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 endeavors 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.