To Take A Stand
By Rafael M. Alunan III
Last week the Philippines hosted the President of India, Shri Ram Nath Kovind, who came to Manila to address the India-Philippines Business Conclave and the 4th ASEAN-India Business Summit in Manila on Oct. 19. The night before, President Rodrigo Duterte tendered a dinner in his honor in Malacañan. A major player of that conclave and summit was the Philippines-India Business Council (PIBC) chaired by Johnny Chotrani.
At the Summit, President Kovind cited the significant potential for the Philippines-India economic collaboration. Both countries, he said, share mutual complementarities that could be useful to deepen trade and investment ties, such as the Philippines’ “Build, Build, Build” infrastructure initiative and India’s “Make in India,” as well as next-generation infrastructure programs. He was accompanied by a business delegation to explore new business opportunities; interact with government officials, local industry, and investment promotion agencies to obtain insights into the cost and ease of doing business.
Areas of interest were agriculture, health care, pharmaceuticals, IT, IT enabled services, electronics, innovation and business start-ups, and digital technologies such as digital payment, e-wallets, etc. Bilateral trade has shown continuous progress but the real gain has been collaboration in the IT-BPO sector. The digital age presents immense opportunities to fill e-commerce shelves, create fin-tech services, develop entertainment platforms, and power green and clean solutions.
The President said that in recent years, both countries have seen two-way investment growth in infrastructure and energy. More prospects wait to be converted into concrete projects, from airport terminals and LNG pipelines, to waste management solutions. The Indian pharma and health care sectors offer immense value to the Philippines. There is scope to enhance partnership in several other areas — from trade, investment, services, agriculture, engineering, to new technologies.
ASEAN is one of the most economically dynamic regions of the world today, and India has deep political and people-to-people relations with every member country. Kovind expressed the wish to bring ASEAN-India economic and business relations up to the same level. Although ASEAN-India trade, tourism, and investments have jumped significantly in the past few years there is still a long distance to cover to reach the target of $200 billion by 2022.
Although our ASEAN neighbors, linked by Asia’s land mass to India, are far more advantaged than us, collectively, not enough has been done to scale up business ties. ASEAN brings in better results from other regional blocs and bilateral ties where we’ve been successful in gradually reducing and eliminating trade and investment barriers. India has yet to benefit from ASEAN’s nominal GDP of $3.1 trillion and per capita income of $4,747. The effective use of existing mechanisms, like the ASEAN-India Business Council, can play a vital role in realizing this goal.
There are two billion people between India and ASEAN that haven’t been leveraged to date. We lack an economic partnership to create the policy and business environment needed to step up B2B linkaging and performance. Toward that end, the Regional Comprehensive Economic Partnership (RCEP) between India, ASEAN and its six FTA partners (China, Japan, India, South Korea, Australia, and New Zealand) is being rushed. RCEP is also open to any other external economic partners, such as countries in Central Asia, South Asia, and Oceania.
ASEAN-India trade has grown from $43.9 billion in 2010 to $81.33 billion in 2018. Indonesia, Malaysia, Thailand, Vietnam, and the Philippines account for 82% of total ASEAN trade with India. While the ASEAN imports over $1.2 trillion worth of goods from all over the world, India supplied only about 2-3% of ASEAN’s total imports; while its imports from ASEAN accounted for about 12% of total. India’s FDI flows to ASEAN were only $1.8 billion, or around 1.5% of total FDIs. Greater market access by both sides require amending negative lists in certain sectors and the successful conclusion of RCEP and other trade agreements.
I was in India last August as a member of the board of PIBC and as chair of the Philippine Council for Foreign Relations (PCFR). Business-wise, the Philippines is clearly at a disadvantage; it’s not part of the Asian land mass compared to most of ASEAN. But we’re connected by water: the Indian Ocean flows through the South China Sea and into the Pacific Ocean. India-PH joint ventures could radiate back eastwards to India and westwards to the Asia-Pacific region, which accounts for around 84% of our country’s total exports. Shipbuilding, pharmaceuticals, land transport, AI, space programs, and technical services are core areas of interest.
India’s “Indo-Pacific” concept, a term that gained currency in light of the strategic competition between the US and China, was another subject matter of interest. It’s a concept that’s still evolving depending on who you’re talking to. One version is focused on a military construct intended to oppose China’s militarization of the South China Sea and Belt-Road Initiative. ASEAN’s RCEP is more aligned to India’s, which is still in the process of crafting its own architecture.
Its foundations rest on a cooperative approach for these priorities: integrated economies, sustainable development of marine resources or blue economy, rules-based maritime order, international law and military deterrence. Its pillars would likely be maritime cooperation, trade and investments, connectivity, socio-cultural, science and technology, and the UN’s social development goals.
The Philippine government, if it hasn’t done so yet, should create an Indo-Pacific desk and tap the services of think tanks like PCFR to help craft an integrated approach for strategic alignment with the world’s leading economic and military powers. After obtaining official approval of the strategic plan, joint working groups on sectoral cooperation, e.g., maritime security, trade expansion, medical services, should be organized. All that eventually will require Executive-Legislative approval leading to an Indo-Pacific summit to formalize our alignment.
His thoughts on Philippines-India relations reached this high note: “I have no doubt that there exists a rich tapestry of our shared heritage waiting to be researched and documented. The discovery of the statue of Tara in Agusan and the commonality in our languages and thought speak of vibrant cultural exchanges in the ancient past. And much to our delight, our contemporary cultural attributes, be it music or dance, Karaoke or Kathak, continue to bring our two peoples closer.”
Rafael M. Alunan III is a former Secretary of Interior and Local Government and chairs the Philippine Council for Foreign Relations.
