India and Southeast Asia: Neighbors at ease

India and Southeast Asia: Neighbors at ease

Multifaceted relations have expanded enormously in recent
years, but there are still a few uncertainties.

By Kripa Sridharan

SINGAPORE: As regional neighbors, India and the Southeast
Asian countries in the 1990s have been on a rediscovery mission
identifying areas of co-operation that had been dormant for a
disturbingly long period of time. Indian policy in Southeast
Asia, referred to as India's "look East" policy, in the wake of
the Cold War has exhibited a refreshing degree of modification.
This has been due to a combination of factors that unfolded at
different levels such as systemic change, as reflected in the
twin phenomena of globalization and the demise of the conflict-
laden bipolar international structure; an attitudinal change on
the part of the regional states; and, governmental change within
India in the midst of a grave economic crisis.

Anyone familiar with the contours of Southeast Asia-India
relations in the past decades will readily acknowledge the uneven
nature of their mutual ties despite geographical proximity.
Relations have swung from the extremes of intensely close
interactions in the early post-colonial period to a noticeable
degree of indifference in subsequent decades. The present phase
of closer transactions marks yet another departure as it bases
itself on more pragmatic grounds.

A consideration of the developments that have occurred as a
result of this pragmatism must inevitably take into account the
dramatic economic measures India announced when a new government
assumed office in New Delhi in June 1991. It marked a shift in
India's focus towards a more market-oriented economic program
with the objective of making India an economic power of
consequence. This inevitably meant an outwardly oriented economic
strategy. Such a shift in orientation conveniently tied in with
the regionalization drive promoted by some ASEAN member-states.

India made an attempt to adopt an integrated view of foreign
and economic policies and began invoking the merits of a well-
structured foreign economic policy. The emphasis accordingly
shifted towards attracting investments, enhancing exports and
sourcing technology which were identified as the tasks Indian
diplomatic missions should be engaged in. Redirection and change
in policy were both functional and geographical in scope. On both
these counts the Asean region figured most prominently in the
calculations of Indian policy-makers thus transforming the nature
of India's interest towards the region from a secondary to a
primary one. The region's spectacular economic achievement in
terms of high growth and improvements in living standards as well
as its comparative political stability drew India towards
Southeast Asia.

Adopting a very pro-active stance, India set about publicizing
the economic measures introduced in the country through the
medium of seminars and conferences. Even though the
liberalization process was just in its infancy the positive
reaction it aroused in the region was impressive. The winds of
change sweeping India placed it at the center of the ASEAN
region's attention after a long hiatus. There was an eagerness to
explore the opportunities afforded by the vast Indian market
under a liberalized economic regime.

India's efforts to bridge the information gap was welcomed as
the region became more interested in the Indian experiment. India
perceived the linkage with ASEAN as an indispensable part of its
attempt to globalize the Indian economy. Indian foreign policy
was being pressed into service to accomplish this goal which led
to several high-profile visits to Southeast Asia. Reciprocal
visits followed from the region indicating a willingness to seek
a mutually beneficial course of interaction based on the primacy
of economics. Related concerns such as an institutional linkage
and closer political understanding also figured in the agenda
apart from the highly valued functional co-operation.

Following the abortive moves to forge institutional linkages
in the 1970s and 1980s, a renewed interest in reviving the
process could be perceived in the early 1990s which culminated in
India becoming a sectoral dialogue partner of Asean in January
1992. Even though limited in scope, the partnership was not
necessarily a limiting option as it did hold the potential of a
more regular access to the region than what had existed hitherto.
Initially, three sectors such as trade, investment and tourism
were identified, to which science and technology were
subsequently added.

Although substantive progress in the five designated areas
fell far short of expectations, nevertheless, ASEAN in December
1995 upgraded India to the level of a full dialogue partner
motivated in no small measure by the enormous potential that
closer co-operation held. Full dialogue status represents a
culmination of India's efforts to edge closer to a region which,
because of its spectacular economic achievements, is considered
particularly salient in the current context of India's foreign
policy. Institutional links between India and ASEAN have further
strengthened with India's membership of the ASEAN Regional Forum
(ARF) and India's participation in the Asean Post-Ministerial
Conference held in Jakarta in July 1996.

Howsoever valuable the dialogue partnership may be in itself,
what would make it of lasting value to both India and the ASEAN
states would be the level of economic transactions and the
congruence of political views that is engendered by the
partnership in the long run.

Institutional links may act as facilitating mechanisms but
actual performance would depend on the role of private businesses
and individuals and the multinational corporations who alone can
translate the potential into reality. This has doubtless been in
evidence in recent years.

Two-way merchandise trade between India and its trans-regional
neighbors was an insignificant US$166 million in 1975; it went up
to US$1,179 million in 1980; US$1,466 million in 1985; US$2,222
in 1990; and US$5,377 in 1995-1996. Indian estimates
euphorically visualize a three-fold jump in trade by the turn of
the century, to US$15 billion.

ASEAN's share of India's merchandise trade has gone up from
slightly more than 4 percent in 1989 to close to 7 percent in
1994-1995, but India's share in ASEAN's total trade remained a
disappointing 0.74 percent in the first half of 1995. This
imbalance attests to the importance that ASEAN holds for India as
a trading partner but not the other way around.

Trade is also unevenly distributed between India and the
different states of the region.

With some, it may look quite robust, but it is not so with
others. The breakdown of bilateral trade figures between India
and the regional states for the 1995-1996 period is as follows:
US$8 million with Brunei; US$1,131 million with Indonesia;
US$1,280 million with Malaysia; US$166 million with the
Philippines; US$2,018 million with Singapore; US$644 million with
Thailand; and, US$138 million with Vietnam. Investment figures
also show a similar unevenness. Indian figures for approved
investments from some ASEAN countries between 1991-1995 are as
follows: from Indonesia 1,222.8 million rupees; 12,523.7 million
rupees from Malaysia; 13,494.4 million rupees from Singapore;
and, from Thailand 23,490.1 million rupees.

Apart from merchandise trade and direct foreign investment
there is clear evidence of improvement in India-ASEAN trade in
services. Another important facet of this burgeoning economic
relationship is the trend in manpower flows. India has, in the
past few years, been supplying a considerable number of people
both at the top and bottom end of the skills ladder to many ASEAN
countries.

Any analysis of India's evolving ties with the region,
however, would remain incomplete without mentioning Singapore's
catalytic role in facilitating India's burgeoning relations with
its neighboring region. Of the ASEAN countries, Singapore has
exerted maximum effort in reintroducing India to the region.

Singapore's Prime Minister Goh Chok Tong was well ahead of
other regional leaders to perceive the enormous economic
potential that could flow from the reforms in India and has
been the most vocal supporter of India's closer ties with
Southeast Asia. Not content with the remarkable surge in
bilateral ties, Singapore has also been keen on improving India's
multilateral and multidimensional interactions with the Southeast
Asian region and beyond.

But support such as this must be matched by perseverance on
the part of India to press ahead with the reform program. India's
Southeast Asian neighbors while eager to exploit the various
potentials in the Indian market cannot help noticing the
bottlenecks that still impede investment.

Senior Minister Lee Kuan Yew's reported observation during his
visit to India in January 1996 that while reforms were
irreversible, unless they were accelerated, India risked being
left behind in the global economic race, is reflective of the
general uncertainty surrounding the pace of reforms that is being
increasingly determined by political expediency rather than
economic prudence notwithstanding the commitment to the Common
Minimum Program crafted by the present coalition government.

Conflicting signals on proposals such as the plan by Singapore
Airlines and India's Tata group to launch a domestic airline is
only bound to dampen investor confidence.

In sum, India's altered policy towards its neighboring region
in the 1990s is a product of a conscious choice. Policy
readjustment was induced by changes in the external and domestic
environments which in turn exposed the need for a clearer
delineation of its foreign economic policy. But such a policy
cannot be sustained merely on a diet of promises. Policy
readjustment must be followed by meaningful restructuring to make
the necessary impact.

The intriguing question is: does India have the will to do it?

Dr. Kripa Sridharan is a Lecturer with the Department of
Political Science, National University of Singapore.