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.