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ASEAN-India Connectivity: Towards an Action Plan

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ASEAN-India Connectivity: Towards an Action Plan 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
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