VOL. IV, NO. 17 | June 2017
ASEAN-India: Forging Physical Connectivity
by Jemimah Joanne C. Villaruel
“Connectivity is the pathway to shared prosperity.” These words were stated by Indian Prime Minister Narendra Modi during the 13th ASEAN-India Summit held in Kuala Lumpur, Malaysia in 2015.
As ASEAN strives to achieve its goal of establishing a single market and become a fully integrated ASEAN Community, it is clear that connectivity is a crucial factor as demonstrated by the adoption of the revised Master Plan on Connectivity (MPAC) 2025, which seeks to comprehensively connect ASEAN Member states, along with its regional and sub-regional partners, through its physical, institutional and people-to-people linkages. While MPAC is centered on developing connectivity among ASEAN member states, it also gives due importance to connectivity with ASEAN’s dialogue and strategic partners, particularly China, India, Japan, and Korea.
In fact, during the consultation between the ASEAN Connectivity Coordinating Committee (ACCC) and its Dialogue Partners on 19 October 2016, H.E. Ambassador Latsamy Keomany, Permanent Representative of Lao PDR to ASEAN and ACCC Chair, emphasized that “MPAC 2025 will require partnerships with our Dialogue Partners and other external partners for effective implementation. We need an inclusive process that helps in defining the needs of ASEAN and the opportunities for our peoples and partners.”
With ASEAN-India trade amounting to USD75 billion in 2015 and projected to reach approximately USD200 billion by 2022, connectivity is all the more vital to facilitate and increase cross-border trade and investment between ASEAN and India. According to a study by the Economic Research Institute for ASEAN and East Asia (ERIA), an enhanced ASEAN-India connectivity could result in cumulative gains of over five percent of gross domestic product (GDP) for Cambodia, Myanmar, Thailand, and Viet Nam, and gains of over two percent of GDP for India.
Forging physical connections
Many modes of connectivity bind ASEAN and India. Foremost among these are national and regional connectivity projects being developed to facilitate and enhance trade and investment and boost the untapped economic potential of both regions. Three of the most significant regional connectivity projects between ASEAN and India are the India-Myanmar-Thailand Trilateral Highway, the Kaladan Multimodal Transit Transport Project (KMTTP), and the Myanmar-India Economic Corridor (MIEC).
Myanmar, in particular, plays an integral role in India’s Act East policy and has served as a catalyst for closer bilateral relations between the two states, being the only land bridge between India and Southeast Asia, as well as due to its increasing democratization and opening up to greater political and economic engagement. The aforementioned regional connectivity projects encompass the construction and development of roads, railways, and bridges connecting the Mekong region with India. However, structural and procedural barriers have hampered the full implementation and progress of these projects because of the difficulty of integrating and harmonizing physical infrastructures between and among states. These barriers include lack of capacity, poor infrastructure, and significant domestic challenges that curtail the execution of projects, not to mention the perceived unequal benefit of such massive infrastructure projects for states in the region.
In the case of the Trilateral Highway, immigration and customs issues are also major concerns, which is why the signing of the Motor Vehicle Agreement is imperative for the smooth and continuous movement of passenger and cargo vehicles between India, Myanmar, and Thailand. Despite these hurdles, there are plans to extend the Trilateral Highway to Cambodia, Lao PDR, and Vietnam for phase two of its construction. This development illustrates the significance of this project in opening up trade and investment between India and the Mekong region and transforming it into a vibrant economic corridor.
Apart from land infrastructure projects, air and maritime connectivity are also crucial in deepening linkages between ASEAN and India. The long-awaited conclusion of the ASEAN-India Air Transport Agreement (AIATA) based on “open skies” principles that cover both air freight and passenger services is a major step towards aviation cooperation, notably in light of the establishment of the ASEAN Single Aviation Market. For the Philippines, an enhanced air connectivity with India, particularly through the establishment of direct flights, promises increased trade and tourism between the two countries.
But India’s maritime connectivity with ASEAN is still in its initial stage, although it already has a strong maritime security engagement with many ASEAN member states, as shown by its numerous joint naval cooperation to enhance maritime domain awareness in the region. In addition, the Maritime Transport Cooperation Agreement with ASEAN is being negotiated in order to strengthen maritime connectivity. With 95 percent of India’s trade volume moving by sea, enhancing maritime connectivity with India is not only prudent but also necessary if ASEAN wants to maximize its trade potential with India by developing its maritime infrastructure and enacting policies that will support the efficient movement of goods and services between land and sea borders.
Reaping the benefits of connectivity
As ASEAN approaches its 50th founding anniversary, it is faced with the daunting task of achieving regional cohesiveness whilst also confronting transboundary issues and an unpredictable political-security climate. The resolution of political-security differences in the region may take time; however, economic interests are a constant in the development equation.
Thus, connectivity is essential to bring about regional integration, as well as to promote trade through the seamless flow of goods and services. An enhanced and well-developed connectivity between states aids in the reduction of transaction costs and facilitates investment. ASEAN-India connectivity encompasses the physical, digital, and institutional realms. It is without a doubt, however, that physical connectivity will remain a crucial element: the development of land, air, and maritime infrastructure enhances the logistics and supply chain for production and consumption, which serve as key drivers of economic development.
As Chair of ASEAN in 2017, the Philippines has a vital role to play in strengthening relations between ASEAN and its external partners. 2017 is a milestone in ASEAN-India relations since it commemorates 25 years of Dialogue Partnership, 15 years of Summit Level interaction, and five years of Strategic Partnership. As Chair of ASEAN, the Philippines should take the lead to reexamine the modalities and nuances of ASEAN-India relations, take stock of its accomplishments, and undertake steps to propel the relations forward.
With various connectivity projects underway, it is clear that both ASEAN and India are committed and eager to realize the immense economic potential brought about by enhanced physical linkages. While structural and administrative hurdles persist, the completion of these projects will nonetheless bring about tremendous advantages and opportunities for mutual development.
CIRSS Commentaries is a regular short publication of the Center for International Relations and Strategic Studies (CIRSS) of the Foreign Service Institute (FSI) focusing on the latest regional and global developments and issues.
The views expressed in this publication are of the authors alone and do not reflect the official position of the Foreign Service Institute, the Department of Foreign Affairs and the Government of the Philippines.
Jemimah Joanne C. Villaruel is a Foreign Affairs Research Specialist with the Center for International Relations and Strategic Studies of the Foreign Service Institute. Ms. Villaruel can be reached at firstname.lastname@example.org.