ASEAN-India Connectivity: Towards an Action Plan
Prabir De RIS, New Delhi
International Conference to Commemorate the 20th Anniversary of ASEAN-India Cooperation
Chulalongkorn University, Bangkok 20-21 September 2012 ASEAN is India’s Major Trade Partner • ASEAN is India’s one of the largest trading partners, bilateral trade in goods crossed US$ 75 billion in 2011. • India’s trade with ASEAN is likely to cross US$ 100 billion in 2013 (India-ASEAN Business Forum, New Delhi Meeting, 2011) • India-ASEAN FTA, took in effect from 1 January 2010, negotiation on CEPA ongoing. • Major challenge – infrastructure gap (both national and regional) ~ connectivity gap! Master Plan of ASEAN Connectivity • At present, Asian market is fragmented and is often an obstacle to free flow of goods and services, and the administrative or technical barriers in the market result in expensive mobility within Asia. • Asia’s aim of single market depends on the existence of a seamless, flexible, and efficient logistics and transportation system. • In 2010, the East Asia Summit (EAS) leaders adopted a comprehensive strategy for smart, sustainable, and inclusive growth. • At the 17th ASEAN Summit in 2010, ASEAN leaders adopted the Master Plan on ASEAN Connectivity, which identifies key strategies and actions to enhance the region’s connectivity in three dimensions: physical, institutional, and people to people. Comprehensive Asia Development Plan (CADP) • The Comprehensive Asia Development Plan (CADP), designed by ERIA for East Asia Summit (EAS) members, provides a grand spatial design for infrastructure development in East Asia, armed with a consistent conceptual framework based on new waves of international trade theory such as the fragmentation theory and new economic geography. CADP, Phase II ASEAN-India Connectivity Plan • CADP has successfully completed ASEAN-India connectivity plan to develop a basic strategy to enhance the ASEAN–India physical connectivity. • On-behalf of ASEAN Secretariat, the study was completed by ERIA in 2011. • RIS was a team member. Driving Force - Production Blocks and Service Links (Connectivity)
Connectivity
Source: ERIA Agglomeration and Dispersion in New Economic Geography
Source: ERIA Trade, Infrastructure and Regional Cooperation – Strategy • East Asian integration is market driven, facilitated by fragmentation of production • Two major windows: – FTA (software) – Connectivity / services links (hardware) • Connectivity in India shows two structures: – National connectivity [DMIC, DFC, NMDP, a.o] – Regional connectivity [TH, KMTTP, MIEC, a.o] • Regional connectivity with ASEAN two axis: – NER [multimodal & intermodal type] – Southern region [multimodal] Benefits of Better Connectivity 1. Better connectivity generates growth, attracts investment, creates employment, and reduces poverty.
2. Better connectivity infuses new dynamism in regional production network. – Stronger production network would help deepen global (or regional) integration process.
3. Better connectivity reduces trade costs. – The catalyst to regional production network is lower trade costs. Strengthening Links with East Asia: India’s Look East Policy • to expand trade and investment with East Asia • to intensify production networks with East Asia • to improve economic efficiency to reduce transportation costs • to complete the South and East Asian transport networks and improve links with other regions/ subregions • to encourage use of different modes of transportation India – ASEAN Trade India’s Trade with ASEAN and ASEAN+3 (a) Volume (US$ billion)
2000 2006 2007 2010 CAGR* (%)
ASEAN 7.13 28.36 36.96 21.83 21.83
ASEAN+3 18.02 73.45 98.39 132.71 24.73 World 92.96 297.23 388.80 551.91 19.50
(b) Global share (%)
2000 2006 2007 2010
ASEAN 7.67 9.54 9.51 9.31
ASEAN+3 15.67 22.34 23.11 24.05
World 100.00 100.00 100.00 100.00
Source: DOTS, IMF India’s Export to ASEAN, 2009
Export (US$ bln.) Total all products 17.899 Primary commodities, excluding fuels 4.361 All food items 2.447 Manufactured goods 9.399 Chemical products 1.904 Machinery and transport equipment 5.233 Other manufactured goods 2.261 Iron and steel 0.717 Textile fibres, yarn, fabrics and clothing 0.613 Mineral fuels, lubricants and related materials 3.147 ASEAN & India: Export Destination and Import Origin For ASEAN India as export India as import destination origin 1990 2000 2009 1990 2000 2009 All commodities 1.3% 1.6% 3.3% 0.9% 1.0% 2.1% Manufactured 1.1% 1.3% 2.7% 0.9% 0.8% 1.7% goods Machinery 0.9% 1.0% 2.4% 0.3% 0.3% 0.9%
For India ASEAN as export ASEAN as import destination origin 1990 2000 2009 1990 2000 2009 All commodities 5.4% 6.5% 10.6% 6.3% 11.0% 9.1% Manufactured 5.3% 5.9% 9.2% 5.7% 9.9% 7.5% goods Machinery 12.7% 11.6% 19.2% 6.4% 17.1% 9.9% India’s Machinery Exports by Destination Industry Composition of ASEAN’s Total Merchandise Exports to India Industry Composition of ASEAN’s Total Merchandise Imports from India Exporter Country Composition of the ASEAN’s Machinery Exports to India Importer Country Composition of the ASEAN’s Machinery Imports from India Major Machinery Goods Imported by the ASEAN Member States from India in 2009
Value Share of the HS codes in (million country’s Country the HS 1992 Commodity description Type US$,constant machinery imports classification 2005) from India Singapore No. 8525.20 Transmit-receive apparatus, including mobile Products 163 21% phones
No. 8704.23 Diesel powered trucks weighing > 20t Products 77 10% Indonesia No. 8525.20 Transmit-receive apparatus, including mobile Products 379 57% phones
No. 8704.10 Dump trucks designed for off-highway use Products 72 11% Thailand No. 8525.20 Transmit-receive apparatus, including mobile Products 125 32% phones
No. 8708.40 Transmissions for motor vehicles Parts 58 15% Malaysia No. 8525.20 Transmit-receive apparatus, including mobile Products 30 11% phones
Viet Nam No. 8525.20 Transmit-receive apparatus, including mobile Products 101 42% phones
No. 8901.90 Cargo vessels other than tanker or Products 75 31% refrigerated Importance of NER • NER comprising 4% of India’s population and 9% of India’s geographical area presents 3% of India’s gross domestic product (GDP). • NER is services driven economy – 59% of annual average income coming from services sector. • India’s international borders with Bangladesh (4097 km) and Myanmar (1643 km) – Adjacent economies, but economically less integrated. • NER is India’s gateway to East Asia – 96% of NER constituting international boundaries • India’s trade with Bangladesh: US$ 2.79 billion in 2009 – Export: US$ 2.50 billion – Import: US$ 0.30 billion • India’s trade with Myanmar: US$ 0.97 billion in 2009 – Export: US$ 0.21 – Import: US$ 1.12 • Barriers to trade are mostly supply-side constraints –‘behind the border’ barriers matter most. NER as India’s Gateway to the East
BCIM FTA in operation
MGC SAARC
TII TI TI
FTA under negotiation EAS ASEAN (ASEAN+6) TI FTA in operation TI NER TI TI
TII TI BIMSTE C APTA FTA under negotiation FTA in operation
SASEC GMS Myanmar’s Trade (US$ million)
Myanmar-China Myanmar-Thailand Myanmar-India Myanmar-Bangladesh Year Normal Border Total Normal Border Total Normal Border Total Normal Border Total
1997 -1998 202.00 145.81 347.81 245.60 83.86 329.46 310.65 22.25 332.90 70.98 5.74 76.72
1998 -1999 176.69 194.29 370.98 382.17 39.34 421.51 232.71 3.61 236.32 190.00 9.22 199.22
1999 -2000 290.66 96.39 387.05 391.54 43.7 435.24 280.11 8.55 288.66 17.81 22.28 40.09
2000 -2001 194.40 267.628 462.03 478.29 107.539 585.83 329.42 16.004 345.42 33.53 20.569 54.10
2001 -2002 260.54 276.35 536.89 924.48 170.586 1095.07 408.05 19.37 427.42 32.87 31.125 63.99
2002 -2003 500.76 331.797 832.56 1246.72 74.035 1320.75 418.36 11.798 430.16 51.38 26.718 78.10
2003 -2004 307.37 387.116 694.49 892.94 78.568 971.51 460.32 10.279 470.60 55.13 25.186 80.32
2004 -2005 288.85 496.711 785.56 1329.53 121.936 1451.47 412.24 15.195 427.43 44.86 22.759 67.62
2005 -2006 352.27 481.36 833.63 1394.44 199.02 1593.46 553.84 15.41 569.25 40.10 20.87 60.97
2006 -2007 552.10 749.76 1301.86 2411.63 300.23 2711.86 878.09 15.77 893.86 33.79 26.86 60.65
2007 -2008 1384.845 977.429 2362.27 2888.35 304.74 3193.09 885.93 14.83 900.76 95.54 32.5 128.04
2008 -2009 1384.438 986.598 2371.04 2698.67 327.35 3026.02 940.32 9.88 950.20 92.82 24.65 117.47
2009 -2010 1774.640 1076.811 2851.45 3301.90 274.65 3576.55 1192.92 13.74 1206.66 62.31 18.47 80.78
Source: Dr Tin based on CSO Myanmar Trade Structure
Transit Trade Links
Finished products China, Myanmar Thailand, etc. NER
Resource – Industry Links Bangladesh Facilities at LCSs at Moreh, India Facility Available (Y) Not Available (N) Food testing laboratory N Availability of electricity Y Telephone Y Internet N EDI (Icegate) N Weighbridge N Warehouse N Cold storage N Parking place Y Transshipment platform / Transit sheds N Secretarial assistance (fax, photocopy etc.) N Drinking water Y Drivers’ rest room Y Health centre N Hotels and restaurants N Separate entry and exit gates Y Banks N Courier / Post Office N Servicing centre / Vehicle repair shops N
Source: RIS Poor Links in Regional Infrastructure
Sector Countries Particular
Kolkata – Dhaka India and Bangladesh Road transportation Agartala – Dhaka (passenger bus services) India and Myanmar No link so far
India and Myanmar No link so far Rail transportation (passenger train services) India and Bangladesh Kolkata - Dhaka
India – ASEAN5 Many
Aviation (international India - Bangladesh Many flight connection) India and Myanmar Kolkata – Yangon (weekly)
India and Myanmar No link Inland waterways (cargo) India and Bangladesh Yes Key Impediments to ASEAN-India Trade • High NTBs • High non-physical barriers • Inadequate infrastructure – national and regional (inadequate and poor stock and link of infrastructure) • Lack of trade facilitaiton and absence of regional transit trade • Mismatch of standards • Unfavourable currency in border trade • Poor institutions and governance • High trade costs (transport costs outweigh tariffs) Nonphysical barriers
• Inconsistent and difficult border crossing formalities and procedures • Restrictive visa requirements • Restrictions on entry of motor vehicles • Different standards on vehicles and drivers across countries • Transit traffic difficult/not allowed Insufficient number of flights
• Many ASEAN countries not yet connected with Airlines as on July 2012 India by direct flights. Sector No of flights per day
• ASA is yet to be signed India - Thailand 22 with some ASEAN countries India - Malaysia 9 • Airlines want 5th FR, not India - Singapore 20
accepted by country’s India - Myanmar 1 regulators • ASEAN-India open sky India - Philippines 1 policy yet to be utlized. Source: DGCA ASEAN-India Passenger Movement
Passenger Movement 2000-01 2010-11 AAGR (%)
India - Thailand 510655 2081881 30.77
India - Malaysia 319736 881906 17.58
India - Myanmar 9753 10738 1.01
India - Singapore 1176888 2043398 7.36 India - Brunei 4722 India - Indonesia 10497
Source: DGCA ASEAN-India Freight Movement
Freight Movement 2000-01 2010-11 AAGR (%) India - Thailand 12412 72633 48.52 India - Malaysia 8585 30459 25.48 India - Myanmar 105 5 -9.52 India - Singapore 63074 96883 5.36 India - Brunei 341 India - Indonesia 364
Source: DGCA India – ASEAN Connectivity Projects Important Regional Physical Connectivity Projects
• Kaladan Multimodal Transit Transport Project • India – Myanmar – Thailand Trilateral Highway • Delhi – Hanoi Railway Link • Mekong – India Economic Corridor •Aizawl • ODI INDIA IN ROAD •I N D I A
•I N D I A •B A N G L A D E S H •Lawngtlai
•Myeikwa (IM Border) ODIN MYANMAR ROAD
•Kaletwa (Ch 225 km
•Myanmar •Paletwa Ch. 158 Km
•Kyauktaw DISTANCES T W I Kolkata Sittwe 539 km
Sittwe Paletwa 158 km •Bay of Bengal Paletwa Kaletwa 67 km
Kaletwa Myeikwa (IM Border) 62 km
Myeikwa (IM Border) Lawngtlai 100 km •Sittwe Lawngtlai Aizawl 334 km Kaladan Multimodal Transit Transport System Ch. 0.0 km Project Details
• Piloted and funded by MEA .
• Based on DPR prepared by RITES in 2003.
• Project area entirely in Myanmar.
• Transport infrastructure components planned originally
– Port/IWT development between Sittwe and Kaletwa along Kaladan river
– Road form Kaletwa to Indo- Myanmar border(Mizoram) Project Components
• Fairway development/ Sea-dredging in Sittwe port area
• Construction of Port/IWT terminals at Sittwe
• Fairway development/Dredging on Sittwe - Paletwa stretch of Kaladan river (158 Km)
• Construction of IWT Terminal at Paletwa
• Construction of 6 IWT vessels (300 ton each)
• Highway (129 kms) from Paletwa to Indo-Myanmar Border. Routes
Stretch Mode Distance (in km) Kolkata- Sittwe Sea route 539 Sittwe- Paletwa* IWT (Kaladan) 158
Paletwa-Kaletwa- Road 129 Indo Myanmar border* Total 826
* Post DPR review India – Myanmar-Thailand Highway • Development of 78 km of new roads • Upgradation of about 400 km of roads • Construction of all-weather approach lanes, • Rehabilitation/ reconstruction of weak or distressed bridges • A detailed examination of a project on the Ayeyarwaddy river as well as a causeway. • Phase-I of the IMTTA was taken up in early 2005. • India assumes responsibility of 78 km of missing links and 58 km of upgradation as part of Phase-I. • India may also take up additional 132 km of upgradation. • Thailand would take up upgradation of 136 km and 62 km sectors of Phase-I and another 100 km as part of Phase-II. • Border Roads Organisation (BRO) upgraded the Tamu- Kalewa-Kalemyo (TKK) road (160 km) in Myanmar at a cost of about US$ 27.28 million. Government of India is also responsible for upkeep of the TKK road. Alignment
• Highway links Moreh (in India) with Mae Sot (in Thailand) through Bagan (in Myanmar) • The alignment of this trilateral highway falls within the Asian Highways 1 and 2, being pursued by UNESCAP. Road Conditions of Trilateral Highway # Route Distance Drive Time Average Speed (i) Myawaddy-Thaton (a) 18 km 15 minute 72 km/h Myawaddy-Thingan Nyinaung (b) 44 km 120 minute 22 km/h Thingan Nyinaung- Kawkareik (c) 95 km 120 minute 47.5 km/h Kawkareik-Paan (d) 38 km 50 minute 45.6 km/h Paan-Thaton (ii) Not yet constructed - -
Thaton-Meiktila : Thaton- Htantabin-Meiktila (iii) 142 km 135 minute 63 km/h
Meiktila-Bagan : Meiktila- Kyaukpadaung-Bagan (iv) Not yet constructed - -
Bagan-Banbwe : Bagan- Pakoku-Yinmabin- Banbwe (v) 80 km 150 minute 32 km/h Banbwe-Labo: Banbwe-Yagyi- Labo (vi) Labo-Myittha Bridge (a) 37 km 150 minute 14.8 km/h Labo-Kyaw-Marma (b) 67 km 125 minute 32.2 km/h Marma-Myittha Bridge (Kalewa) (c) 29 km 25 minute 69.6 km/h Myittha Bridge-Kyikone Junction (vii) 131 km 150 minute 52.4 km/h Kalay-Tamu : Kalay-Kyikone- Tamu Myanmar Deep Seaport Projects Ongoing and Prospective Connectivity Projects in Myanmar
Cost Tier Type Sector Sub−Sector Project Name Status (US$ mil)
2 PPP Logistics Port, Rail, Road Dawei deep sea port 8,600.0 Ongoing 2 PPP Logistics Road/Bridge Dawei-Magul-Lenya-Kawthaung - Ongoing 2 PPP Logistics Port, Rail, Road Kyaukphyu deep sea port 10,000.0 Ongoing
2 PPP Logistics Road/Bridge Dawei-Maesamee Pass - Prospective
3 PPP Logistics Road Kaladan Multimodal Project (Setpyitpyin to India border) 49.1 Ongoing Kaladan Multimodal Project (Sittwe Port, Kaladan River 3 PPP Logistics Port / Maritime 68.2 Ongoing development) 3 Public Logistics Road/Bridge Upgrading below Class III road (Chaung U-Kalay) - Ongoing 3 Public Logistics Road/Bridge Upgrading below Class III road (Kengtong-Taunggyi) - Ongoing
3 PPP Logistics Railway Lasio-Muse railway 479.5 Prospective
3 PPP Logistics Road/Bridge Muse-Kyaukphyu - Prospective
3 PPP Logistics Railway Rehabilitation of Kalay-Mandalay rail line 162.0 Prospective
3 PPP Logistics Railway Tamu-Kalay railway 97.7 Prospective
3 PPP Logistics Road/Bridge Tanine-Pansauk Road - Prospective
3 PPP Logistics Railway Thanbyuzayet-Three Pagoda Pass railway 246.2 Prospective
3 PPP Logistics Road/Bridge Thingannyinaung- Kawkareik - Prospective Delhi – Hanoi Railway Link • Two objectives – (a) to link India’s Manipur with India’s main railway corridor, and (b) to re-establish and renovate railway networks in Myanmar. • Indian consulting engineering company, RITES, has already completed a preliminary study to establish Delhi – Hanoi railway link in 2006. • Indian government has come forward and extended US$ 56 million credit line to the Myanmar government for upgradation of 640 km railway system between Mandalay and Yangon section. • Indian Railways is engaged in harmonization of railway tracks in the northeastern India and also construction of new lines. • Project under construction in Indian side: Diphu – Karong – Imphal - Moreh rail link which will link India with ASEAN. – Construction of a 98 km railway line connecting Jiribam to Imphal has already been taken up at the cost of Rs 31 billion. The project was initiated in April 2003 and supposed to be completed by March 2014 for Jiribam-Tupul sector and March 2016 for Tupul-Imphal sector. • On completion of these projects there could be possibilities for (i) India – Myanmar – Thailand – Malaysia - Singapore rail link, and (ii) India – Myanmar – Thailand – Hanoi rail link. New Delhi – Hanoi Rail Link Route-I New Delhi-Hanoi Rail Link Route-I in Myanmar
Distance (in km) Section Route Renovating/ Construction Cost (USD in million) 128 Tamu-Kalay Missing 151* 516 Kalay-Mandalay Existing 285* 541 Mandalay-Bago Existing 270 Bago-Thanbyuzayat Existing 210** 110 Thanbyuzayat-Three Pagodas Pass Missing 402** New Delhi – Hanoi Rail Link Route-II New Delhi-Hanoi Rail Link Route-II in Myanmar
Distance (in km) Section Route Renovating/ Construction Cost (USD in million) 128 Tamu-Kalay Missing 151* 516 Kalay-Mandalay Existing 285* 541 Mandalay-Bago Existing 270 Bago-Thanbyuzayat Existing 210** 235 Thanbyuzayat-Ye-Dawei Existing 110 Dawei-Bang Bong Tee Missing 309** Mekong – India Economic Corridor • MIEC involves integrating the four Mekong countries (Myanmar, Thailand, Cambodia and Vietnam) with India. • It connects Ho Chi Minh City (Vietnam) with Dawei (Myanmar) via Bangkok (Thailand) and Phnom Penh (Cambodia) and further linking to Chennai in India. • It is expected to augment trade with India by reducing travel distance between India and MIEC countries and removing supply side bottlenecks. • Approx. investment US$ 88 billion. Mekong – India Economic Corridor (MIEC)
Delhi-Mumbai Industrial Corridor Automobile Cluster on NH-8 along the alignment of West Dedicated Freight Corridor Textile/ Garment Cluster IT/ ITES Cluster
Delhi
Mumbai
Chennai- Dawei Ennore Bangkok Bangalore Sea Route Proposed Chennai- Bangalore- Phnom Penn Mumbai Corridor on NH-4 Southern DFC is in the similar Ho Chi Min City alignment of the existing rail Mekong India network Corridor covering four countries BCIM Corridor ASEAN – India Connectivity: New Corridor Projects A Regional Framework to Enhance ASEAN-India Connectivity Challenges • Funding of regional infrastructure projects (uncertain global economic environment) – Institutional mechanism – Financing instruments • Stronger institutions for regional cooperation • Supporting skill • Stronger coordination • Land acquisition, environment, a.o Lessons from GMS
• Connectivity works – impact on trade and poverty • Physical connectivity needs resources and time • Software connectivity needs time and resources • Capacity building and political commitment important • Demand-side factors also important Some important developments on regional connectivity (strong impact on ASEAN-India trade flow) 1. Transit for traffic between India, Bangladesh, Nepal, and Bhutan. 2. Integrated check posts (ICP) in Moreh in Manipur, Petrapole in West Bengal, etc. 3. India – ASEAN connectivity projects, particularly Mekong – India Economic Corridor (MIEC) and BIMSTEC Trilateral Highway 4. Kunming – Kyaukpyu gas pipeline, highway and SEZ 5. Dawei SEZ and port New Projects of ASEAN-India Connectivity: Recommendations • Completion of Chennai–Ennore Port Road Connectivity Project • Completion of National Highway Development Programme (NHDP), Phase VI • Completion of Dedicated Freight Corridor (DFC) projects • Linking Chennai with DFC projects • Capacity augmentation of airports in Tamil Nadu and North East India • Capacity augmentation of seaports in Tamil Nadu • Completion of Delhi–Mumbai Industrial Corridor (DMIC) • Development of Chennai–Bangalore–Mumbai Industrial Corridor (CBMIC) • Completion of the feasibility study of PRIDe (Peninsular Region Industrial Development) corridor • Completion of the missing links of India–Myanmar–Thailand Trilateral Highway • Completion of the feasibility study of Delhi–Hanoi Railway Link (DHRL) • Completion of the Kaladan Multimodal Transit Transport Project (KMTTP) • Developing Mekong–India Economic Corridor (MIEC) • New flights and newer connection between ASEAN countries and India Vision for ASEAN-India Single Market
ASEAN Economic Community: 2015
Current Status Harmonized & Maritime & Aviation One Transit Competition integrated road waterways policy ‘Customs’ Policy and railway network network EU (10) ✓ ✓ ✓ ✓ ✓ ✓ ASEAN ✓ ✓ ✓ ✓ ✓ û NAFTA û* ✓ ✓ ✓ ✓* ✓ ASEAN û û û û û û -India
* Except US and Mexico Key Strategies to Enhance the Physical Connectivity • Strategy 1: Complete the Trilateral Highway Network and extend it to Lap PDR, Cambodia and Vietnam. • Strategy 2: Implement the Delhi – Ha Noi Rail Link (DHRL) project • Strategy 3: Establish an efficient and integrated short sea shipping services between India and Myanmar. • Strategy 4: Accomplish an integrated, efficient and competitive maritime transport system • Strategy 5: Establish integrated and seamless multimodal transport systems • Strategy 6: Accelerate the development of ICT infrastructure and services between ASEAN and India • Strategy 7: Implement the open sky between ASEAN and India. • Strategy 8: Connect ASEAN capital with Indian cities. Policy Options • Policy option 1: Accelerate the free flow of goods within ASEAN region by eliminating barriers to merchandise trade within the region. • Policy option 2: Accelerate the development of an efficient and competitive logistics sector, in particular transport, telecommunications and other connectivity related services in the region • Policy option 3: Substantially improve trade facilitation in the region • Policy option 4: Enhance border management capabilities and performances • Policy option 5: Accelerate further opening up of ASEAN and India to FDI from within and beyond the region under fair investment rules • Policy option 6: Strengthen institutional capacity in lagging areas in the region and improve regional-sub-regional coordination of policies, programmes and projects • Policy option 7: Set-up ASEAN-India connectivity coordination committee to coordinate the Master Plan and its implementation. Concluding Remarks • Trade between India and East Asia is the major development • Lack in connectivity will slow down the integration process • Presence of regional infrastructure is negligible • India-ASEAN connectivity holds the key to deeper Asian integration • An integrated action plan for achieving a common market by 2020 is required. Thank you