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Geographic and ethnic closeness, eastward expansion for Indian corporates and influence of Indian community in every walk of life one can see in the whole member nations of ASEAN. Today, major ventures of Indian business houses are striking in every sector in ASEAN.
Learning Values:
After reading this chapter one can learn: 1. The gamut of South East Asian economy, industry and infrastructure. 2. Fast growing economies with their core competencies. 3. India-ASEAN trade: both inward and outward. 4. Emerging opportunities: sector wise. 5. Major challenges and strategic approaches to succeed
The Association of Southeast Asian Nations or ASEAN was established on 8 August 1967 in Bangkok by the five original Member Countries, namely, Indonesia, Malaysia, Philippines, Singapore, and Thailand, as a display of solidarity against Communist expansion in Vietnam and insurgency within their own borders.Brunei Darussalam joined on 8 January 1984, Vietnam on 28 July 1995, Lao PDR and Myanmar on 23 July 1997, and Cambodia on 30 April 1999. The ASEAN region has a population of about 600 million, a total area of 4.5 million square kilometers, a combined gross domestic product of almost US$ 800 billion, and a total trade of about US$ 850 billion. ASEAN flag Brunei Cambodia Indonesia Laos Malaysia Myanmar Philippines Singapore Thailand Vietnam Jakarta Ong Keng Yong 4,480,000 km2
Members
Objectives:
The ASEAN Declaration states that the aims and purposes of the Association are: (1) To accelerate economic growth, social progress and cultural development in the region and (2) To promote regional peace and stability through abiding respect for justice and the rule of law in the relationship among countries in the region and adherence to the principles of the United Nations Charter. The ASEAN Vision 2020, adopted by the ASEAN Leaders is outward looking, living in peace, stability and prosperity, bonded together in partnership in dynamic development and in a community of caring societies.
Seat of Secretariat Secretary General Area Population - Total (2005) - Density GDP (2004) - Total - Total - GDP/capita - GDP/capita
$2553.1 billion (PPP) $800.6 billion (Nominal) $4,639 (PPP) $1,455 (Nominal) Bangkok Declaration - 8 August 1967
In 2003, the ASEAN Leaders Formation resolved that an ASEAN Community should be established comprising three - Signed pillars, namely, ASEAN Security Community, ASEAN Economic Community and ASEAN Socio-Cultural Community.
Fundamental Principles:
ASEAN Member Countries have adopted the following fundamental principles in their relations with one another, as contained in the Treaty of Amity and Cooperation in Southeast Asia (TAC): Mutual respect for the independence, sovereignty, equality, territorial integrity, and national identity of all nations; The right of every State to lead its national existence free from external interference, subversion or coercion; Non-interference in the internal affairs of one another; Settlement of differences or disputes by peaceful manner; Renunciation of the threat or use of force; and Effective cooperation among themselves.
Economic Indicators:
Recent Economic Indicators GDP (US$bn) (current prices) GDP PPP (US$bn) GDP per capita (US$) GDP per capita PPP (US$) Real GDP growth (% change YOY) Current account balance (US$ mil.) Current account balance (% GDP) Inflation (% change YOY) 2001 571.3 2,037.20 1,089 3,883 2.2 33,256 5.8 4.9 2002 636.8 2,176.10 1,193 4,078 4.8 35,792 5.6 4.8 2003 717.4 2,345.50 1,324 4,330 5.3 52,594 7.3 3.5 2004 800.6 2,553.10 1,455 4,639 6.6 53,144 6.6 4
Vision 2020:
In 1997, the ASEAN leaders adopted the ASEAN Vision 2020, which called for ASEAN partnership in dynamic development aimed at creating closer economic integration within the region. The vision statement also resolved to create a stable, prosperous and highly competitive ASEAN Economic Region, in which there is a free flow of goods, services, investments, capital, and equitable economic development and reduced poverty and socio-economic disparities. The Hanoi Plan of Action, adopted in 1998, serves as the first in a series of plans of action leading up to the realization of the ASEAN vision.
BRUNEI DARUSSALAM
Capital: Land area: Population: Language: Member of: Bandar Seri Begawan 5.8 thousand sq. km 370.1 thousand (2005) Malay, English ASEAN, APEC, APT, APDC, Commonwealth, ESCAP, GP 77, GATT/WTO, ICAO, IMO, IMF, WMO, UNDP, WHO, WIPO, WTO-GBT, ASEM, EALAF, UN, OIC, NAM, AASROC, UNESCO, APG, WSIS, IDB, ADB and AMED B$ (Bruneian Dollar). US$ 9,530.5 million at current market prices Oil and gas, textiles, food and beverages, building materials Oil and gas, ready-made garments Transport equipment and machinery, manufactured goods, food chemicals
Brunei does not have a Central Bank. The Ministry of Finance discharges the functions of the Central Bank for Brunei.
CAMBODIA
Capital: Land area: Population: Language: Member of: Currency: GDP: Major Industries: Major Exports: Major Imports: Phnom Penh 181.0 thousand sq. km 13,661.4 thousand Khmer ASEAN, CTBTO, ESCAP, FAO, IAEA, IBRD, ICAO, IDA, IFC, IFAD, ILO, IMF, IMO, ITU, LDC, UNO, UNCTAD, UNESCO, UPO, UNIDO, WIPO, WHO Riel US$5,523 million (2005) at current market prices Textiles and Garments, Beverages, Food Processing, Wood Processing Garments, Textile Product Sawn, Wood Furniture and Rubber Transport equipment and machinery, manufactured goods, food chemicals
INDONESIA
Capital: Land area: Population: Language: Member of: Currency: GDP: Major Industries: Major Exports: Jakarta 1,890.8 thousand sq. km 219,205.0 thousand Bahasa Indonesia ASEAN, UN, IMF, ESCAP, FAO, ILO, UNESCO, IBRD, IFC, MIGA, IDB, IDA, ADB, WTO, APEC, ASEM, EALAF Rupiah US$ 280,265 million (2005) at current market prices Pulp and paper, cement, basic metals and fertilizer, power generation, telecommunication, transportation Textile, electronic goods, footwear, oil & gas, plywood, sawn timber
Chemical and pharmaceutical, fertilizer, cotton yarns, textile fabric, machines, motor vehicles Vegetable oil, Coal, coke and briquettes, Metalifferous ores and metal scrap, Non-electrical machinery, Pulp and waste paper Dyes, intermediates etc., Primary and semi-finished iron and steel, Oil meals, Inorg/Org/agro chemicals, Machinery and Instruments
LAO PDR
Capital: Land area: Population: Language: Member of: Currency: GDP: Major Industries: Major Exports: Major Imports: Vientiane 236.8 thousand sq. km 5,938.8 thousand Lao ASEAN, ADB, ESCAP, FAO, IBRD, WHO, IDA, WIPO, IFC, ILO, IMF, UN, NCTAD, UNESCO, UNIDO, UNICEF, WHO, EALAF Kip US$ 2,872 million (2005) at current market prices Garment industry, wood-based and processing industries, electricity Coffee, electricity, clothing, wood and forest product and Gypsum Industrial machinery, chemicals, iron, electrical machinery and parts, steel, oil, construction material and consumption goods
MALAYSIA
Capital: Land area: Population: Language: Member of: Currency: GDP: Major Industries: Major Exports: Major Imports: Major Exports to India (2005-06) Major Imports from India (200506) Kuala Lumpur 330.3 thousand sq. km 26,127.7 thousand Melayu, English, Chinese, Tamil ASEAN, ADB, APEC, ASEM, D-8, EBRD, ECOSOP, ESCAP, FAO, G-15, IAEA, IBRD, ICAO, IDA, IDB, ILO, EALAP Malaysian Ringgit US$ 130,860.5 million (2005) at current market prices Electronic & electrical goods, textiles, clothing & footwear, chemicals, petroleum, wood and metal products and rubber Electronic & electric machinery, petroleum & LNG, textiles, clothing & footwear, palm oil, sawn timber Manufacturing inputs, machinery & transport equipment, metal product Electronic goods, Organic Chemicals, Wood and wood products, Vegetable oils, Non-ferrous metals Transport Equipments, Meat and preparations, Dyes, intermediates etc., Machinery and Instruments, Inorg/org/agro chemicals
MYANMAR
Capital: Land area: Population: Language: Member of: Currency: GDP: Major Industries: Major Exports: Major Imports: Major Exports to India (2005-06)
Yangon 676.6 thousand sq. km 56,002.6 thousands (2005) Myanmar ASEAN, ADB, ESCAP, ACU, FAO, IBRD, IDA, IFC, ILO, IMF, ITU, WTO, UNESCO, UNIDO, UNICEF, EALAF Myanmar Kyat US$ 11,168.8 million (2005) at current market prices Agro-based industries, textiles industries, steel mills Rice, teak, beans & pulses, rubber, coffee, minerals, gems marine products Power tillers, hand tractor, fertilizer, diesel oil, cement, dumper, loader and spare parts, water pumps, hydraulic excavator Wood and wood products, Pulses, Natural rubber, Raw hides and skins, Fruits and nuts
PHILIPPINES
Capital: Land area: Population: Language: Member of: Manila 300.0 thousand sq. km 85,236.9 thousands Filipino, English, Spanish APEC, ARF, ACD, ADB, ASEAN, ASEM, CCC, Common Fund for Commodities, CP, ESCAP, FEALAC, FAO, G-24, G-77, IAEA, IBRD, ICAO, ICC, ICFTU, ICRM, IDA, IFAD, IFC, IFRCS, IHO, ILO, IMF, IMO, Interpol, IOC, IOM, ISO, ITU, NAM, OPCW, UN, UNCTAD, UNESCO, UNHCR, UNIDO, UNMIK, UNTAET, UNU, UPU, WCL, WFTU, WHO, WIPO, WMO, World Tourism Organization, World Trade Organization Peso US$98,407.5 million (2005) at current market prices Priority sectors : construction materials, electronics, food, giftware and holiday decor, home furnishings, IT & IT-enabled services, marine products, motor vehicle parts and components, organic and natural products, wearables Electronic products; garments; ignition wiring set and other wiring sets used in vehicles, aircrafts, and ships; coconut oil; woodcrafts and furniture; other products manufactured from materials imported on consignment basis; petroleum products; metal components; cathodes and sections of cathodes of refined copper; fresh bananas (per data as of August 2005) Electronic products; mineral fuels, lubricants, and related materials; industrial machinery and equipment; transport equipment; iron and steel; cereal and cereal preparations; textile yarn, fabrics, made-up articles, and related products; telecommunications equipment and electrical machinery; plastics in primary and nonprimary forms; organic and inorganic chemicals (per data as of August 2005) Electronic goods, Newsprint, Metaliferrous ores and metal scrap, Nonelectrical Machinery, Organic chemicals Primary and semi-finished Iron and Steel, Meat and preparations, Rubber manufactured products, Drugs, pharmaceutical and fine chemicals, Plastic and Linoleum products
Major Exports:
Major Imports:
SINGAPORE
Capital: Land area: Population: Language: Member of: Currency: GDP: Major Industries: Major Exports: Major Imports: Major Exports to India (2005-06) Major Imports from India (200506) Singapore 697.1 sq. km 4.198 million (2004) English, Malay, Mandarin, Tamil ASEAN, ADB, APEC, ARF, COMMONWEALTH, FAO, IAEA, IBRD, IDA, IFC, IMF, IFAD, IMO, ILO, ITU, UNIDO, UPO, WHO, ASEM, EALAF, WTO, WIPO, ICAO, NAM, G77 Singapore Dollar (S$) US$106,818 million (2004) at current market prices Electronics, chemicals, banking and finance, real estate, tourism, trading Petroleum products, industrial machines, radio & television receivers & parts, electronic component & parts, clothing, beverages & tobacco Crude petroleum, iron & steel, industrial machines, electric generators, electronic component and parts Electronic goods, Organic chemicals, Non-electrical machinery, Printed books, news papers etc., Transport equipments Gems and Jewellery, Transport equipments, Electronic goods, Machinery and Instruments, Dyes, intermediates etc.
THAILAND
Capital: Land area: Population: Language: Member of: Currency: GDP: Major Industries: Major Exports: Major Imports: Major Exports to India (2005-06) Major Imports from India (200506) Bangkok 513.3 thousand sq. km 64,763.0 thousands Thai ASEAN, ADB, ASEM, ESCAP, FAO, IBRD, IDA, IFC, IMF, ILO, UNCTAD, UNESCO, WHO, WIPO, APEC, EALAF Baht US$ 176,206.6 million (2005) at current market prices Electronics, gems and jewelry, footwear, textiles, clothing, mobiles Textiles, computer & components, integrated circuits and parts, gems & jewelry, footwear Industrial machinery, iron & steel electrical machinery & parts, chassis and body Electronic goods, Non-electrical machinery, Artificial resins, plastic materials etc., Iron and Steel, Transport equipment Gems and jewellery, Non-ferrous metals, Primary and semi finished Iron and Steel, Oil meals, Machinery and Insturments
VIETNAM
Capital: Land area: Ha Noi 330.4 thousands sq. km
Population: Language: Member of: Currency: GDP: Major Industries: Major Exports: Major Imports: Major Imports from India (200506)
83,119.9 thousands Vietnamese ASEAN, IBRD, IDA, IFC, IMF, ASEM, MIGA, UNDP, UNCTAD, GSPT, UNIDO, FAO, IFAD, ICAO, EALAF Dong US$ 52,807.6 million (2005) at current market prices Agriculture, forestry, fishery, industrial construction Crude oil, coal, chromium, tin, cements, woolen carpet, jute carpet, rice cinnamon, marine products Motors, petroleum products, diesel oil, fertilizers Oil meals, Drugs, pharmaceutical and fine chemicals, Primary and semi finished iron and steel, Plastic and linoleum products, Inorg/org/agro chemicals, Non-ferrous metals
ASEAN Trade:
Country Brunei Darussalam Cambodia Indonesia Lao PDR Malaysia Myanmar The Philippines Singapore Thailand Viet Nam ASEAN For 2005 (In million US$) Exports Imports 6,369.3 3,091.5 85,660.0 174.1 140,470.5 3,123.8 41,254.7 229,804.1 109,622.6 28,576.5 648,147.0 1,503.1 2,824.7 57,700.9 701.8 114,213.1 1,632.9 47,418.2 200,162.8 117,990.9 32,593.9 576,742.4
ASEAN-India:
2001-02 4400.31 3467.33 ASEANS Trade with India 2002-03 2003-04 5160.33 7438.22 4627.65 5825.71 2004-05 9110.91 8422.42 2005-06 10609.34 10511.72
EXPORTS IMPORTS
During the last five years the exports and imports both have increased significantly. There was an increase of 1.41 times in exports and of 2.03 times in imports from/to ASEAN during this period. The highest increase in exports was during the year 2003-04, while that of imports was in the year 2004-05.
Objectives:
The objectives of this Agreement are to: 1. Strengthen and enhance economic, trade and investment co-operation between the parties; 2. Progressively liberalize and promote trade in goods and services as well as create a transparent, liberal and facilitative investment regime; 3. Explore new areas and develop appropriate measures for closer economic co-operation between the parties; and 4. Facilitate the more effective economic integration of the new ASEAN Member States and bridge the development gap among the parties.
1. Trade Facilitation
Mutual Recognition Arrangements, conformity assessment, accreditation procedures, and standards and technical regulations Non-tariff measures Customs cooperation Trade financing Business visa and travel facilitation.
2. Sectors of Cooperation
Agriculture, fisheries and forestry. Services: media and entertainment, health, financial, tourism, construction, business process outsourcing, environment. Mining and energy: oil and natural gas, power generation and supply; Science and technology: information and communications technology, electroniccommerce, biotechnology; Transport and infrastructure: transport and communication; Manufacturing: automotive, drugs and pharmaceuticals, textiles, petrochemicals, garments, food processing, leather goods, light engineering goods, gems and jewellery processing; Human resource development: capacity building, education, technology transfer; and Others: handicrafts, small and medium enterprises, competition policy, Mekong Basin Development, intellectual property rights, government procurement.
General Exception:
Such measures are not applied when it constitutes a means of arbitrary or unjustifiable of arbitrary or unjustifiable discrimination between or among the Parties where the same conditions prevail, or a disguised restriction on trade within the ASEAN-India FTA, nothing in this Agreement shall prevent any Party from taking action and adopting measures for the protection of its national security or the protection of articles of artistic, historic and archaeological value, or such other measures which it deems necessary for the protection of public morals, or for the protection of human, animal or plant life, health and conservation of exhaustible natural resources.
With an improved double-taxation avoidance treatment agreement, there will be greater investment flows between Singapore and India as they don't need to pay capital gains tax. The agreement will also allow freer movement of skilled and qualified professionals between the two countries. This means, subject to further negotiations, within a year, doctors, dentists, nurses, accountants and architects from both countries can practice in each other's country
Negotiating 1. 2. 3. 4. Bargaining is a way of life to people in Southeast Asia they bargain daily for purchase of groceries and other goods, and it has become an automatic response to bargain and negotiate for more favorable terms in the business world Join in the bargaining dont make concessions quickly, but be ready to use a concession to extract a better bargain for yourself Never lose your temper, shout or become overly demanding at delays in decision-making or bureaucratic procedures Saving face is the rule let your local representative or partner monitor progress and problems. If you must criticize, do so gently and indirectly
SINGAPORE:
Singapore is an attractive destination for start-ups and incubation. There are various financial schemes and there is also an abundant pool of private equity investors who are interested in start ups. The IP regime also acts as a magnet for start-ups and international investors have found the IP protection in Singapore to be excellent. The IP laws will give much protection to Indian companies wishing to have their projects started or incubated in Singapore. India is looking for capital, technology, and expertise, which can be provided by Singapore through investment and collaboration in areas like telecommunications, financial, and transport services. On the other hand, Singapore is in search of a large market and also requires manpower to fulfill its potential as a service hub, both of which can be provided by India. SECTORS ATTRACTING FDI FROM SINGAPORE: Top five sectors attracting FDI from Singapore are: 1. Telecommunications 17.93%, 2. Services Sector (financial and non-financial) 16.28%, 3. Electrical Equipments (including computer software & electronics) 12.40% 4. Fuels (power & oil refinery) 11.12% and
5. Transportation Industries 8.85%. Singapores investments in India can be broadly classified into 3 categories, namely, (a) Investments by Temasek Holdings (b) Investments by Temasek Linked Companies (TLCs) and (c) Investments by private businesses. Most of the Singapores investments in India falls under the first two categories.
Temasek Holdings, an investment holding company of Singapore government, opened an office in Mumbai in 2004 to focus on investment opportunities in India. INVESTMENTS BY TEMASEK LINKED COMPANIES (TLCs) CONSTRUCTION TELECOM PORT INFORMATION TECHNOLOGY POWER WASTE MANAGEMENT LOGISTICS
INDONESIA:
Banking:
Indonesia has both State-owned banks and private banks. All major international banks have a presence in Indonesia. The Bank of India maintains a representative office in Indonesia while Bank Indonesia International (BII) has a branch in Mumbai.
These include oil and gas, manpower and engineering consultancy services for the petroleum industry, mining, plantation products (particularly CPO), IT education and services, ports and railways, telecommunications, pharmaceuticals and education (both School and University).
MALAYSIA:
Potential Indian Exports to Malaysia Malaysia
Paper and wood products Transport equipments Gems & Jewellery Rubber Groundnuts Man-made yarns and fabrics Dyes and coal tar chemicals Glassware
- Computer hardware and peripherals incl. microchips - Business Machines - Consumer electronics
o o o o
locally incorporated company (public or private) Partnership or sole proprietorship Representative Office Joint Venture or subsidiary
Advantages:
Continued benefit from market growth Fully knowledgeable about the industry Able to identify emerging opportunities Control image, reputation, and sales of the company's products Control financial matters such as price and profit
Disadvantages:
Drain on financial, technical and personnel resources of the investor Business and financial risk
PHILIPPINES:
Potential Sectors for Investment
Indian Investment in Philippines: Textile machinery, Drugs and pharmaceuticals, Software development and training, Steel and metal, Manufacturing and design of gold jewellery, Engineering consultancy, Transport equipment Philippines Investment in India : Food processing, Fashion designing for garments, Packaging products, Telecommunications, Coconut-based products, Tourism
THAILAND:
Indian investments in Thailand are mainly in areas which are relatively high-tech and even capital intensive and cover a wide range of products and activities including production of rayon fiber, steel wires and rods, paper-grade pulp, chemicals, drugs and pharmaceuticals, nylon tyre cord and real estate. The major Indian groups involved are the Aditya Birla Group, Ballarpur Industries, Baroda Rayon Group, Usha Martin Industries, Ranbaxy Laboratories, Lupin Laboratories and the Ansals and the Uniworth International Ltd. Telecommunications and fisheries accounted for chunk of the Thai investment while Thai investors have also evinced interest in real estate and tourism sectors, light engineering industry and petrochemicals. The food processing and agro-industries in Thailand are well developed and hence, these sectors offer enormous opportunities for Indo-Thai Joint Venture in India. The following bilateral agreements exist between India and Thailand in the economic field:i) ii) iii) iv) Bilateral Trade Agreement Agreement for the Avoidance of Double Taxation Air Services Agreement Cooperation Agreement between Board of Investment of Thailand and the Foreign Investment Promotion Board of India v) A Bilateral Investment Promotion and Protection Agreement have been signed by both the countries in July 2000. vi) Framework Agreement for establishing an FTA dated Oct. 9, 2003.