India’s ‘Look East’ ties

Author: Mahendra Ved, New Delhi

Prime Minister Manmohan Singh’s three-nation visit to Malaysia, Vietnam and Japan marked a reassertion of India’s resolve to ‘Look East’ to achieve its strategic, geopolitical and economic goals. Closely preceding the visit of US President Obama and the G20 summit in Seoul, this tour was of significant strategic importance.

Manmohan Singh discusses India-Japan relations with Japanese Prime Minister Naoto Kan

The highlights of his tour were: the signing of a commitment to expand trade with Malaysia; a number of pacts with Vietnam; and an understanding with Japan on nuclear energy.

It is clear that the Look East Policy received priority given Manmohan’s decision not to visit New York for the United Nations General Assembly, an ideal venue for world leaders to hold bilateral discussions on the sidelines.

The man who pushed for the free trade agreement (FTA) with ASEAN wants to reach out to a 550 million-strong consumer market that exudes a magnetic appeal to the world’s industry. Besides the large consumer base, the East Asia region is rich in raw materials and energy, which India badly needs for its future development.

India has obvious constraints in its own region, where the South Asian Association for Regional Cooperation has not done too well. It is hardly surprising that India’s external affairs minister, SM Krishna, recently pointed to the dynamic growth rates posted in trade and investment in East Asia and Southeast Asia.

Cooperation between India and Asean has moved at a fast pace since India launched its economic reforms and the Look East Policy in the 1990s. India was a full dialogue partner at the fifth ASEAN Summit in Bangkok in 1995 and became a member of the ASEAN Regional Forum in 1996. India and ASEAN have held summit meetings annually since 2002.  Manmohan Singh was at the Eighth ASEAN-India summit in Vietnam.

There is great potential for trade and investment between India and ASEAN. An FTA with ASEAN signed in August last year in Thailand will boost the group’s economic and trade relations with India. India’s trade with ASEAN has surged from US$39.08 billion in 2007-08 to US$45.34 billion in 2008-09.

President Pratibha Patil’s visit to Laos and Cambodia formed a backdrop to Manmohan visit to the region. The state visits have, in the past, been largely ceremonial in nature. But now, business delegations accompany the head of state. Patil’s delegation had 45 business persons. This is a recent trend and constitutes a significant change that allows economic ties to drive bilateral and multilateral relations.

Patil said the engagement with Cambodia and Laos was set to substantially expand, and would be taken forward bilaterally and through ASEAN. In Laos, India extended a credit line of US$72.55 million to finance two power projects. In Cambodia, Patil signed two agreements, the first between the comptroller and auditor-general of India and the National Audit Authority of Cambodia, and the second for a US$15 million credit line between EXIM Bank and the Cambodian government for Phase II of the Stung Tassal water development project.

In Malaysia, Manmohan Singh actually paid a return visit within nine months of Prime Minister Datuk Seri Najib Razak’s successful trip to New Delhi in January. Najib had urged India to conclude the Comprehensive Economic Cooperation Agreement (CECA) and this will now materialise, which is a landmark.

Trade with Malaysia and ASEAN could double and, in some cases, even triple. Indeed, Najib, according to one report, has set an ambitious target of US$50 billion in Indo-Malaysian trade by 2015, up from US$7.06 billion last year. The CECA is expected to facilitate the flow of trade and investment between the two nations further. The focus areas of cooperation include construction, road and transport management, information technology, pharmaceuticals and biotechnology.

Malaysia has emerged as a major potential investor in India, with planned investments in power, oil refineries, telecommunications and electrical equipment industries, besides highway and other infrastructure development projects. Also, there are more than 400 Indian companies, including 61 Indian joint ventures, operating in Malaysia.

Many leading Indian companies have made substantial investments in a number of ASEAN countries and, conversely, ASEAN countries have made investments in India.

Many consumer products have entered Indian homes, and ASEAN firms are vying for a slice of India’s US$500 billion infrastructure pie.

The Southeast Asian region has a large Indian diaspora. So, just as Najib made it a point to visit Chennai in January, Manmohan Singh, too, walked through a refurbished ‘Little India’, the business district of ethnic Indians.

While visits have their own place in building relations, there is need for drawing a bigger, long-term course.

Ambassador AN Ram, a former Indian envoy to Thailand, suggests a 10-year action plan for consolidating India’s ties with the region. This should include, among other things, more sporting events like the India-ASEAN car rally and promoting greater public participation. There should be an India-ASEAN network of think-tanks to sustain a broad-based relationship.

The Indo-ASEAN FTA, Indo-Thai FTA and India-Singapore CECA are central to building relationships. Together, India and ASEAN could amount to the creation of a huge market embracing a combined population of nearly 1.8 billion, with strong economic and political clout.

India and the region could some day become accessible by land, with the trans-Asian rail and road network.

Indian leaders have, generally, enjoyed a cordial relationship with ASEAN leaders. Indeed, the late Indian prime minister PV Narasimha Rao once expressed surprise that his hosts had entitled his address as one about ‘new relations.’ India’s ties with Southeast Asia had been ancient and have never ceased, he said.

Symbols and symbolisms play their role in forging ties. Manmohan was one among millions who left from and will return home to New Delhi at an airport that has been refurbished to world-class standards by an Indian-Malaysian joint venture.

Mahendra Ved is a New Delhi-based writer and columnist

This article was originally published here at New Straits Times.