The Hindu : ASEAN and lost opportunities

Online edition of India's National Newspaper
Friday, Oct 25, 2002

Opinion

Opinion - Editorials

ASEAN and lost opportunities

THE NEED FOR strengthening India's economic ties with the ASEAN was once again voiced quite vociferously at the business summit that concluded last week. There can be no two opinions at all on the desirability of boosting trade and commerce with the ten-member regional group. However, previous efforts in this direction have unfortunately not yielded the desired results. Four important members of the ASEAN — Singapore, Malaysia, Indonesia and Thailand — have at various times in the recent past taken special initiatives to boost trade with India, without commensurate results. It is noteworthy that several State Governments in India have tried to tap the special strengths of a few of these countries — as for example Singapore's known status as a haven for electronics and recently bio-technology — but again with disappointing results. Hence, for the latest summit to be branded as something more than rhetoric and theoretical there must be a significant breakthrough in many directions.

The point has been made that India has not benefited from its traditional multifaceted relationship with South East Asia. A long historical association, which was not exploitative in any sense, could have provided the base for a considerably enhanced trade relationship. Even today some of these countries, Singapore, Thailand and Malaysia, are important tourist destinations for the Indian middle class. There has been a vast potential in India to cater to the specialised educational requirements of students from these countries, especially in the higher echelons. Only now have some attempts been made in exchanging students between India and countries such as Singapore. It is a fact of the increasingly globalised world that the migration of students among countries has paved the way for a more meaningful exploitation of trade and commerce.

However, despite the lost opportunities, there is apparently room for optimism, as the tenor of the recent summit shows. A study conducted by McKinsey, the consultancy firm for summit hosts FICCI, expects trade between India and ASEAN to grow between 15 and 18 per cent over the next five years and that ASEAN'S share in India's trade will grow from the present 6 to 8 per cent. It is not clear as to whether the approach from now on can not only counter the past legacy, but also reckon with a certain heterogeneity among the member-countries that might nullify the advantages of an unified strategy vis-a-vis ASEAN.

For instance, India's trade deficit with Singapore has been increasing — from Rs.845 crores in 1997-98 to Rs.1,582 crores in 2001-02 while with Malaysia it had been decreasing from Rs.2,561 crores to Rs.1,717 crores during the same period. Obviously, Malaysia's efforts to boost its commodity exports to India, especially palm oil, will succeed only if India lowers its import tariff. Such an appeal was made by no less than the visiting Malaysian Prime Minister, Mahathir Mohammad.

However, given the drought conditions in India, it is unlikely that such a sop will be given at this juncture. It will be highly detrimental to domestic oil seed growers. Again, there is a difference in the strategy adopted by individual ASEAN countries in conducting trade with non-members. Singapore favours a bilateral approach while Malaysia a regional one. Under such circumstances, the suggestion endorsed by both the Malaysian and Indian Prime Ministers to set up a Regional Trade and Investment Area between India and ASEAN bristles with practical difficulties. All in all, it is difficult to gauge the efficacy of business summits including the latest one concerning ASEAN. Yet, to the extent they open the doors to fresh ideas, though not immediately to trade and commerce, they should be commended.

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