Greater trade, connectivity key to Asean-India ties: PM Lee26/01/2018
He urges both sides to work on sealing RCEP trade deal, and collaborate more to boost land, air, sea and digital links
Prime Minister Lee Hsien Loong yesterday called on Asean and India to take ties up a notch by enhancing trade, investments and connectivity.
Calling India "a very important economic partner", he however noted that it accounts for just 2.6 per cent of Asean trade.
Mr Lee was speaking at a summit in New Delhi to mark 25 years of relations between the two sides. Singapore is the Asean chair this year.
He also urged both sides to ensure an existing free trade agreement between them stays relevant.
The two sides should also work on sealing the Regional Comprehensive Economic Partnership (RCEP), he said, referring to the proposed trade pact between Asean and six countries, including India. "RCEP could potentially transform the entire East Asian region into a single market, comprising 45 per cent of the world's population and about a third of its current GDP," noted Mr Lee.
An RCEP deal would boost India's strategic position in the region, he said, calling for negotiations to be concluded this year "so that the benefits can be realised earlier".
On connectivity, Mr Lee said enhanced land, air, sea and digital links will benefit the people of Asean and India. Asean appreciates India's role in the building of the India-Myanmar-Thailand Highway, he added. But many visitors cannot reach India via land, "so we have to work towards greater air connectivity".
It would help for the two sides to work on an Asean-India Air Transport Agreement (AIATA), he said, noting that India accounts for just 3 per cent of tourist arrivals in Asean countries. "The AIATA will enhance people-to-people flows across the region and help both Indian and Asean carriers to tap on new and emerging markets, especially in the areas of business, investment and tourism."
He also called for more collaboration on digital links, such as a harmonisation of e-payment systems.
Mr Lee's call comes at a time when Asean-India trade has stagnated. At the last commemorative summit in 2012, annual trade stood at US$75 billion, and the two sides expressed hope that it would hit US$200 billion (S$261 billion) by 2020.
But trade has fallen to $70 billion - even as Asean-China trade grew to nearly $500 billion. South Korea trades more with Asean than India does, despite having a smaller economy than India.
Some ways to enhance trade include better maritime and air links, more mutual recognition deals, and the easing of business visas, said Dr Faizal Yahya of the Lee Kuan Yew School of Public Policy (LKYSPP).
Agreeing that there is an urgency to act, LKYSPP's Professor Ramkishen Rajan said RCEP talks have stalled in part due to India's insistence on negotiating the liberalisation of both the goods and services markets in tandem.
Another reason for the lacklustre trade figures could be the after-effects of the 2008 recession, said Professor Biswajit Dhar of Jawaharlal Nehru University.
Added Dr K.J. Joseph of India's Centre for Development Studies: "Trade in goods, wherein Asean has comparative advantage, got liberalised, whereas trade in services, wherein India has comparative advantage, is yet to be opened up."
If Asean can agree to open up its service sector more, this imbalance can be redressed, which would enhance trade, he said.
Source: The Straits Times