Message from Chairman, Committee on Trade with ASEAN countries

Transcription

1 Issue: December 2017 Chairman s Pen In this issue of the newsletter on ASEAN+5, we highlight the ASEAN-India Connectivity Summit (AICS) with the theme of Powering Digital and Physical Linkages for Asia in the 21st Century. AICS aims to accelerate existing connectivity prospects; identify issues of concern, evolve suitable policy recommendations and develop strategies to enhance economic, industrial and trade relations between ASEAN and India. Its focus areas are Infrastructure, Roadways, Shipping, Digital, Finance, Energy and Aviation. The Government of India under Prime Minister Narendra Modi is determined to catch up with the all pervading current of globalization and tap the full potential of trade with neighbouring countries. It is within this scheme of things that India has chalked a grand plan of connecting the country s highways with international highways at the whopping cost of Rs 25,000 crore. India-ASEAN relations have traversed a long, dynamic path interspersed with multiple achievements to reach the year 2017, to celebrate 25 years of their partnership. Such is India s engagement with ASEAN but the country s physical (land) connectivity with its eastern neighbours is quite poor. India s North East region s dismal transport infrastructure is one weak-link in India s otherwise quite energetic engagement with ASEAN. Thus connectivity remains to be the major challenge both within and out. The completion of the multiple connectivity projects, through land, water, and air which India is currently pursuing would go a long way in boosting India s international trade and commerce with ASEAN. We are hopeful that the information provided in the newsletter will be useful for our readers. Message from Chairman, Committee on Trade with ASEAN countries The Indian government is planning to engage Association of South East Asian Nations (ASEAN) in a big way as the new industrial policy being framed for the development of industries in northeast India would prove to act as a catalyst with the trade with ASEAN. Connectivity with the 10-member ASEAN is a central plank in India's Act East policy to develop regional relations. But not much progress has been achieved so far in terms of the completion of the highway projects. P K Shah Improving and enhancing connectivity is crucial to improve India s economic and

2 diplomatic ties with the ASEAN countries. Thus the present government has put a special focus on strengthening relations with ASEAN, prioritizing connectivity projects under its Act East policy. The ASEAN- India Connectivity Summit (AICS) is expected to discuss the progress achieved so far in some of the crucial projects such as the Kaladan multi-modal transit transport corridor and India-Thailand Trilateral Highway, which have been moving at snail s pace for almost a decade now. Efforts will be made to expedite these projects. A master plan on port connectivity will also be developed in this summit so that trade with ASEAN can be enhanced with a special focus on maritime connectivity. I hope this newsletter will be insightful for our readers and they will enjoy reading it. Basic Facts Regional Comprehensive Economic Partnership (RCEP) is a proposed free trade agreement (FTA) between ten member states of the Association of Southeast Asian Nations (ASEAN) (Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand, Vietnam) and the six states with which ASEAN has existing free trade agreements (Australia, China, India, Japan, South Korea and new Zealand) Prospective RCEP member states accounts for a population of 3.4 billion people with a total Gross Domestic Product (GDP, PPP) of $ 49.5 trillion, approximately 39 percent of the world's GDP. Scope of negotiations: RCEP will cover trade in goods, trade in services, investment, economic and technical cooperation, intellectual property, competition, dispute settlement and other issues. The RCEP will have broader and deeper engagement with significant improvement over the existing ASEAN+1 FTAs, while recognizing the individual and diverse circumstances of the participating countries. ASEAN-India Connectivity Summit (AICS) India hosted the ASEAN-India Connectivity Summit (AICS) on December 11-12, with the theme of Powering Digital and Physical Linkages for Asia in the 21st Century. This summit came month after the 15th ASEAN- India Summit, in which connectivity was one of the major issues for discussion. Connectivity is a major area of convergence for the Association of Southeast Asian Nations (ASEAN) and India. India is the third country after Japan and China to initiate a dedicated meeting with the ASEAN Connectivity Coordinating Committee (ACCC). The purpose of this consultative mechanism on connectivity between ASEAN and India is to explore possibilities and means to support the Master Plan on ASEAN Connectivity (MPAC), and physically connect it with India. India currently is working with ASEAN on multiple connectivity projects, through land, water, and air. One of the flagship projects for land connectivity between ASEAN and India is the India-Myanmar-Thailand Trilateral Highway. This initiative, which connects the three countries from Moreh in India to Mae Sot in Thailand to Bagan in Myanmar, was first proposed in At the Commemorative Summit between ASEAN and India in 2012, it was decided to further extend the Trilateral Highway to Cambodia and Vietnam. But over the years, this initiative has stalled due to the lack of institutional and financial support from all three countries.

3 To develop connectivity through water, ASEAN and India are working on the Kaladan Multi-Modal Transit Transport Project (KMMTTP). The project was initiated by the Indian government in 2008 and is entirely funded by India. The purpose is to seek an alternative route through Myanmar for the transportation of goods to the northeast region of India. The KMMTTP connects Kolkata in India to Sittwe and Paletwa in Myanmar by sea and river respectively. A road is also planned to connect Paletwa in Myanmar to Zorinpui on the India- Myanmar border. Alongside this initiative, India has contributed to build a sea link via Sittwe port in Myanmar in order to enable an alternative transit route through Bangladesh. General V. K. Singh, also minister of state for external affairs, while addressing the ASEAN-India Connectivity Summit, stated that ASEAN and India are exploring the signing of an ASEAN-India Maritime Transport Cooperation Agreement. This initiative, according to Singh, will help to enhance cooperation and communication, eliminate barriers hindering maritime transport, and establish a regional maritime transport framework system. Since ports and waterways are responsible for the flow of the merchandise trade between ASEAN and India, investment in quality infrastructure is essential for better connectivity, trade growth, and maximum utility of resources. According to the ASEAN-India Maritime Connectivity Report published by the ASEAN-India Center at Research and Information System for Developing Countries in 2014, in the list of top 25 ports by container volume, ASEAN countries have seven ports while India has only one. This is an area of concern between the two regions. Introduction of the SagarMala project by Prime Minister Narendra Modi, whereby India plans to invest in port infrastructure for improved integration and connectivity through the sea, is an encouraging step in this direction. Other projects, such as a railway link between New Delhi in India to Hanoi in Vietnam; the Mekong-India Economic Corridor (MIEC) connecting South and Southeast Asia; and Stilwell road and Dawei deep-sea port in Myanmar are under consideration. The MIEC involves the integration of four Mekong countries Vietnam, Myanmar, Thailand, and Cambodia along with India, connecting Ho Chi Minh City, Dawei, Bangkok, and Phnom Penh with Chennai. The corridor will provide opportunities for the participant countries to develop infrastructure, enhance their economic base with the region, and especially reduce the transit distance between India and ASEAN countries. Besides this, the India, Myanmar, and Thailand Motor Vehicles Agreement (IMT MVA) is in the final stage. On realization, this will become the first-ever cross border facilitation agreement between South and Southeast Asia, thus allowing free movement of cargo, passenger, and personal vehicles along the roads linking these three countries. On the issue of air connectivity, select ASEAN countries have direct flights to first and second tier cities in India, but there is ample scope for improvement. India in the past has announced a Line of Credit of $1 billion to encourage such connectivity projects between India and ASEAN, and a Project Development Fund of 5 billion rupees ($78 million) with an aim to promote manufacturing hubs in the CLMV countries. After the 1962 war against China, Indian leadership choose not to develop infrastructure in the northeast as a defense against Chinese penetration. However, the lack of infrastructure development has costed India on both the domestic and foreign policy fronts. Domestically, the disconnect of the northeast from the mainland was one of the many reasons for the rise of insurgencies in this region. On the foreign policy front, India

4 missed out on opportunities to diversify its energy needs to Myanmar and enhance its economic relations with Southeast Asia due to modest connectivity infrastructure. Giving substance to ASEAN-India relations through connectivity will gradually change the geopolitical landscape of this region. Exploring opportunities through connectivity projects will not only curb existing insurgencies, but also help India s northeastern states to develop their economic potential and integrate with mainland India. These projects will also help India to remove physical impediments to trade with ASEAN countries and further integrate the two regions for better economic and security relations. Against this backdrop, the AICS hosted by Delhi was a major step toward establishing better connectivity and catalyzing the already undertaken projects between ASEAN and India. Trade Analysis & Statistics Trade Analysis & Statistics India s total engineering exports to ASEAN+5 country wise during April-December of 2017 stood at US$ 12 billion. Some major highlights of the cumulative engineering exports from India to ASEAN+5 during April- December2017 are given below: During April-December2017, India s engineering exports to ASEAN+5 stood at US $ million which is 21.4% of the total global engineering exports of India during the same period. India s cumulative engineering exports to ASEAN+5 during this period have also increased by 27.4%. China topped the list once again for Indian cumulative engineering exports. Major engineering products exported to the country include Copper and products, Iron and Steel, Zinc and products, Electrical machinery & equipments etc and IC Engines and parts. It recorded huge positive growth of almost 90% in imports from India during April-December2017 compared to April-December2016 among the fifteen countries. Only Myanmar registered more than 50% growth in April-December2017 compared to April-December 2016 among the fifteen countries. Top 5 nations which had the highest demand for Indian engineering products during April-December of in absolute values include: Values in US$ million COUNTRY APRIL-DECEMBER 2016 APRIL- DECEMBER 2017 Growth (%) CHINA MALAYSIA SINGAPORE KOREA RP INDONESIA Source: DGCI&S, Government of India

5 Values in US$ million A comparison of top 5 nations which had the highest demand for Indian engineering products during April- December2016 and its subsequent change in April-December2017 is shown in the pie chart below: Fig 1: Change in Engineering Export among the top 5 ASEAN+5 countries (April-December2017 viz-a-viz April- December2016) April-December 2016 April-December 2017 OTHERS 31% MALAYSIA 18% SINGAPORE 17% OTHERS 33% MALAYSIA 13% SINGAPORE 13% INDONESIA 10% KOREA RP 11% CHINA 13% INDONESIA 10% KOREA RP 12% CHINA 19% Source: DGCI&S, Government of India Fig 2: Trend in Total Engineering Export in ASEAN +5 during April-December2017 (Month wise) Source: DGCI&S, Government of India Top 10 engineering panels exported to ASEAN+5 during April-December2017 viz-a-viz April- December2016 are provided in bar diagram.

6 Fig 2: Top 10 engineering panels exported to ASEAN+5 in April- December2017 viz-a-viz April- December2016 April-December 2017 April-December 2016 Products of Iron and Steel Motor Vehicle/cars Zinc and products made of zinc Ships, Boats and Floating Structures Auto Components/Parts Industrial Machinery for dairy, Electric Machinery and Equipment Aluminium and products made of Copper and products made of copper Iron and Steel Source: DGCI&S, Government of India News in Focus Centre plans to link North East to South East Asia, says Assam Governor Jagdish Mukhi The Centre is considering linking Guwahati with all major South East Asian nations by flight services as part of a plan to improve connectivity to the North East and boost the region's trade prospects, Assam Governor Jagdish Mukhi said today. A plan to develop the Assam city as a major hub for trade with the 10-nation ASEAN bloc is being worked on, he said. The governor said efforts were on to set up consulates of all the 10 member-countries of ASEAN (Association of Southeast Asian Nations) in Guwahati, and to re-open traditional trade routes between the North Eastern states and South East Asia. Read more:

7 Hope Arunachal becomes driver of India's relations with Asean countries: President President Ram Nath Kovind on Sunday said he hoped Arunachal Pradesh will become a driver of India's trade and economic relations with the Asean countries under the 'Act East Policy' of the central government. "Being a border state, Arunachal Pradesh offers a unique opportunity for trade with neighbouring countries," he told legislators at a special session of the Arunachal assembly. The Association of Southeast Asian Nations (Asean) is a regional intergovernmental organisation comprising of 10 Southeast Asian states. Kovind also urged legislators to remember they had been elected to meet the aspirations of the state's people and to render public service. Read more: Enviable Economic Growth Rates in China, India and ASEAN The economies of China, India and the member countries of the Association of South Eastern Asia Nations (Asean) will grow this year an average of 6.4 percent, figure unthinkable in regions like Latin America (1.1) or Africa (3.4). Vietnam news media reproduce today a report of the Organization for Cooperation and Economic Development (OCED) according to which the Gross Domestic Product of China and the Asean members will increase thanks to a renewed and robust domestic consumption. In India, meanwhile, there will be a slight deceleration due to the fiscal sector and the monetary reforms. Fast normalization of the monetary policy in developed countries, growth of debt in the private sector and the expanded trade restrictions are the main risks for growth in those nations, warns the report. Read more: Invite to ASEAN heads for R-Day shows India's commitment to The decision to invite the heads of all 10 ASEAN nations as guests for the Republic Day celebrations next year shows India's commitment to strengthening the ties with the regional bloc, President Ram Nath Kovind said today. He also said the growth of the Northeast region is linked to the development of neighbouring countries, including the ASEAN nations. "We have invited all the 10 leaders of ASEAN countries to be our honoured guest for the Republic Day celebrations next year. This will be a historic event and that shows our commitment to strengthening out relationship with Association of Southeast Asian Nations (ASEAN) nations," he said.

8 "The development of the Northeast is tied to the development of India's neighbours and ASEAN nations. Friendly partner countries from other regions are also integral to our vision for the Northeast and can contribute substantially," Kovind said. Read more: Asean connect: Sushma Swaraj holds meet with Governors of northeastern states As India boosts its trade, connectivity and people-to-people ties with southeast Asia under the Act East Policy, External Affairs Minister Sushma Swaraj on Thursday held an interactive meeting with the Governors of the northeastern states and the Lieutenant Governor of Andaman and Nicobar Islands. Stating that acting east through India's northeastern region, External Affairs Ministry spokesperson Raveesh Kumar tweeted that Sushma Swaraj chaired the interactive discussion with the Governors of the northeastern states and the Lieutenant Governor of Andaman and Nicobar Islands to synchronise the views of the northeastern states into the Asean-centric Act East Policy. "The interactive discussion will feed into the deliberations at the Asean-India Commemorative Summit 2018 marking 25 years of Asean-India dialogue relations featuring an enhanced role for the northeastern region, India's gateway to the Asean," Kumar said. Read more: RCEP: India hardens stand ahead of summit with ASEAN In a sign that India s Free Trade Agreement (FTA) negotiations could slow further, the Ministry of External Affairs (MEA) has taken a strong stand that the country should restrain itself from concluding any such pact from which it would not gain in the medium term. This was evident in Foreign Secretary S. Jaishankar s comments before the Department Related Parliamentary Standing Committee on Commerce in June. The panel s report on trade with Association of South East Asian Nations (ASEAN) showed that Mr. Jaishankar had called for observance of due restraint and not conclude trade arrangements which are not to our medium term advantage. According to the panel s report, the senior official submitted that a lot of our [India s free trade] agreements have not served as well as they could have. The report, released on December 18, is significant coming ahead of the ASEAN-India commemorative summit to be held on January 25, where the issue of the long-delayed Regional Comprehensive Economic Partnership (RCEP) will likely take centre stage. Read more:

9 PM: Malaysia is India's gateway to Asean Malaysia is India's gateway to the Association of Southeast Asian Nations (Asean) and beyond, leveraging on the strong links between the two countries, said Prime Minister Najib Abdul Razak. He said since 1998, India has been Malaysia's largest export destination in the South Asian region and over the last decade trade has increased by more than four-fold. "India is currently Malaysia's 10th largest trading partner, our seventh largest export destination and our 11th largest source of imports," he said in his keynote address at the Economic Times Asian Business Leaders' Conclave in Kuala Lumpur today. Read more: Shared Values, Common Destiny: The Call Of The ASEAN Inviting leaders of 10 South East Asian countries to attend the 2018 Republic Day celebrations as well as participate in a commemorative summit marking the 25th anniversary of India s ties with the bloc, Prime Minister Narendra Modi said 1.25 billion people of India are keen to welcome the Association of Southeast Asian Nations (ASEAN) leaders as the chief guests at India s 69th Republic Day celebrations. In his address at the ASEAN-India Summit in Manila, Modi said he was looking forward to a befitting culmination of the commemorative year and receiving you at the India-ASEAN Special Commemorative Summit on 25 January, 2018 in New Delhi. India and ASEAN are observing 25 years of their Dialogue Partnership, 15 years of summitlevel interaction and five years of strategic partnership this year and it is being celebrated with a wide range of activities, both in India and through missions in ASEAN member states, culminating in a commemorative summit on the theme Shared Values, Common Destiny. Addressing the 15th ASEAN-India Summit, Modi said India s relationship with ASEAN remains a key pillar of its foreign policy. Referring to India s Act East Policy, he underlined that its centrality in the regional security architecture of the Indo-Pacific region is evident. Modi made it clear that India s Act East Policy puts ASEAN at the centre of our engagement and India has enjoyed exceptionally good political and people-to-people relations with each and every country in the ASEAN region. Read more: Maritime security, digitisation to be in focus at upcoming ASEAN Summit in Delhi Prime Minister Narendra Modi is planning the red-carpet treatment for the 10 heads of state of the ASEAN countries visiting India in January for the 25th Commemorative Summit to mark the relationship of India with the economically important grouping an indication of the importance India attaches to ASEAN. The 10 heads of state have confirmed their presence as chief guests during Republic Day on January 26.

10 People in the external affairs ministry said maritime security and digitisation will be the focus of the summit on January 25. The heads of state are also expected to be part of a retreat in Rashtrapati Bhawan on January 26. Read more: India proposed $1 billion credit for connectivity with ASEAN: Nitin Gadkari India has proposed USD 1 billion line of credit to promote sea, air and road connectivity projects with ASEAN, Union Minister Nitin Gadkari said today. Apart from this, India has set up a project development fund of USD 77 million to develop manufacturing hubs in Cambodia, Laos, Myanmar and Vietnam, he said. "The ASEAN India maritime transport cooperation agreement is being negotiated...an Asian India civil aviation task force has been established to see optimisation of air connectivity. Read more: India invites ASEAN leaders to Republic Day parade in January India has invited the heads of state or government of all the 10 members of the Association of Southeast Asian Nations (ASEAN) to its Republic Day parade and celebrations on Jan. 26 next year, sources said Wednesday. India showcases its military might at its Republic Day parade every year on Jan. 26, and it will be the first time ever that so many world leaders will attend the same event as chief guests with Indian President Ram Nath Kovind and Prime Minister Narendra Modi. "The unusual step has been taken to commemorate the 70th year of India's independence from Britain as well as the 25th anniversary of India-ASEAN ties. And a day before, that is Jan. 25, Delhi will host the India-ASEAN Special Commemorative Summit," sources said. In principle, all the ASEAN leaders have accepted India's invitation to attend the Republic Day parade on the iconic Rajpath overlooking the Rashtrapati Bhawan (presidential house) in the heart of the national capital, sources added. Read more: EEPC India ASEAN+5 Territorial Newsletter Contact: Priyanka Chakraborty pchakraborty@eepcindia.net Phone no: