January 27, 2018 2:06:55 am
The Act East policy is now in flow. The remarkable gesture of inviting leaders of 10 ASEAN nation as guests of honour at the Republic Day is a manifestation of our engagement with South East Asia. It will emphasise “Shared Values Common Destiny”, a theme slightly at variance with the “Shared Values in a Fractured World”, at Davos. The fact that ASEAN leaders will be seen together with Prime Minister Narendra Modi presents an appropriate image for the present world.
The India-ASEAN summit marks the 25th anniversary of the engagement, the 15th year of our Dialogue Partnership and fifth anniversary of the Strategic Partnership. The theme of the retreat of the summit is maritime security, which is a subject that attracts constant attention. However, the underlying engagement is economic. And this requires careful attention and nurturing as a growing strategic synergy and understanding must not be impervious to the challenge posed by China India and ASEAN house a quarter of the world’s population and the region is relatively peaceful. Stability with consistent economic growth in the region makes it attractive to all its partners. ASEAN is today at the centre of the Indo-Pacific as a strategic concept but has been in focus for economic reasons for much longer, beginning with the traditional monsoon-led trade between India and South East Asian countries.
In 2012, at the summit to mark the 20th anniversary of the India-ASEAN engagement, both committed themselves to an expanded functional dialogue with a view to enhance regional architecture. With several ministerials, and interactions at other fora, we have fulfilled this. Our commitment to a $100-billion trade has missed the target. The total is about $70 billion, which is good but falls short. Our mutual commitment to an early completion of the Regional Comprehensive Economic Partnership (RCEP) launched in Phnom Penh in 2012 still awaits conclusion.
The RCEP was launched in 2012 when India’s review of its free trade agreements (FTA) was emerging. The decision to engage with the RCEP was a strategic one. Imagine a Look/Act East Policy with India absent from a new regional architecture. However, the enthusiasm for early harvest was decimated as too many competing interests made the noodle bowl look like separate dim sums on each issue. As it is, the Indian sense of achievement from separate negotiations of the FTA with ASEAN on goods and services led us to think that unless both were negotiated together, the concessions India gives on market access for goods are not really matched by returns on services. There are also the differences among the ASEAN members themselves with some being total free trade advocates like Singapore and others like Indonesia with reservations, like India. With RCEP, the problem was accentuated as the other FTA partners of ASEAN besides India — China, Japan, ROK, Australia and New Zealand — have varied interests. Thus, the deep enthusiasm from Australia and New Zealand to open everything and the scare of the Chinese dominating markets led to circumspection all around. India was painted as the spoiler as this time it was unrelenting in the quest to match access for goods with access to services.
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It is significant that with the accentuated strategic perception in the region, ASEAN sees India more clearly as a strategic partner and will want to engage India in all aspects — socio-cultural, political and economic. Thus, it appears that there will be a more realistic appreciation of the RCEP process and while India may be requested to lower its ambitions on services, others too will be requested to lower their demands. A RCEP without India is now unlikely.
Another area where the ASEAN wants to see more of India but believe it is playing below par is in infrastructure development. The Trilateral Highway is considered as aiding connectivity but the pace of its development is too slow pace. There is great demand in the ASEAN countries for infrastructure and they are looking for FDI and funding options. All the ASEAN countries have joined the AIIB, for instance, and together account for 8.96 per cent of the vote compared to 7.745 per cent for India. Between us, we have over 15 per cent, approximately half of China’s share. We also have a $1-billion credit facility for developing infrastructure and other projects in ASEAN countries besides a Rs 500-crore Project Development Facility for CLMV (Cambodia, Laos, Mynmar, Vietnam) countries under the commerce ministry.
But while the development funds are well utilised, the line of credit (LOC) is hardly touched. This is odd considering the ambition of Indian companies to undertake large projects in ASEAN countries and the strong outreach of Chinese finance to grasp most infrastructure development. India needs to study why the LOCs are underutilised.
We need to use the strategic space in economic terms to enhance our partnership with ASEAN. The ASEAN Master Plan for Connectivity has several options, including in the maritime sector, for us to pursue in conjunction with friends in the region. A maritime project for a strategic port with economic sustainability in an ASEAN country, linked to ports in Chennai or Visakhapatnam and their hinterland, jointly developed with Japan or South Korea, can be a new model which is regional and supportive of East Asian connectivity and projects.
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