India and Southeast Asia: Towards Security Convergence

4. Economic Co-operation and Integration: Building Blocks of Security

124 INDIA AND SOUTHEAST ASIA: TOWARDS SECURITY CONVERGENCE 4 ECONOMIC CO-OPERATION AND INTEGRATION: BUILDING BLOCKS OF SECURITY Geopolitics versus geoeconomics. It is often argued that today the latter has taken the centre stage of international relations. Whether it is true is a debatable point. However, it is apparent that economic interests are seen to be dominant in relationship between countries even as the role of politico-security factors remains largely undiminished. In present times, as was broadly true in the past, it is not just military strength but also the economic well-being and wherewithal that lends to a country a sense of stability and security. The goal of human security, which all countries aspire to reach, cannot be attained without economic security. In the opposing pulls and pressures caused by the universal trend towards globalization on the one hand and regional economic integration on the other, countries need to strike an appropriate balance between the two. Regional co-operation in trade and economic matters can create a sense of interdependence and security, which does not remain confined to merely governments and state players, but permeates to the people-to-people level. Both India and the countries of Southeast Asia are seized of this reality and are tailoring their trade and economic policies accordingly. INDIA–SOUTHEAST ASIA RELATIONS: THE ECONOMIC IMPULSE With respect to the renewed intensification of India–Southeast Asia relations in political and economic field, it will be hard to pin down what inspired the other first. Is it the thawing in political relations following the end of the Cold War (and the Cambodian conflict) or is it mutual attraction for market place and economic complementarities? In any 05 India&SEA Ch 4 11/11/05, 8:18 AM 124 Economic Co-operation and Integration: Building Blocks of Security 125 case, a strong economic impulse contributed to a rediscovery of each other and to the beginning of a process of integration. It is a fortuitous coincidence that even in the ancient past, trade had played the leading role in bringing India and Southeast Asia together. Today, history seems to repeat itself. In just a decade since starting a serious dialogue, with a focus on expanding economic relations, India and ASEAN signed a framework agreement for developing comprehensive economic co-operation including a free trade agreement in October 2003. This marked a rapid rise in the trajectory of their relations. That year two-way trade exceeded US$12.1 billion. In absolute terms this is a modest figure given their combined population of more than 1.5 billion and the large sizes of their economies. Trade was, however, primarily concentrated in four countries, namely, Singapore, Malaysia, Thailand and Indonesia.1 The situation for investments was not much encouraging either. The investments figure from India to the ASEAN countries was US$225.28 million during the period 1995–2001, whereas approvals by India for foreign direct investment (FDI) from the ASEAN-6 countries, namely, Indonesia, Malaysia, the Philippines, Singapore, Thailand and Vietnam, to India came to US$2,072.96 million during the period 1996–2001.2 For India and Southeast Asia, the overall economic depth in their relationship is still fairly marginal compared with the continuing upsurge in the latter’s economic relations with China. China–ASEAN trade was expected to exceed US$100 billion in 2004.3 The contrast is particularly sharp. However, the fact that India demonstrated a willingness and resolve to enter into a Comprehensive Economic Co-operation Agreement (CECA) including an FTA with ASEAN, like what China and Japan had done, was itself a manifestation of India’s desire to be a serious player in the politico-economic arena of the Asia-Pacific. For ASEAN countries, this act put them in a more confident position with respect to India’s engagement in the region and their own engagement with India. In the earlier years there was evidence of complementarities and mutually needed strengths by both sides. However, regrettably, the economic ties seemed to mirror the overall political relations. After the mid-1960s till the end of the Cold War when India–Southeast Asia relations (with the exception of India’s relations with the Indochina countries) were largely formal, the volume of economic relations remained low. In the beginning of the 1990s, India’s trade with the ASEAN-6 05 India&SEA Ch 4 11/11/05, 8:18 AM 125 126 INDIA AND SOUTHEAST ASIA: TOWARDS...