India’s ‘Look East’ policy has strategic goals (Comment)

Prime Minister Manmohan Singh’s three-nation visit to Japan, Malaysia and Vietnam marks a reassertion of India’s resolve to pursue its “Look East Policy” to achieve its strategic, geo-political and economic goals.

The signing of a commitment to expand trade with Malaysia next week, a number of pacts with Vietnam and an understanding with Japan on nuclear energy are the highlights of his tour.

That the Look East Policy - begun in the nineties under then prime minister P.V. Narasimha Rao in whose government Manmohan Singh was the finance minister - has received priority is clear from Manmohan’s decision not to visit New York this September for the UN 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 the Association of Southeast Asian Nations (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 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 (SAARC) has not done too well. It is hardly surprising that India’s External Affairs Minister S.M. 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 will be at the eighth ASEAN-India summit in Vietnam next week.

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 $39.08 billion (RM122 billion) in 2007-08 to $45.34 billion in 2008-09. There is great potential for trade and investment between India and ASEAN.

Forming the backdrop of the Manmohan visit to the region was one last month by President Pratibha Patil to Laos and Cambodia. Not only were cultural agreements signed but business talk was also conducted.

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 people. 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 $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 $15 million credit line between EXIM Bank and the Cambodian government for Phase II of the Stung Tassal water development project.

Cambodia is the country coordinator for India in ASEAN and will occupy the ASEAN chair in 2012, when India hosts the commemorative India-ASEAN summit in New Delhi.

In Malaysia, Manmohan will be paying 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. This will be 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 $50 billion in Indo-Malaysian trade by 2015, up from $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 also made investments in India.

Many consumer products have entered Indian homes and ASEAN firms are vying for a slice of India’s $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, too, will walk through a refurbished ‘Little India’ in Kuala Lumpur.

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

Ambassador A.N. 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 up the 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 P.V. 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 had said.

This closeness has been evident in Manmohan’s personal chemistry with ASEAN leaders visiting New Delhi in recent years.

Symbols and symbolisms do 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.

(26.10.2010-Mahendra Ved can be contacted at mahendraved07@gmail.com)