DOING BUSINESS WITH ASSOCIATION OF SOUTHEAST ASIAN NATIONS (ASEAN)

Geographic and ethnic closeness, eastward expansion for Indian corporates and influence of Indian community in every walk of life one can see in the whole member nations of ASEAN. Today, major ventures of Indian business houses are striking in every sector in ASEAN.

Learning Values:
After reading this chapter one can learn: 1. The gamut of South East Asian economy, industry and infrastructure. 2. Fast growing economies with their core competencies. 3. India-ASEAN trade: both inward and outward. 4. Emerging opportunities: sector wise. 5. Major challenges and strategic approaches to succeed

The Association of Southeast Asian Nations or ASEAN was established on 8 August 1967 in Bangkok by the five original Member Countries, namely, Indonesia, Malaysia, Philippines, Singapore, and Thailand, as a display of solidarity against Communist expansion in Vietnam and insurgency within their own borders.Brunei Darussalam joined on 8 January 1984, Vietnam on 28 July 1995, Lao PDR and Myanmar on 23 July 1997, and Cambodia on 30 April 1999. The ASEAN region has a population of about 600 million, a total area of 4.5 million square kilometers, a combined gross domestic product of almost US$ 800 billion, and a total trade of about US$ 850 billion. ASEAN flag Brunei Cambodia Indonesia Laos Malaysia Myanmar Philippines Singapore Thailand Vietnam Jakarta Ong Keng Yong 4,480,000 km2

Members

Objectives:
The ASEAN Declaration states that the aims and purposes of the Association are: (1) To accelerate economic growth, social progress and cultural development in the region and (2) 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. The ASEAN Vision 2020, adopted by the ASEAN Leaders is outward looking, living in peace, stability and prosperity, bonded together in partnership in dynamic development and in a community of caring societies.

Seat of Secretariat Secretary General Area Population - Total (2005) - Density GDP (2004) - Total - Total - GDP/capita - GDP/capita

572,400,000 122.3 people/km

$2553.1 billion (PPP) $800.6 billion (Nominal) $4,639 (PPP) $1,455 (Nominal) Bangkok Declaration - 8 August 1967

In 2003, the ASEAN Leaders Formation resolved that an ASEAN Community should be established comprising three - Signed pillars, namely, ASEAN Security Community, ASEAN Economic Community and ASEAN Socio-Cultural Community.

Fundamental Principles:
ASEAN Member Countries have adopted the following fundamental principles in their relations with one another, as contained in the Treaty of Amity and Cooperation in Southeast Asia (TAC): 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.

Economic Indicators:
Recent Economic Indicators GDP (US$bn) (current prices) GDP PPP (US$bn) GDP per capita (US$) GDP per capita PPP (US$) Real GDP growth (% change YOY) Current account balance (US$ mil.) Current account balance (% GDP) Inflation (% change YOY) 2001 571.3 2,037.20 1,089 3,883 2.2 33,256 5.8 4.9 2002 636.8 2,176.10 1,193 4,078 4.8 35,792 5.6 4.8 2003 717.4 2,345.50 1,324 4,330 5.3 52,594 7.3 3.5 2004 800.6 2,553.10 1,455 4,639 6.6 53,144 6.6 4

Vision 2020:
In 1997, the ASEAN leaders adopted the ASEAN Vision 2020, which called for ASEAN partnership in dynamic development aimed at creating closer economic integration within the region. The vision statement also resolved to create a stable, prosperous and highly competitive ASEAN Economic Region, in which there is a free flow of goods, services, investments, capital, and equitable economic development and reduced poverty and socio-economic disparities. The Hanoi Plan of Action, adopted in 1998, serves as the first in a series of plans of action leading up to the realization of the ASEAN vision.

ASEAN Members Background Information:

For 2005 (In US$) Country GDP Per Capita Country GDP Per Capita Brunei Darussalam 25,751.3 Myanmar 199.4 Cambodia 404.3 Philippines 1,154.5 Indonesia 1,278.6 Singapore 26,880.7 Lao PDR 479.9 Thailand 2,720.8 Malaysia 5,008.5 Viet Nam 635.3 ASEAN 1,582.6

BRUNEI DARUSSALAM
Capital: Land area: Population: Language: Member of: Bandar Seri Begawan 5.8 thousand sq. km 370.1 thousand (2005) Malay, English ASEAN, APEC, APT, APDC, Commonwealth, ESCAP, GP 77, GATT/WTO, ICAO, IMO, IMF, WMO, UNDP, WHO, WIPO, WTO-GBT, ASEM, EALAF, UN, OIC, NAM, AASROC, UNESCO, APG, WSIS, IDB, ADB and AMED B$ (Bruneian Dollar). US$ 9,530.5 million at current market prices Oil and gas, textiles, food and beverages, building materials Oil and gas, ready-made garments Transport equipment and machinery, manufactured goods, food chemicals

Currency: GDP: Major Industries: Major Exports: Major Imports:

Brunei does not have a Central Bank. The Ministry of Finance discharges the functions of the Central Bank for Brunei.

CAMBODIA
Capital: Land area: Population: Language: Member of: Currency: GDP: Major Industries: Major Exports: Major Imports: Phnom Penh 181.0 thousand sq. km 13,661.4 thousand Khmer ASEAN, CTBTO, ESCAP, FAO, IAEA, IBRD, ICAO, IDA, IFC, IFAD, ILO, IMF, IMO, ITU, LDC, UNO, UNCTAD, UNESCO, UPO, UNIDO, WIPO, WHO Riel US$5,523 million (2005) at current market prices Textiles and Garments, Beverages, Food Processing, Wood Processing Garments, Textile Product Sawn, Wood Furniture and Rubber Transport equipment and machinery, manufactured goods, food chemicals

INDONESIA
Capital: Land area: Population: Language: Member of: Currency: GDP: Major Industries: Major Exports: Jakarta 1,890.8 thousand sq. km 219,205.0 thousand Bahasa Indonesia ASEAN, UN, IMF, ESCAP, FAO, ILO, UNESCO, IBRD, IFC, MIGA, IDB, IDA, ADB, WTO, APEC, ASEM, EALAF Rupiah US$ 280,265 million (2005) at current market prices Pulp and paper, cement, basic metals and fertilizer, power generation, telecommunication, transportation Textile, electronic goods, footwear, oil & gas, plywood, sawn timber

Major Imports: Major Exports to India(2005-06): Major Imports from India(200506)

Chemical and pharmaceutical, fertilizer, cotton yarns, textile fabric, machines, motor vehicles Vegetable oil, Coal, coke and briquettes, Metalifferous ores and metal scrap, Non-electrical machinery, Pulp and waste paper Dyes, intermediates etc., Primary and semi-finished iron and steel, Oil meals, Inorg/Org/agro chemicals, Machinery and Instruments

LAO PDR
Capital: Land area: Population: Language: Member of: Currency: GDP: Major Industries: Major Exports: Major Imports: Vientiane 236.8 thousand sq. km 5,938.8 thousand Lao ASEAN, ADB, ESCAP, FAO, IBRD, WHO, IDA, WIPO, IFC, ILO, IMF, UN, NCTAD, UNESCO, UNIDO, UNICEF, WHO, EALAF Kip US$ 2,872 million (2005) at current market prices Garment industry, wood-based and processing industries, electricity Coffee, electricity, clothing, wood and forest product and Gypsum Industrial machinery, chemicals, iron, electrical machinery and parts, steel, oil, construction material and consumption goods

MALAYSIA
Capital: Land area: Population: Language: Member of: Currency: GDP: Major Industries: Major Exports: Major Imports: Major Exports to India (2005-06) Major Imports from India (200506) Kuala Lumpur 330.3 thousand sq. km 26,127.7 thousand Melayu, English, Chinese, Tamil ASEAN, ADB, APEC, ASEM, D-8, EBRD, ECOSOP, ESCAP, FAO, G-15, IAEA, IBRD, ICAO, IDA, IDB, ILO, EALAP Malaysian Ringgit US$ 130,860.5 million (2005) at current market prices Electronic & electrical goods, textiles, clothing & footwear, chemicals, petroleum, wood and metal products and rubber Electronic & electric machinery, petroleum & LNG, textiles, clothing & footwear, palm oil, sawn timber Manufacturing inputs, machinery & transport equipment, metal product Electronic goods, Organic Chemicals, Wood and wood products, Vegetable oils, Non-ferrous metals Transport Equipments, Meat and preparations, Dyes, intermediates etc., Machinery and Instruments, Inorg/org/agro chemicals

MYANMAR

Capital: Land area: Population: Language: Member of: Currency: GDP: Major Industries: Major Exports: Major Imports: Major Exports to India (2005-06)

Yangon 676.6 thousand sq. km 56,002.6 thousands (2005) Myanmar ASEAN, ADB, ESCAP, ACU, FAO, IBRD, IDA, IFC, ILO, IMF, ITU, WTO, UNESCO, UNIDO, UNICEF, EALAF Myanmar Kyat US$ 11,168.8 million (2005) at current market prices Agro-based industries, textiles industries, steel mills Rice, teak, beans & pulses, rubber, coffee, minerals, gems marine products Power tillers, hand tractor, fertilizer, diesel oil, cement, dumper, loader and spare parts, water pumps, hydraulic excavator Wood and wood products, Pulses, Natural rubber, Raw hides and skins, Fruits and nuts

PHILIPPINES
Capital: Land area: Population: Language: Member of: Manila 300.0 thousand sq. km 85,236.9 thousands Filipino, English, Spanish APEC, ARF, ACD, ADB, ASEAN, ASEM, CCC, Common Fund for Commodities, CP, ESCAP, FEALAC, FAO, G-24, G-77, IAEA, IBRD, ICAO, ICC, ICFTU, ICRM, IDA, IFAD, IFC, IFRCS, IHO, ILO, IMF, IMO, Interpol, IOC, IOM, ISO, ITU, NAM, OPCW, UN, UNCTAD, UNESCO, UNHCR, UNIDO, UNMIK, UNTAET, UNU, UPU, WCL, WFTU, WHO, WIPO, WMO, World Tourism Organization, World Trade Organization Peso US$98,407.5 million (2005) at current market prices Priority sectors : construction materials, electronics, food, giftware and holiday decor, home furnishings, IT & IT-enabled services, marine products, motor vehicle parts and components, organic and natural products, wearables Electronic products; garments; ignition wiring set and other wiring sets used in vehicles, aircrafts, and ships; coconut oil; woodcrafts and furniture; other products manufactured from materials imported on consignment basis; petroleum products; metal components; cathodes and sections of cathodes of refined copper; fresh bananas (per data as of August 2005) Electronic products; mineral fuels, lubricants, and related materials; industrial machinery and equipment; transport equipment; iron and steel; cereal and cereal preparations; textile yarn, fabrics, made-up articles, and related products; telecommunications equipment and electrical machinery; plastics in primary and nonprimary forms; organic and inorganic chemicals (per data as of August 2005) Electronic goods, Newsprint, Metaliferrous ores and metal scrap, Nonelectrical Machinery, Organic chemicals Primary and semi-finished Iron and Steel, Meat and preparations, Rubber manufactured products, Drugs, pharmaceutical and fine chemicals, Plastic and Linoleum products

Currency: GDP: Major Industries:

Major Exports:

Major Imports:

Major Exports to India (2005-06) Major Imports from India (200506)

SINGAPORE
Capital: Land area: Population: Language: Member of: Currency: GDP: Major Industries: Major Exports: Major Imports: Major Exports to India (2005-06) Major Imports from India (200506) Singapore 697.1 sq. km 4.198 million (2004) English, Malay, Mandarin, Tamil ASEAN, ADB, APEC, ARF, COMMONWEALTH, FAO, IAEA, IBRD, IDA, IFC, IMF, IFAD, IMO, ILO, ITU, UNIDO, UPO, WHO, ASEM, EALAF, WTO, WIPO, ICAO, NAM, G77 Singapore Dollar (S$) US$106,818 million (2004) at current market prices Electronics, chemicals, banking and finance, real estate, tourism, trading Petroleum products, industrial machines, radio & television receivers & parts, electronic component & parts, clothing, beverages & tobacco Crude petroleum, iron & steel, industrial machines, electric generators, electronic component and parts Electronic goods, Organic chemicals, Non-electrical machinery, Printed books, news papers etc., Transport equipments Gems and Jewellery, Transport equipments, Electronic goods, Machinery and Instruments, Dyes, intermediates etc.

THAILAND
Capital: Land area: Population: Language: Member of: Currency: GDP: Major Industries: Major Exports: Major Imports: Major Exports to India (2005-06) Major Imports from India (200506) Bangkok 513.3 thousand sq. km 64,763.0 thousands Thai ASEAN, ADB, ASEM, ESCAP, FAO, IBRD, IDA, IFC, IMF, ILO, UNCTAD, UNESCO, WHO, WIPO, APEC, EALAF Baht US$ 176,206.6 million (2005) at current market prices Electronics, gems and jewelry, footwear, textiles, clothing, mobiles Textiles, computer & components, integrated circuits and parts, gems & jewelry, footwear Industrial machinery, iron & steel electrical machinery & parts, chassis and body Electronic goods, Non-electrical machinery, Artificial resins, plastic materials etc., Iron and Steel, Transport equipment Gems and jewellery, Non-ferrous metals, Primary and semi finished Iron and Steel, Oil meals, Machinery and Insturments

VIETNAM
Capital: Land area: Ha Noi 330.4 thousands sq. km

Population: Language: Member of: Currency: GDP: Major Industries: Major Exports: Major Imports: Major Imports from India (200506)

83,119.9 thousands Vietnamese ASEAN, IBRD, IDA, IFC, IMF, ASEM, MIGA, UNDP, UNCTAD, GSPT, UNIDO, FAO, IFAD, ICAO, EALAF Dong US$ 52,807.6 million (2005) at current market prices Agriculture, forestry, fishery, industrial construction Crude oil, coal, chromium, tin, cements, woolen carpet, jute carpet, rice cinnamon, marine products Motors, petroleum products, diesel oil, fertilizers Oil meals, Drugs, pharmaceutical and fine chemicals, Primary and semi finished iron and steel, Plastic and linoleum products, Inorg/org/agro chemicals, Non-ferrous metals

ASEAN Trade:
Country Brunei Darussalam Cambodia Indonesia Lao PDR Malaysia Myanmar The Philippines Singapore Thailand Viet Nam ASEAN For 2005 (In million US$) Exports Imports 6,369.3 3,091.5 85,660.0 174.1 140,470.5 3,123.8 41,254.7 229,804.1 109,622.6 28,576.5 648,147.0 1,503.1 2,824.7 57,700.9 701.8 114,213.1 1,632.9 47,418.2 200,162.8 117,990.9 32,593.9 576,742.4

ASEAN's global merchandise trade:

ASEAN's principal export destinations, 2005:
1) 2) 3) 4) 5) Japan 14.7% United States 13.4% China 10.8% Republic of Korea 5.0% Australia 4.5%

ASEAN's principal import sources, 2005:

1) Japan 18.6% 2) United States 13.7% 3) China 13.7%

4) Hong Kong 7.3% 5) Republic of Korea 5.1% 6) Australia 2.8%

The ASEAN Free Trade Agreement:

ASEAN free trade area was launched in 1992 to eliminate tariff barriers among the South East Asian Countries with a view to integrating Asian economies into a single production base and creating a regional market. At the Fourth ASEAN Summit in Singapore in January 1992, ASEAN initiated the ASEAN Free Trade Area, or AFTA, which laid out a comprehensive program of regional tariff reduction, to be carried out in phases through the year 2008. This deadline was subsequently moved forward to 2003. Over the course of the next several years, the program of tariff reductions was broadened and accelerated, and a host of "AFTA Plus" activities were initiated, including efforts to eliminate non-tariff barriers and quantitative restrictions and harmonize valuation, and procedures, and develop common product certification standards. In addition, ASEAN later signed framework agreements for the intra-regional liberalization of trade in services, and for regional IPR cooperation. An industrial complementation scheme designed to encourage intra-regional investment was approved, and discussions were held on creating a free investment area within the region. During the financial crisis of 1997-98, ASEAN reaffirmed its commitment to AFTA, and as part of a series of "bold measures," agreed that the original six AFTA signatories would accelerate many planned tariff cuts by one year, to 2002 from 2003. When the AFTA agreement was originally signed, ASEAN had six members (Brunei, Indonesia, Malaysia, Philippines, Singapore, and Thailand). Vietnam joined in 1995, Laos and Myanmar in 1997, and Cambodia in 1999. All four countries were required to sign on to the AFTA agreement in order to join ASEAN, but were given longer time frames in which to meet AFTA's tariff reduction obligations

Common Effective Preferential Tariff (CEPT):

The CEPT is the mechanism by which tariffs on goods traded within the ASEAN region, which meet a 40% ASEAN content requirement, were reduced to 0-5% by the year 2002/2003 (2006 for Vietnam, 2008 for Laos and Myanmar, and 2010 for Cambodia). The tariff reductions are moving ahead on both the "fast" and "normal" tracks. Tariffs on goods in the fast track were largely reduced to 0-5% by 2000. Tariffs on goods in the normal track were reduced to this level by 2002, or 2003 for a small number of products. Currently, about 81% of ASEAN's tariff lines are covered by either the fast or normal track. ASEAN members have the option of excluding products from the CEPT in three cases: 1.) Temporary exclusions; 2.) Sensitive agricultural products; 3.) General exceptions. General Exceptions refer to products which a country deems necessary for the protection of national security, public morals, the protection of human, animal or plant life and health, and protection of articles of artistic, historic, or archaeological value. Approximately one percent of ASEAN tariff lines fall into this category. The CEPT scheme covered nearly 98 percent of all tariff lines in ASEAN by the year 2003; by then, the only products not included in the CEPT Scheme were those in the General Exceptions category and sensitive agricultural products. In the longer term, the ASEAN countries have agreed to enact zero tariff rates on virtually all imports by 2010 for the original signatories, and 2015 for the four newer ASEAN members.

Average AFTA / CEPT Tariff Rates

1998 Brunei Indonesia Laos Malaysia Myanmar Philippines Singapore Thailand Vietnam 1.35 7.04 5.00 3.58 4.47 7.96 0.00 10.56 6.06 1999 1.29 5.85 5.00 3.17 4.45 7.00 0.00 9.75 3.78 2000 1.00 4.97 5.00 2.73 4.38 5.59 0.00 7.40 3.30 3.87 2001 0.97 4.63 5.00 2.54 3.32 5.07 0.00 7.36 2.90 3.65 2002 0.94 4.20 5.00 2.38 3.31 4.80 0.00 6.02 2.89 3.25 2003 0.87 3.71 5.00 2.06 3.19 3.75 0.00 4.64 2.02 2.68

ASEAN 5.37 4.77 Source: ASEAN Secretariat

ASEAN Investment Area:

The December 1995 ASEAN Summit endorsed in principle the concept of an ASEAN Investment Area (AIA), in which barriers to intra-regional investment were lowered and removed, regulations were liberalized, streamlined, and made more transparent, and incentives were offered to boost regional investment. The basic concept was to substantially increase the flow of investment into ASEAN from both ASEAN and non-ASEAN sources by enhancing the region's competitiveness. An initial list of temporary exclusions, covering the agriculture, forestry, and mining sectors, was adopted at the AIA Ministerial Meeting in Thailand in October 2000. Under the AIA agreement, seven members had agreed to remove their temporary exclusion lists for ASEAN investors in manufacturing by 2003. Full realization of the AIA with the removal of temporary exclusion lists in manufacturing agriculture, fisheries, forestry and mining is scheduled by 2010 for the ASEAN-6 and by 2015 for the new members (Cambodia, Laos, Myanmar, and Vietnam). The main approaches on the AIA are as follows: All industries are to be opened up for investment, with exclusions to be phased out according to schedules National treatment is granted immediately to ASEAN investors with few exclusions Elimination of investment impediments Streamlining of investment process and procedures Enhancing transparency Undertaking investment facilitation measures

ASEAN-India:
2001-02 4400.31 3467.33 ASEANS Trade with India 2002-03 2003-04 5160.33 7438.22 4627.65 5825.71 2004-05 9110.91 8422.42 2005-06 10609.34 10511.72

EXPORTS IMPORTS

During the last five years the exports and imports both have increased significantly. There was an increase of 1.41 times in exports and of 2.03 times in imports from/to ASEAN during this period. The highest increase in exports was during the year 2003-04, while that of imports was in the year 2004-05.

Indian exports to ASEANmajor commodity groups:

Indias 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:

Indias 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 Enhancing Indias exports to ASEAN: As mentioned earlier, focus should be on the sectors that are of maximum importance to ASEAN, namely: Machinery, engineering products, Mineral products, base metal and metal articles, Chemicals, drugs and pharmaceuticals, Base metal and metal articles, Transport equipment, Textiles and apparel, Plastics, Optical, precision and instruments, Prepared foodstuffs, Vegetable products and Services.

Indias Relationship with ASEAN Countries:

ASEAN has four Summit level Dialogue Partners, i.e., China, Japan, ROK and India which is known as ASEAN+4. In addition, it has a number of Dialogue and sectoral Dialogue Partners as well. Indias focus on a strengthened and multi-faceted relationship with ASEAN is an outcome of the significant changes in the worlds political and economic scenario since the early 1990s and Indias own march towards economic liberalization. Indias search for economic space has resulted in our Look East policy. ASEANs economic, political and strategic importance in the larger Asia-Pacific Region and its potential to become a major partner of India in trade and investment is a significant factor in our policy paradigms. ASEANs steady expansion westward to include Myanmar has also brought it to our land boundaries. It now provides a land bridge for India to connect with the Asia-Pacific-centered economic crosscurrents shaping the 21st century market place. ASEAN seeks access to Indias professional and technical strengths. Our traditional friendship with the CLMV countries (Cambodia, Lao PDR, Myanmar and Vietnam) also makes India a valuable ally for promoting the Initiative for ASEAN Integration (IAI). India is actively engaged in the Mekong- Ganga-Cooperation (MGC) which brings together India and five ASEAN countries, Cambodia, Lao PDR, Myanmar, Thailand and Vietnam. India has signed three agreements with ASEAN on October 8, 2003. 1) A framework agreement for the creation of Indo-ASEAN free trade area by the year 2011 2) An agreement to cooperate to counter terrorism.

3) India becoming a signatory to the ASEAN treaty of amity and cooperation.

Economic Cooperation Between India and ASEAN:

ASEAN member countries agreed to work towards an ASEAN-India Regional Trade and Investment Area (RTIA) as a long-term objective and desired to adopt a Framework Agreement on Comprehensive Economic Cooperation between ASEAN and India to minimize barriers and deepen economic linkages between the parties; lower costs; increase intra-regional trade and investment; increase economic efficiency; create a larger market with greater opportunities and larger economies of scale for the businesses of the parties; and enhance the attractiveness of the parties to capital and talent.

Objectives:
The objectives of this Agreement are to: 1. Strengthen and enhance economic, trade and investment co-operation between the parties; 2. Progressively liberalize and promote trade in goods and services as well as create a transparent, liberal and facilitative investment regime; 3. Explore new areas and develop appropriate measures for closer economic co-operation between the parties; and 4. Facilitate the more effective economic integration of the new ASEAN Member States and bridge the development gap among the parties.

Measures of Economic Cooperation:

1. Progressive elimination of tariffs and non-tariff barriers in substantially all trade in goods; 2. Progressive liberalization of trade in services with substantial sectoral coverage; 3. Establishment of a liberal and competitive investment regime that facilitates and promotes investment within the ASEAN-India RTIA; 4. Provision of special and differential treatment to the New ASEAN Member States; 5. Provision of flexibility to the Parties in the ASEAN-India RTIA negotiations to address their sensitive areas in the goods, services and investment sectors with such flexibilities to be negotiated and mutually agreed based on the principle of reciprocity and mutual benefits; 6. Establishment of effective trade and investment facilitation measures, including, but not limited to, simplification of customs procedures and development of mutual recognition arrangements; 7. Expansion of economic cooperation in areas as may be mutually agreed between the Parties that will complement the deepening of trade and investment links between the Parties and formulation of action plans and programmes in order to implement the agreed sectors/areas of co-operation; and 8. Establishment of appropriate mechanisms for the purposes of effective implementation of this Agreement.

Areas of Economic Cooperation:

Where appropriate, the Parties agreed to strengthen their cooperation in the following areas, including, but not limited to:

1. Trade Facilitation
Mutual Recognition Arrangements, conformity assessment, accreditation procedures, and standards and technical regulations Non-tariff measures Customs cooperation Trade financing Business visa and travel facilitation.

2. Sectors of Cooperation
Agriculture, fisheries and forestry. Services: media and entertainment, health, financial, tourism, construction, business process outsourcing, environment. Mining and energy: oil and natural gas, power generation and supply; Science and technology: information and communications technology, electroniccommerce, biotechnology; Transport and infrastructure: transport and communication; Manufacturing: automotive, drugs and pharmaceuticals, textiles, petrochemicals, garments, food processing, leather goods, light engineering goods, gems and jewellery processing; Human resource development: capacity building, education, technology transfer; and Others: handicrafts, small and medium enterprises, competition policy, Mekong Basin Development, intellectual property rights, government procurement.

3. Trade and Investment Promotion

Fairs and exhibitions; ASEAN-India web links & Business sector dialogues

Most Favoured Nation Treatment:

India shall continue to accord Most-Favoured Nation (MFN) Treatment consistent with WTO rules and disciplines to all the non-WTO ASEAN Member States upon the date of signature of this Agreement.

General Exception:
Such measures are not applied when it constitutes a means of arbitrary or unjustifiable of arbitrary or unjustifiable discrimination between or among the Parties where the same conditions prevail, or a disguised restriction on trade within the ASEAN-India FTA, nothing in this Agreement shall prevent any Party from taking action and adopting measures for the protection of its national security or the protection of articles of artistic, historic and archaeological value, or such other measures which it deems necessary for the protection of public morals, or for the protection of human, animal or plant life, health and conservation of exhaustible natural resources.

Dispute Settlement Mechanism:

The Parties shall, within one (1) year after the date of entry into force of this Agreement, establish appropriate formal dispute settlement procedures and mechanism for the purposes of this Agreement and any disputes concerning the interpretation, implementation or application of this Agreement shall be settled amicably by mutual consultations.

Trade and Investment:

ASEAN-India trade in 2003-4 was about US$ 15 billion, an increase of approximately 350% over the 1993-94 trade figures. The balance of trade is in favour of ASEAN. There remains significant potential to further expand these ties. For a total population of approx. 1.5 billion people and with a combined GDP of US$1.5 trillion, a trade turnover of approx. US$ 15 billion is grossly inadequate. At the 2nd India-ASEAN Business Summit held in New Delhi and Mumbai in 2003, a target 2 of US$ 15 billion by 2005 and US$ 30 billion for India ASEAN trade by 2007 was set out. The target of US$ 30 billion was reiterated by Prime Minister at the 3rd ASEAN India Summit held in Vientiane on November 30, 2004. Indias exports to ASEAN member countries include oil meals, gems and Jewellery, meat and meat preparations, cotton yarn, fabrics, machinery, rice, drugs and pharmaceuticals, chemicals, etc. Indias imports mainly consist of artificial resins, plastic material, natural rubber, wood and wood products, electronic goods, organic chemicals, edible oils, fertilizers, etc. ASEAN countries, particularly, Malaysia, Singapore and Thailand, are also increasingly investing in India in sectors such as telecommunications, fuels, hotel and tourism services, heavy industry, chemicals, fertilizers, textiles, paper and pulp, and food processing.

Singapore and India sign Comprehensive Economic Cooperation Agreement:

Singapore and India have sealed a groundbreaking pact on economic cooperation, the first between Singapore and a South Asian country. The CECA came into force on 1 August 2005. The basic concepts of CECA mentioning that it is a FTA plus which includes foods, services, investment, IPR (Intellectual Property Right) and economic cooperation in areas like education, science and technology, air transport services and double tax avoidance agreement. Though Singapore is a small country, it is the heart of business connections between India and East Asia. Thus, Singapore can be Indias forward base to access markets and resources in the East Asian region. Already 1600 Indian companies are using Singapore as a base to expand both regionally and internationally. The Comprehensive Economic Cooperation Agreement will enhance ties between both countries by speeding up the already growing flows of trade, investment and people. Under it, three-quarters of Singapore's exports to India will face zero or substantially reduced tariffs, making them cheaper and more attractive to Indian consumers, unless for a small list of products on the negative or sensitive list. Indian imports will also enter Singapore duty-free. This agreement with India will give Singapore an added momentum to position itself as a free trade hub and for India to leverage on that role. Exporters will enjoy savings from simplified testing procedures for electronic and telecommunication equipment as well as food products. So India will be able to export egg and dairy products to Singapore within a shorter timeframe. The Potential areas under CECA are: Food Processing Bio-Technology Pharmaceuticals Electronics and Electronic Equipments Banking systems and financial companies Professional cooperation and exchange, investment, movement of visitors

With an improved double-taxation avoidance treatment agreement, there will be greater investment flows between Singapore and India as they don't need to pay capital gains tax. The agreement will also allow freer movement of skilled and qualified professionals between the two countries. This means, subject to further negotiations, within a year, doctors, dentists, nurses, accountants and architects from both countries can practice in each other's country

Strategic approach to ASEAN members for Business :

Southeast Asia have long been tagged as one of the worlds most promising and dynamic economic region of the 21st century and as such is high on the priority list of countries to explore when a company wants to expand its business activities. The Association of Southeast Asian Nations (ASEAN) $330 billion consumer market equals that of Chinas booming coastal region in value and is bigger than any other market in Asia. The groups ten member countries (Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand, and Vietnam) are amongst the fastest growing economies in the world. Southeast Asian economies can be fragile, corrupt, and so frustrating when doing business that some days you may wonder why you ever decided to do business there. However, if youre willing to invest the time and resources necessary to succeed in securing business in the region, your efforts will be rewarded by tremendous opportunities and long-term buyer commitment. IMPORTANT ELEMENTS FOR CONDUCTING EFFECTIVE BUSINESS Personal Connections Having the right connections is crucial personal relationships and connections are often more important than economic criteria in making government and business decisions Third Party Intervention Tap the resources and energy of a third party who is respected by both parties in order to help relieve strained ties and solve problems in negotiations

Negotiating 1. 2. 3. 4. Bargaining is a way of life to people in Southeast Asia they bargain daily for purchase of groceries and other goods, and it has become an automatic response to bargain and negotiate for more favorable terms in the business world Join in the bargaining dont make concessions quickly, but be ready to use a concession to extract a better bargain for yourself Never lose your temper, shout or become overly demanding at delays in decision-making or bureaucratic procedures Saving face is the rule let your local representative or partner monitor progress and problems. If you must criticize, do so gently and indirectly

SINGAPORE:
Singapore is an attractive destination for start-ups and incubation. There are various financial schemes and there is also an abundant pool of private equity investors who are interested in start ups. The IP regime also acts as a magnet for start-ups and international investors have found the IP protection in Singapore to be excellent. The IP laws will give much protection to Indian companies wishing to have their projects started or incubated in Singapore. India is looking for capital, technology, and expertise, which can be provided by Singapore through investment and collaboration in areas like telecommunications, financial, and transport services. On the other hand, Singapore is in search of a large market and also requires manpower to fulfill its potential as a service hub, both of which can be provided by India. SECTORS ATTRACTING FDI FROM SINGAPORE: Top five sectors attracting FDI from Singapore are: 1. Telecommunications 17.93%, 2. Services Sector (financial and non-financial) 16.28%, 3. Electrical Equipments (including computer software & electronics) 12.40% 4. Fuels (power & oil refinery) 11.12% and

5. Transportation Industries 8.85%. Singapores investments in India can be broadly classified into 3 categories, namely, (a) Investments by Temasek Holdings (b) Investments by Temasek Linked Companies (TLCs) and (c) Investments by private businesses. Most of the Singapores investments in India falls under the first two categories.
Temasek Holdings, an investment holding company of Singapore government, opened an office in Mumbai in 2004 to focus on investment opportunities in India. INVESTMENTS BY TEMASEK LINKED COMPANIES (TLCs) CONSTRUCTION TELECOM PORT INFORMATION TECHNOLOGY POWER WASTE MANAGEMENT LOGISTICS

INDONESIA:
Banking:
Indonesia has both State-owned banks and private banks. All major international banks have a presence in Indonesia. The Bank of India maintains a representative office in Indonesia while Bank Indonesia International (BII) has a branch in Mumbai.

Promising areas for investment/joint ventures/services:

These include oil and gas, manpower and engineering consultancy services for the petroleum industry, mining, plantation products (particularly CPO), IT education and services, ports and railways, telecommunications, pharmaceuticals and education (both School and University).

Doing business with Indonesia:

Patience is one key to conducting business in Indonesia. Although product quality and price are important, personal rapport is highly valued. Foreign companies may open a local representative office with the permission of the Indonesian Department of Trade. The representative may be an Indonesian company or individual, or a foreign national. Trade representatives are not permitted to engage in direct sales but may engage in sales promotion and marketing, or provide market research and technical advice. In many instances, representative offices of foreign companies have established close connections with Indonesian importers so that the two companies can operate virtually as one, with the Indonesian company acting as the importer/distributor and the trade representative office promoting products and providing technical assistance. Infrastructure development has not kept pace with the growing population and rapidly expanding economy. The government is working to modernize the infrastructure focusing on port and airport construction, power generation, telecommunications and environmental projects. Indonesia's importers and distributors continue to welcome exporters who take time to learn about the market, adapt their products and services to local needs and make a long-term strategic decision to participate in the economy. Given some patience and preparation, the business visitor should find that cultural differences and the physical environment pose no major obstacles to a successful trip.

MALAYSIA:
Potential Indian Exports to Malaysia Malaysia
Paper and wood products Transport equipments Gems & Jewellery Rubber Groundnuts Man-made yarns and fabrics Dyes and coal tar chemicals Glassware

Potential Indian Imports from

- Computer hardware and peripherals incl. microchips - Business Machines - Consumer electronics

Areas For India-Malaysia Synergies In New Economy

Space technology Bio-technology Pharmaceuticals Bio-informatics, Genomics and Ayurveda IT: Development of hardware and software, setting up of training centre in Malaysia. Telecommunication

Infrastructure Food processing Tourism Banking- opening up of a Bank on reciprocal basis.

Market Entry Strategies

1. Licensed Manufacturing: 2. Franchise Agreement:

The principal forms of business entities in Malaysia are:

o o o o

locally incorporated company (public or private) Partnership or sole proprietorship Representative Office Joint Venture or subsidiary

Advantages:
Continued benefit from market growth Fully knowledgeable about the industry Able to identify emerging opportunities Control image, reputation, and sales of the company's products Control financial matters such as price and profit

Disadvantages:
Drain on financial, technical and personnel resources of the investor Business and financial risk

PHILIPPINES:
Potential Sectors for Investment
Indian Investment in Philippines: Textile machinery, Drugs and pharmaceuticals, Software development and training, Steel and metal, Manufacturing and design of gold jewellery, Engineering consultancy, Transport equipment Philippines Investment in India : Food processing, Fashion designing for garments, Packaging products, Telecommunications, Coconut-based products, Tourism

THAILAND:
Indian investments in Thailand are mainly in areas which are relatively high-tech and even capital intensive and cover a wide range of products and activities including production of rayon fiber, steel wires and rods, paper-grade pulp, chemicals, drugs and pharmaceuticals, nylon tyre cord and real estate. The major Indian groups involved are the Aditya Birla Group, Ballarpur Industries, Baroda Rayon Group, Usha Martin Industries, Ranbaxy Laboratories, Lupin Laboratories and the Ansals and the Uniworth International Ltd. Telecommunications and fisheries accounted for chunk of the Thai investment while Thai investors have also evinced interest in real estate and tourism sectors, light engineering industry and petrochemicals. The food processing and agro-industries in Thailand are well developed and hence, these sectors offer enormous opportunities for Indo-Thai Joint Venture in India. The following bilateral agreements exist between India and Thailand in the economic field:i) ii) iii) iv) Bilateral Trade Agreement Agreement for the Avoidance of Double Taxation Air Services Agreement Cooperation Agreement between Board of Investment of Thailand and the Foreign Investment Promotion Board of India v) A Bilateral Investment Promotion and Protection Agreement have been signed by both the countries in July 2000. vi) Framework Agreement for establishing an FTA dated Oct. 9, 2003.