Formation of ASEAN and purpose Member List 1. 2. 3. 4. 5. 6. 7. 8. 9. 10.

Brunei Cambodia Indonesia Laos Malaysia Myanmar Philippines Singapore Thailand Vietnam

ASEAN, established in August 1967, has, for long, been the only official organization that pursued regional economic integration in East Asia. The objective of the formation was twofold. First, it was a means to promote peace and stability in the region. At that time, Southeast Asia was divided by ideological conflict and war. Coupled with territorial disputes and racial tensions between neighbors, there was a possibility that the differences could degenerate into a full-blown armed conflict, leading to a prolonged fragmentation of Southeast Asia. Another motivation for the formation was to contain the spread of communism to Southeast Asian countries. China then openly adopted a policy to export revolutions to Southeast Asia and had supported a number of local insurgency movements led by the communist parties in Indonesia, Malaysia, the Philippines, Singapore and Thailand. Now ASEAN has established strong economic linkages with major trading partners like China, India, Japan and the Republic of Korea, creating closer economic partnerships aimed towards ending up as FTAs, to boost market access for ASEAN exports and provide businesses with greater choice of capital and intermediate products. It is responsible for several economic integration initiatives in East Asia including the ASEAN Free Trade Agreement (AFTA), the ASEAN Framework Agreement on Services (AFAS) and the ASEAN Investment Area (AIA). As part of the ASEAN vision 2020, it aims to establish an ASEAN Security Community, ASEAN Economic Community, and ASEAN Socio-Cultural Community by 2020. By achieving a free flow of goods, investment, services and a reduction in poverty and socio-economic disparity across the region, it hopes to develop into a single market and production base by 2020. Priority sectors which ASEAN countries has Competitive Advantage 11 priority sectors which ASEAN enjoys competitive advantage. These 11 priority sectors are automotive, wood-based products, air travel and tourism, e-ASEAN, electronics, rubber-based products, textile and apparels, agro-based products, fisheries, information and communications technology (ICT) and healthcare. The respective Country Coordinators in these 11 priority integration sectors are as follows: (i) (ii) (iii) Indonesia: wood-based and automotive products; Malaysia: rubber-based products, and textiles and apparels; Myanmar: agro-based products and fisheries; The Philippines: electronics; Singapore: e-ASEAN and healthcare; Thailand: air travel and tourism.

(iv)
(v)

(vi)

ASEAN Vs INDIA ASEAN sees India as an emerging power in Asia and is keen to develop relations with it that would be beneficial to countries within ASEAN and to the region as a whole. It realizes that India possesses large strategic capabilities and can be a strong stabilizing force in the region. Economically, India, with its burgeoning middle class, can be a significant market for ASEAN manufactures and consequently, an important source of welfare for the region. There is a lot that ASEAN can gain from Indias development in its service sector and it looks to develop wide ranging economic partnerships with her. India understands that the ASEAN grouping consists of countries which have achieved significant development in the past 20 years. It is in its interest to establish beneficial linkages with the countries to benefit from their past experience and current standing. There is large potential in the synergies between its economy and that of the ASEAN countries and is keen to strengthen its economic ties with them. ASeans strategic location makes its stability crucial for Indias energy and economic security and it looks to develop its influence in the region by forging vital ties with ASEAN. As a precursor to attaining the stated long-term objective of a India-ASEAN Regional Trade and Investment Area (RTIA), and recognizing the need to further promote and facilitate their cooperation and utilization of greater business opportunities provided by the India ASEAN RTIA, India and the ten Member countries of ASEAN signed the India-ASEAN Framework Agreement on Comprehensive Economic Cooperation (CECA) in Bali, on 8th October, 2003. This forwardlooking Agreement is aimed at forging a closer economic partnership in the 21st century between the ASEAN Member countries and the Republic of India by minimizing barriers and deepening economic linkages between the trading partners, lowering costs, increasing intra-regional trade, investment and productive efficiency, and carries forward the historical economic and commercial ties established between the peoples of the two regions since time immemorial. The CECA is expected to create a large market of over 1.5 billion people, with a combined current GDP of $1.2 trillion, and will cover agreements in investment and services, in addition to trade in goods. Accepting that the total size of the market is an important determinant of realization of the potential gains from a RTA, the India-ASEAN CECA is a step forward in the attempt by the East Asian economies to carve out a trading block which can somewhat counter the distortions created by the existing trading blocks in the Western hemisphere, viz. NAFTA and the EU25.

India and ASEAN Countries at a Glance

Since its start about a decade ago, the partnership between India and the Association of South East Asian Nations (ASEAN) comprising Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand and Vietnam has been developing at quite a fast pace. India became a sectoral dialogue partner of ASEAN in 1992. Mutual interest led ASEAN to
invite India to become its full dialogue partner during the fifth ASEAN Summit in Bangkok in 1995. India also became a member of the ASEAN Regional Forum (ARF) in 1996. India and ASEAN have been holding summit-level meetings on an annual basis since 2002. In August 2009, India signed a Free Trade Agreement (FTA) with the ASEAN members in Thailand. Under the ASEAN-India FTA, ASEAN member countries and India will lift import tariffs on more than 80 per cent of traded products between 2013 and 2016, according to a release by the Ministry of Commerce and Industry. In January 2010, Singapore, Malaysia and Thailand accepted the FTA on goods. The other seven ASEAN countries are expected to operationalise the FTA by August 2010.

India and ASEAN are currently negotiating agreements on trade in services and investment. The services negotiations are taking place on a request-offer basis, wherein both sides make requests for the openings they seek and offers are made by the receiving country based on the requests. India has made requests in a number of areas including teaching, nursing, architecture, chartered accountancy and medicine as it has a large number of English speaking professionals in these areas who can gain from job opportunities in the ASEAN region. India is also keen on expanding its telecom, IT, tourism and banking network in ASEAN countries. Trade The deepening of ties between India and ASEAN is reflected in the continued buoyancy in trade figures. Indias trade with ASEAN countries has increased from US$ 30.7 billion in 2006-07 to US$ 39.08 billion in 2007-08 and to US$ 45.34 billion in 2008-09. During April September 2009-10, Indias trade with ASEAN was US$ 20.19 billion, according to data released by the Ministry of Commerce and Industry. In 2008-09, India's exports to ASEAN totalled US$ 19.14 billion. During April-December 2009-10, India exported goods worth US$ 12.8 billion to ASEAN, according to data released by the Ministry of Commerce and Industry. India imported goods worth US$ 26.3 billion in 2008-09 from ASEAN. During the period AprilDecember 2009-10, India's imports from ASEAN totalled US$ 18.09 billion, according to data released by the Ministry of Commerce and Industry. Singapore The growing bilateral economic relationship is reflected in the rapidly rising bilateral trade between Singapore and India. Singapore continues to be the single largest investor in India amongst the ASEAN countries and the second largest amongst all countries with foreign direct investment (FDI) inflows into India, totaling US$ 2.4 billion in 2009-10. The cumulative FDI inflows from Singapore during April 2000 and March 2010 were US$ 10.2 billion, according to data released by the Department of Industrial Policy and Promotion (DIPP). The total bilateral trade during 2008-09 was US$ 16.1 billion, an increase of 3.86 per cent over US$ 15.5 billion in 2007-08, according to data released by the Ministry of Commerce and Industry. During 2008-09, India exported goods worth US$ 8.45 billion to Singapore. During AprilDecember 2009-10, Indian merchandise exports to Singapore totaled US$ 5.12 billion, comprising mainly of mineral fuels and oils, ships, boats and floating structures and natural pearls, gems and jewellery, according to data released by the Ministry of Commerce and Industry. According to a press release issued by the Ministry of Commerce and Industry, in May 2010, Mr Anand Sharma, the Union Minister of Commerce and Mr Lim Hng Kiang, Minister for Trade and Industry, Singapore, agreed on a bilateral economic roadmap to take the India-Singapore Comprehensive Economic Cooperation Agreement (CECA) forward in the coming five years. As per the roadmap the two countries will work towards doubling the annual bilateral trade by 2015. Moreover, they will promote greater business and investment flows by identifying ways in which

Indian businesses can leverage on Singapore as a business hub in the Asia Pacific to support their international expansion. The two countries will also explore and develop co-operation, in science and technology, intellectual property rights, and media. India-Singapore Bilateral Economic Roadmap includes: Increase two-way flow of tourists, businessmen and professionals Expedite conclusion of mutual recognition agreements (MRAs) for dentistry, medical, nursing, architecture, accountancy and company secretary professionals on priority Explore expansion of the provisions of CECA to liberalise and facilitate movement of Indian professionals to Singapore. Develop closer co-operation in tourism

Moreover, according to Standard Chartered Bank, the business between India and Singapore is set to double in the next five years. The number of Singapore-based companies setting up operations in India, 350 at present, is expected to double in the next five years. Similarly, Indiabased business community in Singapore is likely to increase to 5,500 companies from the present 4,000 in the next two and a half years. Malaysia The bilateral economic relationship between India and Malaysia has been steadily moving ahead. Malaysia has been a huge source of FDI for India. In fact, Malaysia is the 25th largest overall investor and third largest investor among ASEAN countries with a total inflow of US$ 252.97 million during the April 2000-March 2010 period, according to data released by the Department of Industrial Policy and Promotion. Bilateral trade among the two countries amounted to US$ 10,604.75 million during 2008-09, an increase of 23.48 per cent over 2007-08, according to data released by the Ministry of Commerce and Industry. India exported goods worth US$ 3.42 billion to Malaysia in 2008-09. During April-December 2009-10, Indias exports to Malaysia totalled US$ 2.14 billion, comprising ships, boats and floating structures, mineral oils and fuels, and organic chemicals, according to data released by the Ministry of Commerce and Industry. Indians play an important role in promoting tourism in Malaysia. Following a 7.1 per cent growth in revenues from Indian tourists in 2009, Malaysia expects 650,000 visitors from India in 2010, according to the Director General of Malaysia Tourism. Moreover, Indian biotech companies are increasingly looking at making investments in Malaysia. Malaysia is positioning itself as a cost-competitive country and a regional hub for global biotech companies. It is attracting Indian companies with a large number of sops including a 10-year tax holiday, duty exemptions, customised incentives for large investments, access to ASEAN markets through free trade agreements and no restrictions on equity. Thailand Bilateral trade between the two countries touched US$ 4.6 billion in 2008-09, as compared to US$ 4.12 billion in 2007-08, registering a growth of 12.9 per cent, according to data released by the Ministry of Commerce and Industry.

India exported goods worth US$ 1.94 billion in 2008-09 and worth US$ 1.25 billion during AprilDecember 2009-10, to Thailand which included natural pearls, gems and jewellery, residue and waste from food industries and organic chemicals, according to data released by the Ministry of Commerce and Industry. Total FDI inflow during the period April 2000-March 2010 from Thailand was US$ 77.97 million, according to data released by the Department of Industrial Policy and Promotion. India and Thailand are targetting bilateral trade worth US$ 12 billion by 2012. In May 2010, the Thai Deputy Minister of Commerce, Alongkorn Ponlabhoot said, "We are hoping that the increase in trade would be generated through cooperation under various agreements like the BIMSTEC, the Asean-India FTA and the proposed Thailand-India FTA." Indonesia Bilateral trade between India and Indonesia totalled US$ 9.3 billion in 2008-09, an increase of 32.08 per cent over US$ 6.99 billion in 2007-08, according to data released by the Ministry of Commerce and Industry. During the period 2008-09, India exported goods worth US$ 2.56 billion to Indonesia. During April-December 2009-10, India exported goods worth US$ 2.3 billion to Indonesia comprising mainly of organic chemicals, mineral fuels and ships and boats, according to data released by the Ministry of Commerce and Industry. India and Indonesia are targetting bilateral trade worth US$ 20 billion by 2020 according to Indonesian ambassador to India, Andi M Ghalib. Indonesia is an important source of FDI for India. It is the 16th largest FDI investor amongst all countries and the second largest amongst the ASEAN countries. FDI inflows from Indonesia into India totalled US$ 604.28 million during April 2000-March 2010, according to data released by the Department of Industrial Policy and Promotion. Myanmar During 2008-09, India exported goods worth US$ 221.64 million to Myanmar comprising mainly of pharmaceuticals and iron and steel. Bilateral trade stood at US$ 1.15 billion during 2008-09, an increase of 15.7 per cent over US$ 994.45 million in 2007-08, according to the latest data by the Ministry of Commerce and Industry. During April-December 2009-10, Indias exports to Myanmar totalled US$ 159.77 million, according to the latest data by the Ministry of Commerce and Industry. FDI inflows from Myanmar into India totalled US$ 8.96 million in the period April 2000-March 2010, according to data released by the Department of Industrial Policy and Promotion. Vietnam Bilateral trade between India and Vietnam grew to US$ 2.15 billion in 2008-09 from US$ 1.78 billion in 2007-08, registering a growth of 20.38 per cent, according to the latest data by the Ministry of Commerce and Industry. Indian exports to Vietnam in 2008-09 totalled US$ 1.7 billion, while India exported goods worth US$ 1.25 billion from Vietnam during April-December 2009-10 comprising mainly of residues and

wastes from food industries, animal fodder, meat and cereals, according to the latest data by the Ministry of Commerce and Industry. Philippines Bilateral trade between India and Philippines was worth US$ 998.54 million in 2008-09 as compared to US$ 824.87 million in 2007-08, an increase of 21.05 per cent, according to the latest data by the Ministry of Commerce and Industry. Indian exports to Philippines during 2008-09 totalled US$ 743.77 million. During April-December 2009-10, India exported goods worth US$ 534.38 million to Philippines, comprising chiefly of meat, iron and steel and vehicles other than railways, according to the latest data by the Ministry of Commerce and Industry. Cambodia During 2008-09, bilateral trade between the two countries stood at US$ 49.61 million. India exported goods worth US$ 46.90 million to Cambodia in 2008-09. During April-December 200910, India exported goods worth US$ 30.53 million, chiefly comprising pharmaceuticals, cotton and tobacco, according to the latest data by the Ministry of Commerce and Industry.