By Alex Tangkilisan
Feb. 27 – In the third part of our ASEAN-India Free Trade Area
analysis, we will examine trade trends and statistics from India to
Cambodia, Brunei, Laos and the Philippines.
While the Philippines is part of the ASEAN six majors, Cambodia,
Brunei and Laos are the three smallest economies in the region.
Together, these four countries combine for a GDP of US$258.30 billion, a
population of 115.85 million and exports to India amounting to US$1.33
billion (or, about 0.27 percent of India’s total imports).
Cambodia–India Trade
India-Cambodia relations picked up in 1981 when India officially
recognized Cambodia’s new government and opened up an embassy in Phnom
Penh. In contemporary times, there has been an effort to expand their
cooperation through institutional capacity building, human resource
development, infrastructure development and security and defense.
Furthermore, India and Cambodia have enhanced bilateral cooperation
through increased interactions at regional and international forums.
Positive relations were built upon during the first India-Cambodia
Trade and Investment Business Forum, Exhibition and Buyer/Seller Meet in
2009, which sought to enhance economic engagement between the two
countries. India extended duty free tariff preference schemes to
Cambodia that same year. Indian businesspeople in Cambodia have also
established an Indian Chamber of Commerce to promote bilateral trade and
investment ties.
India and Cambodia ties were further bolstered in 2011 when they held
the first round of Foreign Office Consultations (FOC). These
consultation were in regard to trade and bilateral cooperation, with a
focus on policy, economy, security, education and vocational training,
culture, IT and agriculture.
Brunei-India Trade
The discovery of oil in 1929 brought a substantial number of Indians
seeking their fortune to Brunei. Bilateral diplomatic relations between
India and Brunei, however, were not formally established until 1984.
In 2008, India-Brunei relations were enhanced in sectors ranging from
agriculture and defense during the Sultan of Brunei’s visit to India.
During his visit, five agreements were signed, such as the Bilateral
Investment and Protection Agreement (BIPA) and the memorandum of
understanding (MoU) on Cooperation in Information and Communication
Technology.
India also signed a free trade agreement (FTA) on goods with Brunei
in 2010, which effectively slashed import duties on products ranging
from seafood to chemicals and apparel. In return, Brunei also reduced
import duties on various Indian goods.
The main export from Brunei to India has been crude oil, while Brunei
predominately imports textile products and vehicle parts from India.
However, with relatively high shipping costs between the two countries
and limited connections between Indian and Brunei business communities,
coupled with the limited needs of Brunei’s smaller population, bilateral
trade has been somewhat inhibited.
Plans to further strengthen bilateral and economic ties have lead
India and Brunei to explore the possibilities of joint ventures in
hospitality and infrastructural development in addition to joint
ventures in the energy sector.
Laos-India Trade
Due to having many common views on major international issues, a
mutually beneficial bilateral trade relationship has developed between
India and the Lao People’s Democratic Republic.
In recognition of the close ties between the two countries, the Lao
Government established the Lao-India Friendship Association in 1997. An
FTA has also been implemented, which has seen both nations slash import
duties on thousands of products.
In 2010, trade relations were further bolstered as the Indian Chamber
of Commerce in Laos signed multiple agreements and MoUs with
organizations such as the Lao Chamber of Commerce, the Confederation of
Indian Industry and the Federation of Indian Chambers of Commerce and
Industry.
Metals, ores, machinery and electronic equipment account for most of
the products imported and exported between India and Laos. In 2011,
Indian entrepreneurs committed a combined US$950 million in a
plantation, iron ore and agarwood project, which skyrocketed India from
22nd to 6th in terms of foreign direct investment in Laos. India has
previously invested in Laos’ hydro-power, IT, human resource development
and mining sectors.
The Philippines-India Trade
Business relations between India and the Philippines began to prosper
when a trade agreement was signed on May 29, 1979. Adding to this, in
1995, following the first Philippine Trade Mission to India, a Joint
Working Group and a Joint Business Council were set up to assess and
identify potential avenues for trade, and to identify new areas for
collaboration.
The agreement to establish a Joint Commission on Bilateral
Cooperation was signed during President Gloria Macapagal Arroyo’s state
visit to India on October 5, 2007, with an aim to further strengthen and
develop cooperation in the fields of trade, economic, science and
technology. Its inaugural session was held on March 15, 2011, in New
Delhi, during which both sides agreed to continue with and expand on
cooperative initiatives in various sectors such as trade, agriculture
and defense.
India and the Philippines have also been negotiating to revise and
clarify certain aspects of their double taxation avoidance agreement
(DTAA), with regard to the taxation of income derived from professional
services. The newly revised DTAA is set to be signed sometime this year.
Indian business interest in the Philippines primarily lies in the
mining, information and communication technology, and business process
outsourcing sectors.
Part IV of this series will explore the impact of the ASEAN-India
Free Trade Area on Thailand, Singapore and Malaysia. Part II can be
found here.
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