) also entered into force on the same date. With Japan, the bilateral economic partnership with several ASEAN Member States is being consolidated to bring trade in services and investment into the ASEAN-Japan Comprehensive Economic Partnership (AJCEP) Agreement, which entered into force in December 2008. ASEAN is now focusing on the effective implementation of these FTAs so that the peoples of ASEAN as well as its partners will benefit from these arrangements.
ASEAN and India Connected
As they say, we keep the best part of the pie to the last, I am also happy to announce here that on the same date of 1 January 2010, the Trade in Goods Agreement of the ASEAN-India FTA entered into force. Under the Agreement, tariffs on over 4,000 product lines will be eliminated by 2016 and sensitive products have been given a longer timeframe to phased-in for tariff liberalisation. Both sides are now consolidating the trade in services and investment provisions and have set themselves an ambitious target of 2010 to complete the two agreements as a single undertaking.
With a combined market of over 1.8 billion people and a GDP of almost US$2.75 trillion and geographical proximity, potential for ASEAN-India cooperation is immense and waiting to be further tapped. Based on ASEAN statistics, India moved one notch higher, ninth to eighth, both as a major export and import market in 2008 when compared with 2007. India’s share of ASEAN’s total exports increased from US$ 24.8 (2.9%) to US$30.1 billion (3.4%) and total import share of India also increased from US$ 12.4 billion (1.5%) to US$ 17.3 billion (2.1%) for the same period.
Noting that trade had grown steadily despite the economic slowdown, our leaders agreed at their ASEAN-India Summit in October 2009 in Thailand to set a higher target of USD 70 billion trade value, to be achieved in two years. They also noted that the ASEAN-India Business Council needs be re-activated. In this connection, FICCI together with other business organisations such as the Confederation of Indian Industries (CII) could take the lead to re-ignite the interest and work with their counterparts in ASEAN, now that the leaders have given their clear mandate and the environment has been made ripe.
Beyond bilateral FTAs, ASEAN is looking into an approach for the possible development of East Asia-wide FTA based on the recommendations of two major track two studies completed under the ASEAN Plus Three Process, and the East Asia Summit (EAS). Our Leaders have taken a decision to consider these two studies in parallel to take forward East Asia integration. On its part, ASEAN is internally consolidating both studies to come up with possible approaches to move forward the FTA before consulting its Plus Three and EAS partners.
While ASEAN and India continue to negotiate the ASEAN-India FTA, India continued to vigorously pursue her ‘Look East Policy’ by becoming a participant of the East Asia Summit (EAS) comprising, ASEAN, China, Japan, Korea, Australia and New Zealand in 2005. It is a member of the Asia-Europe Meeting since 2008 and is also seeking membership in APEC in 2010.
For me, I see these developments as high points in ASEAN-India relations and at the same time an understatement of long-standing relations between India and Southeast Asia. We are bound together by our shared rich and valuable heritage of civilisation, culture, and peaceful economic and social interactions and linkages extending over two millennia as well as by the pluralistic, multi-religious and culturally diverse nature of our respective societies. In fact, India’s connectivity with Southeast Asia has long been established and remnants of such evidence still remains in almost all ASEAN Member States, for example, the Chandi Borobudur in Indonesia – the southernmost part of ASEAN to the Angkor Wat in Cambodia – the northern most part of ASEAN.
To press the point further, evidence that both sides have long been engaged is reflected through the presence of the Indian Diaspora in all ten ASEAN Member States. Record shows that the number of people of Indian origin (PIO) in ASEAN as the highest in the world. ASEAN is home to about 6 million PIOs and I am a living example of that part of the Indian Diaspora in ASEAN. Prospects for Enhanced ASEAN-India Cooperation As Asia becomes the engine for growth of the global economy, ASEAN and India must capitalise on their partnership through enhanced connectivity to reap the benefits. The prospects for seizing such an opportunity is here and we have to start now. Let me highlight a few areas that we should consider.
The first area will be transport infrastructure linkages, which is a bottleneck for the economic growth of ASEAN and India. Expanding and improving road, rail, maritime and air linkages will be crucial for enhanced connectivity for economic and other reasons. ASEAN is now developing a ASEAN Master Plan on Regional Connectivity as well as under the EAS we are developing an Asia Development Plan with the support of ERIA. These plans will enhance regional connectivity and plug Asia firmly into the regional and global economies.
At the same time, we can strengthen ASEAN-India air connectivity by working towards greater liberalisation of air services, both cargo and passengers. In this connection, I am pleased to note that both sides have expressed keen interest to have an Open Skies regime. The ASEAN-India Aviation Cooperation Framework has been laid down and the next logical step is to conclude the ASEAN-India Air Services Agreement as soon as possible.
The second area is tourism which will serve as the main gateway to bring about “people-to-people” interactions while supporting economic growth and employment. The total number of visitors from India to ASEAN has been on the rise recording 1,469,574 visitors in 2006, 1,813,592 visitors in 2007 and 1,984,685 visitors in 2008. For the same period, India’s share of visitors compared with total international visitors to ASEAN also increased from 2.58% to 2.91% to 3.03% respectively.
The tourism ministers of ASEAN and India at their inaugural meeting in 2008 have agreed to promote and facilitate more tourism flows, including cultural, rural, eco, adventure, sports, religious circuit tourism by utilising their geographical and cultural diversities as well as budget tourism packages including budget or economy accommodations by using multi-modal transport, including luxury coaches and ferry services. They would also be encouraging tourism investment in ASEAN and India. In this connection, both sides have jointly developed the Buddhist Pilgrimage Tourism which includes the development of a webpage, tour packages, listing of potential industry players, production of documentary film, photo exhibition and printing promotional material. This is certainly an area for the private sector to venture.
The third area of connectivity is ICT, which is a key area of ASEAN-India cooperation. Both sides are accelerating the development of an ASEAN-India broadband high speed optical fibre network that would enhance virtual connectivity. Many events have received continuous support from both sides, such as the ASEAN-India ICT Industry Forum, network security, and e-learning technologies. India could certainly make an important contribution this year to the new ICT Masterplan ASEAN is developing given its technology and human resource capabilities in ICT.
There are other areas that ASEAN and India could look into as proposed by the Honourable Prime Minister of India, Dr. Manmohan Singh last year to further enhance connectivity, in particular, the holding an ASEAN Trade and Industrial Exhibition in India; enhancing cooperation in the agriculture sector with a view to meeting the challenges of food security; and cooperation in space technologies, including sharing of satellite data for management of natural disaster and launching of small satellites and scientific instruments and payloads for experiments in remote sensing and communication for space agencies and academic institutions.
Challenges to Address
While there are many opportunities and immense potentials for strengthening ASEAN-India relations, there are also challenges that both sides will have to meet to ensure the momentum of the partnership is unimpeded.
ASEAN and India will have to ensure that the commitments under the Trade in Goods Agreement are implemented on a timely manner so that the benefits of the ASEAN-India Free Trade Area are felt by the people. At the same time, ASEAN and India will have to ensure that their markets are realigned to meet the demands of the FTA as such arrangements may have short-term impact on the economies. This is part and parcel of the FTA trade-offs. Second, ASEAN and India should press on with the negotiations of the services and investment agreements as a single undertaking so that the benefits accruing from these two agreements could be harvested as early as possible.
Third, the business community from both sides must come forward to utilise and benefit from the FTA. For this to happen, the businesses should acclimatise themselves to the economic and business environments in both regions. There is a need for more exhibitions, business dialogues, and events to promote trade and economic activities and create awareness about the FTA. An ASEAN-India FTA business portal could be something that our businesses could consider to support all these efforts. At the same time, we would like to see more investments flowing from India to ASEAN as the FTA takes a firm grip. The new ASEAN Comprehensive Investment Agreement will be a useful tool for Indian investors as the agreement provides for equal treatment to both ASEAN and ASEAN based foreign investors who are interested in investing in our region.
As I see it, the running track has been constructed and is ready, and it is up to the business community to take the lead and “run” the commerce. Whether it will be a 100 metres sprint or a marathon to the finishing line of success depends on the cooperation between the businesses from the two regions. The US-ASEAN Business Council and now the Federation of Japanese Chamber of Commerce and Industry in ASEAN are some useful models that our businesses from ASEAN and India could emulate.
Finally, ASEAN and India should look at infrastructural development within their respective regions and together in connecting South Asia and Southeast Asia. This cannot be done by India or ASEAN alone. We may have to work with our research institutes such as ERIA, and multilateral development banks to make this possible.
Indeed, ASEAN-India connectivity and relations are on an upward trajectory given the benefits, opportunities and potentials of the partnership. We need to exert concerted efforts to ensure that impediments to the partnership are systematically dismantled and that we work together collectively with our other partners and neighbours in the region to build an Asia that will drive the global economy in the decades to come. If the governments, business community and civil society from both sides do their fair share our partnership is destined to succeed in more ways than we have ever envisaged. In closing my address, let me quote the great soul Mahatma Gandhi. “As human beings, our greatness lays not so much in being able to remake the world as in being able to remake ourselves.”
True to his words, we in the ASEAN Secretariat stand firm and committed to support our Member States and India to ensure we continually remake ourselves to ensure enhanced ASEAN-India connectivity now and in the future for the benefit of our people.