ASSOCIATION OF SOUTH-EAST ASIAN

NATIONS
 INTRODUCTION

On 8 August 1967, five leaders - the Foreign Ministers of

Indonesia, Malaysia, the Philippines, Singapore and Thailand - sat
down together in the main hall of the Department of Foreign Affairs
building in Bangkok, Thailand and signed a document. By virtue of
that document, the Association of Southeast Asian Nations (ASEAN)
was born. The five Foreign Ministers who signed it - Adam Malik of
Indonesia, Narciso R. Ramos of the Philippines, Tun Abdul Razak of
Malaysia, S. Rajaratnam of Singapore, and Thanat Khoman of
Thailand - would subsequently be hailed as the Founding Fathers of
probably the most successful inter-governmental organization in the
developing world today. And the document that they signed would be
known as the ASEAN Declaration.

It was a short, simply-worded document containing just five

articles. It declared the establishment of an Association for Regional
Cooperation among the Countries of Southeast Asia to be known as the
Association of Southeast Asian Nations (ASEAN) and spelled out the
aims and purposes of that Association. These aims and purposes were
about cooperation in the economic, social, cultural, technical,
educational and other fields, and in the promotion of regional peace
and stability through abiding respect for justice and the rule of law
and adherence to the principles of the United Nations Charter. It
stipulated that the Association would be open for participation by all
States in the Southeast Asian region subscribing to its aims, principles
and purposes. It proclaimed ASEAN as representing "the collective
will of the nations of Southeast Asia to bind themselves together in
friendship and cooperation and, through joint efforts and sacrifices,
secure for their peoples and for posterity the blessings of peace,
freedom and prosperity."
 The ASEAN region has a population of about 500 million, a
total area of 4.5 million square kilometers, a combined gross
domestic product of US$737 billion, and a total trade of US$ 720
billion.

In 1995, the ASEAN Heads of States and Government re-

affirmed that “Cooperative peace and shared prosperity shall be
the fundamental goals of ASEAN.”

FUNDAMENTAL PRINCIPLES

The Treaty of Amity and Cooperation (TAC) in Southeast

Asia, signed at the First ASEAN Summit on 24 February 1976,
declared that in their relations with one another, the High
Contracting Parties should be guided by the following fundamental
principles:

• 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.

 OBJECTIVES

The ASEAN Declaration states that the aims and purposes of

the Association are:

 To accelerate the economic growth, social progress and

cultural development in the region through joint endeavours
in the spirit of equality and partnership in order to
strengthen the foundation for a prosperous and peaceful
community of Southeast Asian nations.

 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.

In 1995, the ASEAN Heads of States and Government re-

affirmed that “Cooperative peace and shared prosperity shall be
the fundamental goals of ASEAN.”
Member Countries

Brunei
Darussalam Cambodia Indonesia Laos Malaysia

Myanmar Philippines Singapore Thailand Vietnam

 TRADE

ASEAN's exports had regained its upward trend in the two

years following the financial crisis of 1997-1998 reaching its peak
in 2000 when total exports was valued US$ 408 billion. After
declining to US$ 366.8 billion in 2001, as a result of the economic
slowdown in the United States and Europe and the recession in
Japan, ASEAN exports recovered in 2002 when it was valued at US$
380.2 billion. The upward trend for ASEAN-6 continued up to first
two quarters of 2003. Intra-ASEAN trade for the first two quarters
of 2003 registered an increase of 4.2 and 1.6 percent for exports and
imports respectively. [Figures 2, 3 & 4]
 ASEAN TRADE WITH SELECTED TRADING PARTNERS

The United States, the European Union and Japan continued to

be ASEAN’s largest export markets. Japan, followed by the U.S. and
EU, were the largest sources of ASEAN imports. During the first
half of 2002-2003, ASEAN-6 trade with major markets as a whole
increased by 11.71 percent for exports and 6.91 percent for imports.
However, ASEAN exports to the U.S. and India and imports from
Canada and India declined during the same period.

INDIA AND SINGAPORE:

The growing bilateral economic relationship is reflected in the rapidly rising bilateral
trade between Singapore and India.

Singapore continues to be the single largest investor in India amongst the ASEAN
countries and the second largest amongst all countries with foreign direct investment
(FDI) inflows into India, totaling US$ 2.4 billion in 2009-10.

The cumulative FDI inflows from Singapore during April 2000 and March 2010 were
US$ 10.2 billion, according to data released by the Department of Industrial Policy and
Promotion (DIPP).

The total bilateral trade during 2008-09 was US$ 16.1 billion, an increase of 3.86 per
cent over US$ 15.5 billion in 2007-08, according to data released by the Ministry of
Commerce and Industry.

During 2008-09, India exported goods worth US$ 8.45 billion to Singapore. During
April-December 2009-10, Indian merchandise exports to Singapore totaled US$ 5.12
billion, comprising mainly of mineral fuels and oils, ships, boats and floating structures
and natural pearls, gems and jewellery, according to data released by the Ministry of
Commerce and Industry.

According to a press release issued by the Ministry of Commerce and Industry, in May
2010, Mr Anand Sharma, the Union Minister of Commerce and Mr Lim Hng Kiang,
Minister for Trade and Industry, Singapore, agreed on a bilateral economic roadmap to
take the India-Singapore Comprehensive Economic Cooperation Agreement (CECA)
forward in the coming five years. As per the roadmap the two countries will work
towards doubling the annual bilateral trade by 2015. Moreover, they will promote greater
business and investment flows by identifying ways in which Indian businesses can
leverage on Singapore as a business hub in the Asia Pacific to support their international
expansion.

The two countries will also explore and develop co-operation, in science and technology,
intellectual property rights, and media.

India-Singapore Bilateral Economic Roadmap includes:

 • Increase two-way flow of tourists, businessmen and professionals
• Expedite conclusion of mutual recognition agreements (MRAs) for dentistry,
medical, nursing, architecture, accountancy and company secretary professionals
on priority
• Explore expansion of the provisions of CECA to liberalize and facilitate
movement of Indian professionals to Singapore.
• Develop closer co-operation in tourism

Moreover, according to Standard Chartered Bank, the business between India and
Singapore is set to double in the next five years. The number of Singapore-based
companies setting up operations in India, 350 at present, is expected to double in the next
five years. Similarly, India-based business community in Singapore is likely to increase
to 5,500 companies from the present 4,000 in the next two and a half years.

INDIA AND ASEAN:

India’s trade with ASEAN countries has increased from US$ 30.7 billion in 2006-07 to
US$ 39.08 billion in 2007-08 and to US$ 45.34 billion in 2008-09. During April –
September 2009-10, India’s trade with ASEAN was US$ 20.19 billion, according to data
released by the Ministry of Commerce and Industry.

In 2008-09, India's exports to ASEAN totalled US$ 19.14 billion. During April-
December 2009-10, India exported goods worth US$ 12.8 billion to ASEAN, according
to data released by the Ministry of Commerce and Industry.

India imported goods worth US$ 26.3 billion in 2008-09 from ASEAN. During the
period April-December 2009-10, India's imports from ASEAN totalled US$ 18.09
billion, according to data released by the Ministry of Commerce and Industry.

INDIA-ASEAN trade in 2003-04 was about US$ 13.25 billion, over 5 times the 1993-94
trade figure of US$ 2.5billion. India’s exports to ASEAN were US$ 5.8 billion while
imports about US$ 7.4 billion in this period; balance of trade was in favour of ASEAN.
Compared to other regional groupings, ASEAN is the fifth most important market in the
world in terms of Indian exports and fourth in terms of imports.
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.
ASEAN as a region has displayed great economic dynamism. ASEAN’s share in
worldwide exports doubled between 1980 and 2000. Further, both India and
ASEAN as a whole have attained growth in exports, at rates higher than the global
average in last two decades. Growth in India’s exports to ASEAN in recent years
has been much higher in comparison with other important destinations.
Although in case of imports, those from other regions have achieved faster growth
than ASEAN’s imports into India.

Observations:
■ India’s trade with the world in 2004 stood at US$ 142 billion, ASEAN accounting for
9.34 per cent of India’s global trade, up from 8.56 per cent last year.
■ However, based on the availability of data for ASEAN’s global import, India’s exports
to ASEAN in different product groups are much below the potential. The table indicates
the top ten commodity groups that are of maximum importance in ASEAN’s import
basket.
■ Percentage share of India in ASEAN’s import is small. India must focus on the
commodity groups that are of maximum importance to ASEAN so that Indian exports to
the region may reach the targeted level of USD 30 billion by 2007.

Potential sectors for investment and trade with India (markedly from the
manufacturing basket) are –
■ Drugs and pharmaceuticals ■ Leather
■ Gems and jewelry ■ Engineering goods
■ Processed food items
■ Healthcare
 TREND ANALYSIS- GROWTH IN INDIA-ASEAN TRADE

Compound annual growth rate (CAGR) of India-ASEAN total trade for the period 1991-
2001 has been a robust 11.1 per cent, which is more than the CAGR recorded by India’s
total trade in the same period.
CAGR calculated for the years 2001 to 2004 at 17.05 per cent shows a promising
increase that needs to be further accelerated. The potential to accelerate trade
exists, but there is need to apply greater thrust to trade in focus sectors.