DOING BUSINESS WITH ASSOCIATION OF
SOUTHEAST ASIAN NATIONS (ASEAN)
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
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.
In 2003, the ASEAN Leaders resolved
that an ASEAN Community should be
established comprising three pillars,
namely, ASEAN Security Community,
ASEAN Economic Community and
ASEAN Socio-Cultural Community.
Brunei
Cambodia
Indonesia
Laos
Malaysia
Myanmar
Philippines
Singapore
Thailand
Vietnam
Seat of Secretariat
Jakarta
Secretary General
Ong Keng Yong
Area
4,480,000 km2
Population
- Total (2005)
- Density
572,400,000
122.3 people/km²
GDP (2004)
- Total
- Total
- GDP/capita
- GDP/capita
$2553.1 billion (PPP)
$800.6 billion (Nominal)
$4,639
(PPP)
$1,455 (Nominal)
Formation
Bangkok Declaration
- Signed
- 8 August 1967
Fundamental Principles:
ASEAN Member Countries have adopted the following fundamental principles in their relations
with one another, as contained in the Treaty of Amity and Cooperation in Southeast Asia (TAC):
 Mutual respect for the independence, sovereignty, equality, territorial integrity, and
national identity of all nations;
 The right of every State to lead its national existence free from external interference,
subversion or coercion;
 Non-interference in the internal affairs of one another;
 Settlement of differences or disputes by peaceful manner;
 Renunciation of the threat or use of force; and
 Effective cooperation among themselves.
Economic Indicators:
Recent Economic Indicators
GDP (US$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.
ASEAN Members Background Information:
For 2005 (In US$)
Country
GDP Per
Capita
Country
GDP Per
Capita
Brunei
Darussalam
Cambodia
Indonesia
Lao PDR
Malaysia
25,751.3
404.3
1,278.6
479.9
5,008.5
Myanmar
Philippines
Singapore
Thailand
199.4
1,154.5
26,880.7
2,720.8
Viet Nam
635.3
ASEAN
1,582
.6
BRUNEI DARUSSALAM
Capital:
Land area:
Population:
Language:
Member of:
Currency:
GDP:
Major Industries:
Major Exports:
Major Imports:
Bandar Seri Begawan
5.8 thousand sq. km
370.1 thousand (2005)
Malay, English
ASEAN, APEC, APT, APDC, Commonwealth, ESCAP, GP 77,
GATT/WTO, ICAO, IMO, IMF, WMO, UNDP, WHO, WIPO, WTO-GBT,
ASEM, EALAF, UN, OIC, NAM, AASROC, UNESCO, APG, WSIS, IDB,
ADB and AMED
B$ (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$5,523 million (2005) at current market prices
Textiles and Garments, Beverages, Food Processing, Wood
Processing
Garments, Textile Product Sawn, Wood Furniture and Rubber
Transport equipment and machinery, manufactured goods, food
chemicals
INDONESIA
Capital:
Land area:
Population:
Language:
Member of:
Currency:
GDP:
Major Industries:
Major Exports:
Major Imports:
Jakarta
1,890.8 thousand sq. km
219,205.0 thousand
Bahasa Indonesia
ASEAN, UN, IMF, ESCAP, FAO, ILO, UNESCO, IBRD, IFC, MIGA, IDB,
IDA, ADB, WTO, APEC, ASEM, EALAF
Rupiah
US$ 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,
Major Exports to
India(2005-06):
Major Imports
from India(200506)
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:
Major Exports to
India (2005-06)
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$98,407.5 million (2005) at current market prices
Priority sectors : construction materials, electronics, food, giftware
and holiday decor, home furnishings, IT & IT-enabled services, marine
products, motor vehicle parts and components, organic and natural
products, wearables
Electronic products; garments; ignition wiring set and other wiring
sets used in vehicles, aircrafts, and ships; coconut oil; woodcrafts
and furniture; other products manufactured from materials imported
on consignment basis; petroleum products; metal components;
cathodes and sections of cathodes of refined copper; fresh bananas
(per data as of August 2005)
Electronic products; mineral fuels, lubricants, and related materials;
industrial machinery and equipment; transport equipment; iron and
steel; cereal and cereal preparations; textile yarn, fabrics, made-up
articles, and related products; telecommunications equipment and
electrical machinery; plastics in primary and nonprimary forms;
organic and inorganic chemicals (per data as of August 2005)
Electronic goods, Newsprint, Metaliferrous ores and metal scrap, Nonelectrical Machinery, Organic chemicals
Major Imports
Primary and semi-finished Iron and Steel, Meat and preparations,
Currency:
GDP:
Major Industries:
Major Exports:
Major Imports:
from India (200506)
Rubber manufactured products, Drugs, pharmaceutical and fine
chemicals, Plastic and Linoleum products
SINGAPORE
Capital:
Land area:
Population:
Language:
Member of:
Currency:
GDP:
Major Industries:
Major Exports:
Major Imports:
Major Exports to
India (2005-06)
Major Imports
from India (200506)
Singapore
697.1 sq. km
4.198 million (2004)
English, Malay, Mandarin, Tamil
ASEAN, ADB, APEC, ARF, COMMONWEALTH, FAO, IAEA, IBRD, IDA,
IFC, IMF, IFAD, IMO, ILO, ITU, UNIDO, UPO, WHO, ASEM, EALAF, WTO,
WIPO, ICAO, NAM, G77
Singapore Dollar (S$)
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:
Population:
Language:
Member of:
Currency:
GDP:
Major Industries:
Major Exports:
Major Imports:
Major Imports
from India (200506)
Ha Noi
330.4 thousands sq. km
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:
For 2005 (In million US$)
Exports
Imports
Country
Brunei Darussalam
6,369.3
1,503.1
Cambodia
3,091.5
2,824.7
Indonesia
85,660.0
57,700.9
Lao PDR
174.1
701.8
Malaysia
140,470.5
114,213.1
Myanmar
3,123.8
1,632.9
41,254.7
47,418.2
Singapore
229,804.1
200,162.8
Thailand
109,622.6
117,990.9
Viet Nam
28,576.5
32,593.9
648,147.0
576,742.4
The Philippines
ASEAN
ASEAN's global merchandise trade:
 ASEAN's principal export destinations, 2005:
1)
2)
3)
4)
5)
Japan 14.7%
United States 13.4%
China 10.8%
Republic of Korea 5.0%
Australia 4.5%
 ASEAN's principal import sources, 2005:
1)
2)
3)
4)
5)
6)
Japan 18.6%
United States 13.7%
China 13.7%
Hong Kong 7.3%
Republic of Korea 5.1%
Australia 2.8%
The ASEAN Free Trade Agreement:
ASEAN free trade area was launched in 1992 to eliminate tariff barriers among the South East
Asian Countries with a view to integrating Asian economies into a single production base and
creating a regional market.
At the Fourth ASEAN Summit in Singapore in January 1992, ASEAN initiated the ASEAN Free
Trade Area, or AFTA, which laid out a comprehensive program of regional tariff reduction, to be
carried out in phases through the year 2008. This deadline was subsequently moved forward to
2003. Over the course of the next several years, the program of tariff reductions was broadened
and accelerated, and a host of "AFTA Plus" activities were initiated, including efforts to eliminate
non-tariff barriers and quantitative restrictions and harmonize valuation, and procedures, and
develop common product certification standards. In addition, ASEAN later signed framework
agreements for the intra-regional liberalization of trade in services, and for regional IPR
cooperation. An industrial complementation scheme designed to encourage intra-regional
investment was approved, and discussions were held on creating a free investment area within
the region. During the financial crisis of 1997-98, ASEAN reaffirmed its commitment to AFTA, and
as part of a series of "bold measures," agreed that the original six AFTA signatories would
accelerate many planned tariff cuts by one year, to 2002 from 2003.
When the AFTA agreement was originally signed, ASEAN had six members (Brunei,
Indonesia, Malaysia, Philippines, Singapore, and Thailand). Vietnam joined in 1995, Laos and
Myanmar in 1997, and Cambodia in 1999. All four countries were required to sign on to the AFTA
agreement in order to join ASEAN, but were given longer time frames in which to meet AFTA's
tariff reduction obligations
Common Effective Preferential Tariff (CEPT):
The CEPT is the mechanism by which tariffs on goods traded within the ASEAN region, which
meet a 40% ASEAN content requirement, were reduced to 0-5% by the year 2002/2003 (2006 for
Vietnam, 2008 for Laos and Myanmar, and 2010 for Cambodia). The tariff reductions are moving
ahead on both the "fast" and "normal" tracks. Tariffs on goods in the fast track were largely
reduced to 0-5% by 2000. Tariffs on goods in the normal track were reduced to this level by 2002,
or 2003 for a small number of products. Currently, about 81% of ASEAN's tariff lines are covered
by either the fast or normal track.
ASEAN members have the option of excluding products from the CEPT in three cases: 1.)
Temporary exclusions; 2.) Sensitive agricultural products; 3.) General exceptions.
General Exceptions refer to products which a country deems necessary for the protection of
national security, public morals, the protection of human, animal or plant life and health, and
protection of articles of artistic, historic, or archaeological value. Approximately one percent of
ASEAN tariff lines fall into this category. The CEPT scheme covered nearly 98 percent of all tariff
lines in ASEAN by the year 2003; by then, the only products not included in the CEPT Scheme
were those in the General Exceptions category and sensitive agricultural products.
In the longer term, the ASEAN countries have agreed to enact zero tariff rates on virtually all
imports by 2010 for the original signatories, and 2015 for the four newer ASEAN members.
Source:
ASEAN
Secretariat
Average AFTA / CEPT Tariff Rates
1998
1999
2000
2001
2002
2003
Brunei
1.35
1.29
1.00
0.97
0.94
0.87
Indonesia
7.04
5.85
4.97
4.63
4.20
3.71
Laos
5.00
5.00
5.00
5.00
5.00
5.00
Malaysia
3.58
3.17
2.73
2.54
2.38
2.06
Myanmar
4.47
4.45
4.38
3.32
3.31
3.19
Philippines
7.96
7.00
5.59
5.07
4.80
3.75
Singapore
0.00
0.00
0.00
0.00
0.00
0.00
Thailand
10.56
9.75
7.40
7.36
6.02
4.64
Vietnam
6.06
3.78
3.30
2.90
2.89
2.02
ASEAN
5.37
4.77
3.87
3.65
3.25
2.68
ASEAN Investment Area:
The December 1995 ASEAN Summit endorsed in principle the concept of an ASEAN Investment
Area (AIA), in which barriers to intra-regional investment were lowered and removed, regulations
were liberalized, streamlined, and made more transparent, and incentives were offered to boost
regional investment. The basic concept was to substantially increase the flow of investment into
ASEAN from both ASEAN and non-ASEAN sources by enhancing the region's competitiveness.
An initial list of temporary exclusions, covering the agriculture, forestry, and mining sectors, was
adopted at the AIA Ministerial Meeting in Thailand in October 2000. Under the AIA agreement,
seven members had agreed to remove their temporary exclusion lists for ASEAN investors in
manufacturing by 2003. Full realization of the AIA with the removal of temporary exclusion lists in
manufacturing agriculture, fisheries, forestry and mining is scheduled by 2010 for the ASEAN-6
and by 2015 for the new members (Cambodia, Laos, Myanmar, and Vietnam).
The main approaches on the AIA are as follows:
 All industries are to be opened up for investment, with exclusions to be phased out
according to schedules
 National treatment is granted immediately to ASEAN investors with few exclusions
 Elimination of investment impediments
 Streamlining of investment process and procedures
 Enhancing transparency
 Undertaking investment facilitation measures
ASEAN-India:
EXPORTS
IMPORTS
2001-02
4400.31
3467.33
ASEAN’S 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
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.
Indian exports to ASEAN–major commodity groups:
India’s exports to ASEAN include oil meals, gems and jewellery, meat and meat preparations,
cotton yarn, fabrics, made-ups, engineering goods, transport equipment, machinery and
instruments, electronic goods, marine products, fruits and vegetables, rice, drugs and
pharmaceuticals, chemicals, etc.
Indian imports from ASEAN – major commodity groups:
India’s imports mainly consist of artificial resins, plastic material, natural rubber, wood and wood
products, electronic goods, non-ferrous metals, metaliferous ores and metal scrap, organic
chemicals, edible oils, coal,fertilizers,etc
Enhancing India’s exports to ASEAN: As mentioned earlier, focus should be on the sectors that
are of maximum importance to ASEAN, namely: Machinery, engineering products, Mineral
products, base metal and metal articles, Chemicals, drugs and pharmaceuticals, Base metal and
metal articles, Transport equipment, Textiles and apparel, Plastics, Optical, precision and
instruments, Prepared foodstuffs, Vegetable products and Services.
India’s Relationship with ASEAN Countries:
ASEAN has four Summit level Dialogue Partners, i.e., China, Japan, ROK and India which is
known as ASEAN+4. In addition, it has a number of Dialogue and sectoral Dialogue Partners as
well.
India’s focus on a strengthened and multi-faceted relationship with ASEAN is an outcome of
the significant changes in the world’s political and economic scenario since the early 1990s and
India’s own march towards economic liberalization. India’s search for economic space has
resulted in our ‘Look East’ policy. ASEAN’s economic, political and strategic importance in the
larger Asia-Pacific Region and its potential to become a major partner of India in trade and
investment is a significant factor in our policy paradigms. ASEAN’s steady expansion westward to
include Myanmar has also brought it to our land boundaries. It now provides a land bridge for
India to connect with the Asia-Pacific-centered economic crosscurrents shaping the 21st century
market place. ASEAN seeks access to India’s professional and technical strengths. Our
traditional friendship with the CLMV countries (Cambodia, Lao PDR, Myanmar and Vietnam) also
makes India a valuable ally for promoting the Initiative for ASEAN Integration (IAI).
India is actively engaged in the Mekong- Ganga-Cooperation (MGC) which brings together
India and five ASEAN countries, Cambodia, Lao PDR, Myanmar, Thailand and Vietnam.
India has signed three agreements with ASEAN on October 8, 2003.
1) A framework agreement for the creation of Indo-ASEAN free trade area by the year 2011
2) An agreement to cooperate to counter terrorism.
3) India becoming a signatory to the ASEAN treaty of amity and cooperation.
Economic Cooperation Between India and ASEAN:
ASEAN member countries agreed to work towards an ASEAN-India Regional Trade and
Investment Area (RTIA) as a long-term objective and desired to adopt a Framework Agreement
on Comprehensive Economic Cooperation between ASEAN and India to minimize barriers and
deepen economic linkages between the parties; lower costs; increase intra-regional trade and
investment; increase economic efficiency; create a larger market with greater opportunities and
larger economies of scale for the businesses of the parties; and enhance the attractiveness of the
parties to capital and talent.
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.
Measures of Economic Cooperation:
1. Progressive elimination of tariffs and non-tariff barriers in substantially all trade in goods;
2. Progressive liberalization of trade in services with substantial sectoral coverage;
3. Establishment of a liberal and competitive investment regime that facilitates and
promotes investment within the ASEAN-India RTIA;
4. Provision of special and differential treatment to the New ASEAN Member States;
5. Provision of flexibility to the Parties in the ASEAN-India RTIA negotiations to address
their sensitive areas in the goods, services and investment sectors with such flexibilities
to be negotiated and mutually agreed based on the principle of reciprocity and mutual
benefits;
6. Establishment of effective trade and investment facilitation measures, including, but not
limited to, simplification of customs procedures and development of mutual recognition
arrangements;
7. Expansion of economic cooperation in areas as may be mutually agreed between the
Parties that will complement the deepening of trade and investment links between the
Parties and formulation of action plans and programmes in order to implement the agreed
sectors/areas of co-operation; and
8. Establishment of appropriate mechanisms for the purposes of effective implementation of
this Agreement.
Areas of Economic Cooperation:
Where appropriate, the Parties agreed to strengthen their cooperation in the following areas,
including, but not limited to:
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.
3. Trade and Investment Promotion
 Fairs and exhibitions;
 ASEAN-India web links &
 Business sector dialogues
Most Favoured Nation Treatment:
India shall continue to accord Most-Favoured Nation (MFN) Treatment consistent with WTO rules
and disciplines to all the non-WTO ASEAN Member States upon the date of signature of this
Agreement.
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.
Dispute Settlement Mechanism:
The Parties shall, within one (1) year after the date of entry into force of this Agreement,
establish appropriate formal dispute settlement procedures and mechanism for the purposes of
this Agreement and any disputes concerning the interpretation, implementation or application of
this Agreement shall be settled amicably by mutual consultations.
Trade and Investment:
ASEAN-India trade in 2003-4 was about US$ 15 billion, an increase of approximately 350%
over the 1993-94 trade figures. The balance of trade is in favour of ASEAN. There remains
significant potential to further expand these ties. For a total population of approx. 1.5 billion
people and with a combined GDP of US$1.5 trillion, a trade turnover of approx. US$ 15 billion is
grossly inadequate. At the 2nd India-ASEAN Business Summit held in New Delhi and Mumbai in
2003, a target 2 of US$ 15 billion by 2005 and US$ 30 billion for India ASEAN trade by 2007 was
set out. The target of US$ 30 billion was reiterated by Prime Minister at the 3rd ASEAN India
Summit held in Vientiane on November 30, 2004.
India’s exports to ASEAN member countries include oil meals, gems and Jewellery, meat and
meat preparations, cotton yarn, fabrics, machinery, rice, drugs and pharmaceuticals, chemicals,
etc. India’s imports mainly consist of artificial resins, plastic material, natural rubber, wood and
wood products, electronic goods, organic chemicals, edible oils, fertilizers, etc.
ASEAN countries, particularly, Malaysia, Singapore and Thailand, are also increasingly
investing in India in sectors such as telecommunications, fuels, hotel and tourism services, heavy
industry, chemicals, fertilizers, textiles, paper and pulp, and food processing.
Singapore and India sign Comprehensive Economic Cooperation
Agreement:
Singapore and India have sealed a groundbreaking pact on economic cooperation, the first
between Singapore and a South Asian country. The CECA came into force on 1 August 2005.
The basic concepts of CECA mentioning that it is a FTA plus which includes foods, services,
investment, IPR (Intellectual Property Right) and economic cooperation in areas like education,
science and technology, air transport services and double tax avoidance agreement. Though
Singapore is a small country, it is the heart of business connections between India and East Asia.
Thus, Singapore can be India’s “forward base” to access markets and resources in the East
Asian region. Already 1600 Indian companies are using Singapore as a base to expand both
regionally and internationally.
The Comprehensive Economic Cooperation Agreement will enhance ties between both
countries by speeding up the already growing flows of trade, investment and people. Under it,
three-quarters of Singapore's exports to India will face zero or substantially reduced tariffs,
making them cheaper and more attractive to Indian consumers, unless for a small list of products
on the negative or sensitive list. Indian imports will also enter Singapore duty-free. This
agreement with India will give Singapore an added momentum to position itself as a free trade
hub and for India to leverage on that role.
Exporters will enjoy savings from simplified testing procedures for electronic and
telecommunication equipment as well as food products. So India will be able to export egg and
dairy products to Singapore within a shorter timeframe.
The Potential areas under CECA are:
 Food Processing
 Bio-Technology
 Pharmaceuticals
 Electronics and Electronic Equipments
 Banking systems and financial companies
 Professional cooperation and exchange, investment, movement of visitors
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
Strategic approach to ASEAN members for Business :
Southeast Asia have long been tagged as one of the world’s most promising and dynamic
economic region of the 21st century and as such is high on the priority list of countries to explore
when a company wants to expand its business activities. The Association of Southeast Asian
Nation’s (ASEAN) $330 billion consumer market equals that of China’s booming coastal region in
value and is bigger than any other market in Asia. The group’s ten member countries (Brunei,
Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand, and
Vietnam) are amongst the fastest growing economies in the world. Southeast Asian economies
can be fragile, corrupt, and so frustrating when doing business that some days you may wonder
why you ever decided to do business there. However, if you’re willing to invest the time and
resources necessary to succeed in securing business in the region, your efforts will be rewarded
by tremendous opportunities and long-term buyer commitment.
IMPORTANT ELEMENTS FOR CONDUCTING EFFECTIVE BUSINESS

Personal Connections
 Having the right connections is crucial – personal relationships and connections
are often more important than economic criteria in making government and
business decisions

Third Party Intervention


Tap the resources and energy of a third party who is respected by both parties in
order to help relieve strained ties and solve problems in negotiations
Negotiating
1. 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
2. Join in the bargaining – don’t make concessions quickly, but be ready to use a
concession to extract a better bargain for yourself
3. Never lose your temper, shout or become overly demanding at delays in
decision-making or bureaucratic procedures
4. 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%.
Singapore’s 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 Singapore’s 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)
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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.
Promising areas for investment/joint ventures/services:
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).
Doing business with Indonesia:
Patience is one key to conducting business in Indonesia. Although product quality and price are
important, personal rapport is highly valued.
Foreign companies may open a local representative office with the permission of the Indonesian
Department of Trade. The representative may be an Indonesian company or individual, or a
foreign national. Trade representatives are not permitted to engage in direct sales but may
engage in sales promotion and marketing, or provide market research and technical advice.
In many instances, representative offices of foreign companies have established close
connections with Indonesian importers so that the two companies can operate virtually as one,
with the Indonesian company acting as the importer/distributor and the trade representative office
promoting products and providing technical assistance.
Infrastructure development has not kept pace with the growing population and rapidly expanding
economy. The government is working to modernize the infrastructure focusing on port and airport
construction, power generation, telecommunications and environmental projects.
Indonesia's importers and distributors continue to welcome exporters who take time to learn
about the market, adapt their products and services to local needs and make a long-term
strategic decision to participate in the economy. Given some patience and preparation, the
business visitor should find that cultural differences and the physical environment pose no major
obstacles to a successful trip.
MALAYSIA:
Potential Indian Exports to Malaysia
Malaysia
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Paper and wood products
Transport equipments
Gems & Jewellery
Rubber
Groundnuts
Man-made yarns and fabrics
Dyes and coal tar chemicals
Glassware
Potential Indian Imports from
- Computer hardware and
peripherals incl. microchips
- Business Machines
- Consumer electronics
Areas For India-Malaysia Synergies In New Economy
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Space technology
Bio-technology
Pharmaceuticals
Bio-informatics, Genomics and Ayurveda
IT: Development of hardware and software, setting up of training centre in Malaysia.
Telecommunication
Infrastructure
Food processing
Tourism
Banking- opening up of a Bank on reciprocal basis.
Market Entry Strategies
1.
2.
Licensed Manufacturing:
Franchise Agreement:
The principal forms of business entities in Malaysia are:
o
o
o
o
locally incorporated company (public or private)
Partnership or sole proprietorship
Representative Office
Joint Venture or subsidiary
Advantages:

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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:

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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) Bilateral Trade Agreement
ii) Agreement for the Avoidance of Double Taxation
iii) Air Services Agreement
iv) 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.