Beijing Diary

Modi must convince Southeast Asia that India means business

The real problem is not declarations of intent but follow through from Delhi.

 |  Beijing Diary  |  6-minute read |   19-11-2015
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When Narendra Modi lands in Kuala Lumpur on November 21 on a four-day visit to Malaysia and Singapore, this will, somewhat surprisingly, be the well-travelled Prime Minister’s first visit to the heart of Southeast Asia. A year ago, when Modi visited Myanmar — Asean’s western-most member — he outlined what was at the time billed as one of his government’s first major foreign policy initiatives: upgrading the Manmohan Singh government’s “Look East” policy, much derided as a toothless attempt to try and counter China’s rising influence, into a more muscular initiative to “Act East”.

Yet across the ten-nation Asean’s $2.4-trillion economy, there is still much doubt about whether Modi really means business. For one, there is some puzzlement as to why India’s most business-inclined prime minister in years has taken so long to visit a rapidly growing region through which $70 billion of India’s trade — more than India’s trade with China — passes and a region forecast to be the world’s fourth-largest economy by 2050.

Modi lands in Kuala Lumpur for the East Asia Summit at a time of rising concern that the region has no credible counterweight to China’s increasingly unchallenged economic and military might. The fear across the region is that with a distracted United States, disinterested India and Japan without the economic firepower of old, there will be no challenge to China. Indeed, Beijing’s trade with Asean has soared to $480 billion, almost seven times India’s trade, and China’s economic presence has continued to rapidly grow with Beijing now making Asean a fulcrum of its regional diplomacy through a $100-billion “Silk Road” initiative. President Xi Jinping announced the Silk Road plan, the landmark foreign policy initiative of his government, during a visit to Indonesia last October, when Beijing also pushed forward a $40-billion Asean Silk Road fund devoted to infrastructure projects in the region.

Balancing China

Modi will begin his visit in Malaysia, which is leading the pack in terms of courting China. In Kuala Lumpur, he will attend the East Asia Summit, a regional grouping involving Asean and eight other countries including India, China, Japan and the US, before travelling to Singapore. China’s trade with Malaysia alone has crossed $100 billion for two years in a row, and Kuala Lumpur has championed Beijing’s Silk Road plan and its Asian Infrastructure Investment Bank (AIIB).

But the problem for Asean is that it isn’t only in investment and project-building where Beijing is changing the status quo. In the South China Sea, Asean has offered little collective resistance to China’s building of artificial islands and reclamation work on contested reefs to strengthen its hold. Chinese ships have had run-ins with vessels from Vietnam and the Philippines, who have turned to the US for support after finding little help from Asean neighbours.

Which is why the region is seeking a credible counterweight. Indonesia’s Vice President Jusuf Kalla, a veteran politician who commands influence in Asean capitals, says his country certainly wants “better balance between east and west”, referring to ties between China and India. “India has been a good friend of Indonesia for a long long time,” Kalla told india today in an August meeting in Jakarta. “We hope India’s economy will grow well, because an India that grows well is good for Indonesia and the region.”

Modi’s Malaysia challenge

At the same time, AKP Mochtan, Asean’s current deputy secretary general, says India and Asean have remained nowhere close to fulfilling the potential of their relations. “Given the size of India and Asean, our trade relations are very small. Distance connectivity isn’t the issue but (a lack of) interest is.” The perception in the region, from Singapore to Kuala Lumpur, is that the Modi government hasn’t done enough to address this, and that last year’s announcement of “acting east” hasn’t been followed up with action.

“In Singapore, there is a lot of curiosity about "Act East", but the fact is that it is not clear to anybody,” says Amitendu Palit, senior research fellow, Institute of South Asian Studies at the National University of Singapore. Palit says Modi must use this visit to counter “a lot of scepticism” about his government’s approach to trade after Delhi expressed strong concerns about the Regional Comprehensive Economic Partnership (RCEP), a trade agreement involving Asean and six countries. Delhi’s stand has not gone down well with Malaysia and Singapore, who are also members of the US-backed 12-country Trans-Pacific Partnership (TTP) agreement.

With the TPP coming into force next year, the two countries want to push the RCEP and bring some convergence with the TPP, including on opening up procurement and high standards of intellectual property rights protection. “India’s stand has not gone down well with the regional community,” says Palit. “The perception is that the Modi government wants investment but does not want free trade. No investor in the region will agree to this dual strategy.”

India risks missing the bus at a time when the region is opening up, says Pranee Thiparat, a leading Thai international relations expert at Chulalongkorn University in Bangkok. While Asean was for years “derided as a talk shop”, the RCEP push comes as the region finally comes together to establish an economic community in early 2016 on the model of the European Union, which will provide for harmonising trade agreements and liberalising trade and visa regimes. “There is a realisation that if you are not together, you cannot have bargaining power,” says Thiparat. “This isn’t only about responding to a China power-play.

The Asean summit in Cambodia two years ago was a low point and wake-up call, when we could not deliver a communique for the first time in 44 years because of divided opinion on the South China Sea and host Cambodia refusing to allow criticism of China. We know we need someone to deter China,” Thiparat adds, “and that has to be India. But India is still far, far behind.”

It is this perception that Modi’s India needs to change, says Leonard Sebastian, an expert on Asean at the S Rajaratnam School of International Studies in Singapore. “This is the right time for Modi as the region wants a greater Indian presence, and he needs to strike while the iron is hot,” he adds. “India, Japan, US and China are all competing at different levels, but the region would definitely like to see greater intent from India.”

The real problem is not declarations of intent but follow through from Delhi, says Alka Acharya, director of the Institute of Chinese Studies, New Delhi. “In Southeast Asia too, they seem to be asking the question if India is fulfilling its commitments. Today, in Pakistan, Nepal, Sri Lanka things are not going exactly the way we were hoping on the ground.” 

Acharya cites the example of India’s slow-moving efforts to connect the its Northeast to Myanmar, Thailand and the rest of Asean as part of “looking east”, with security considerations often trumping economic initiatives.

As a result, a “mixed signal” is being conveyed to the region on India’s “seriousness and commitment to its look east policy”, Acharya says. For Modi, correcting those perceptions and sending a clear signal that India means business will figure highest on his agenda.

Writer

Ananth Krishnan Ananth Krishnan @ananthkrishnan

The writer is China correspondent for India Today.

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