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Business News/ News / World/  Narendra Modi’s tour of Singapore, Malaysia to build on India’s Act East policy

New Delhi: It was a term coined by then US secretary of state Hillary Clinton on a visit to India in 2011. In a speech to an audience in the southern Indian city of Chennai, Clinton encouraged India to “not just Look East, but to Engage East and Act East".

“Act East" was supposed to build on “Look East", the foreign policy stance India adopted in the 1990s when it opened up its economy to the world, ending four decades of socialist-style insulation. The “Tiger" economies of South-East Asia were seen as the perfect partners as well as models in India’s quest for rapid economic growth.

The Congress party-led coalition government ignored Clinton’s call, and as it became embroiled in domestic political issues and an economic downturn, “Act East" was forgotten. Until last year, when Narendra Modi led the Bharatiya Janata Party to a spectacular triumph in the general election and made it his own in an attempt to inject more dynamism into India’s ties with South-East and East Asia.

Modi’s aim was to signal a new and more action-oriented policy towards the Association of South-East Asian Nations (Asean) in particular and East Asia in general. Modi himself drew attention to the change in name and India’s approach to the region in his speeches to the Asean and East Asia Summits in Nay Pyi Taw, the capital of Myanmar, on 12-13 November last year.

Over the five days from 20 to 24 November, the 65-year-old prime minister will get a chance to walk the talk when he travels to Malaysia—where he will take part in the annual India-Asean summit and a meeting of East Asian heads of state and government—and Singapore, with which India is marking 50 years of diplomatic relations this year.

Asean, which counts Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand and Vietnam as its members, elevated ties with India in 2002 and held its the first top-level dialogue with the world’s second most populous nation. Asean has similar annual summits with the US, China, Japan, South Korea, Australia, New Zealand and the European Union.

The East Asia Summit, on the other hand, is a grouping of Asean countries plus Australia, China, India, Japan, New Zealand, South Korea, Russia and the US. Established in 2005, it aims to promote peace and security in the region, evolving into a forum for strategic dialogue and cooperation on political, security and economic issues of common interest. India has been a regular participant since 2005.

Modi’s 18-month-old government has already demonstrated its resolve to build closer ties with South-East Asia. Vice-president Hamid Ansari visited Cambodia and Laos in September and Indonesia and Brunei earlier this month. President Pranab Mukherjee’s visit to Vietnam in September during which India extended a $100 million credit line for defence hardware purchases was another manifestation of India’s “Act East" policy at work; it comes against the backdrop of disputes between China and many South-East Asian countries, including Vietnam, over maritime boundaries in the South China Sea.

Chinese land reclamation efforts and the reported construction of airstrips on the reclaimed land in the South China Sea have been seen by some analysts as moves to reinforce Chinese territorial claims.

“India’s engagement with the Asean region is dictated by geo-economics," said Baladas Ghoshal, a retired professor on South-East Asian Studies at Jawaharlal Nehru University in New Delhi and now secretary general of the New Delhi-based Society for Indian Ocean Studies think tank.

“There is India’s desire for strong economic linkage with Asean as well as Asean’s desire to have a country of the size and potential (of India) on its side so that the combination can act as a pressure group vis-a-vis China," he said.

Modi’s upcoming trip to the region comes at a time when Asean is looking at further economic integration with the creation of an Asean Economic Community, or AEC, at the end of this year. The AEC will be characterized by a single market and production base, besides “a competitive economic region of equitable economic development and a region fully integrated into the global economy", according to the regional group’s website.

After the two multilateral summits, Modi will sit down with Malaysian Prime Minister Najib Razak for bilateral talks—the first in five years. The last visit by an Indian Prime Minister at a bilateral level took place in October 2010. Both Malaysia and Singapore figure prominently in India’s plans for its own future as well as broader ties with the Asean, said Ghoshal.

With India unveiling plans to modernize its infrastructure to speed up economic growth as well as boost manufacturing, countries like Malaysia and Singapore “are uniquely placed to help India as they have both the resources and the expertise that India is looking for in these very areas", Ghoshal said.

“Both countries have the capacity to help India leapfrog into the next phase of its economic growth—whether we are talking of Digital India (plans to connect India digitally nationwide to deliver better governance) or Smart Cities (plans to build 100 cities with all basic amenities to cope with India’s rising urbanization demands) or Skill India (aimed at equipping young Indians with skills to ensure they get jobs)," Ghoshal said. All three are key schemes of Prime Minister Modi and part of his vision to make India a force to reckon with globally.

During Modi’s visit, India will seek to attract Malaysian investment to reinforce infrastructure, Indian officials said. Some Malaysian companies have identified infrastructure projects—mainly roads and railways—worth $30 billion in recent months, said a person familiar with the development. With Modi looking to drive his “Make in India" campaign through defence manufacturing, India will also seek Malaysian investments in this area, one of the officials cited above said. “The advantage is we (India and Malaysia) use the same platforms, so there is scope for developing this proposal," said the official cited above.

It helps that in recent years the Indian armed forces have formed close links with their Malaysian counterparts. An Indian Air Force team was deployed in Malaysia to train Malaysian pilots on the SU-30SKM aircraft from 2008 to 2010. And Indian naval ships also make regular port calls in Malaysia; the last visit was by India’s Eastern Fleet ships to Kemaman Port in June 2015, according to the Indian foreign ministry website.

In the context of Asean, many Indian policymakers see Malaysia, with a population of 28 million, as a “window into the Asean and the AEC". Ties between India and Malaysia have seen an upswing, especially since current Prime Minister Najib Razak—son of Malaysia’s second prime minister Abdul Razak and nephew of third prime minister Hussein Onn—came to power in 2009.

“There has been a change in the Malaysian perception about India since Najib took over. He (Najib) is the first of Malaysia’s six prime ministers to visit India within the first year of taking office," said a person familiar with India-Malaysia relations. “When he (Razak) visited India, he made it a point of saying that he was visiting India and China among the first few countries, because he believed Malaysia’s future rests in these two countries...," the person cited above said. That’s because people of Indian and Chinese descent are among the major ethnic groups of Malaysia. Najib’s comments went down well in India, which had viewed India-Malaysia ties under former Malaysian prime minister Mahathir Mohammed, in power from 1981 to 2003, as far from satisfactory.

An improvement in political ties has prompted many Indian companies to move into Malaysia in a big way, using it as a base to establish a presence in other Asean countries. Indian investments into Malaysia since 2010 have been in excess of $3 billion, with much of this having been routed through countries such as the Netherlands and Singapore.

Indian information technology, or IT, companies such as Tech Mahindra Ltd have set up shop in Malaysia to take advantage of its key geographical location—it is within three hours of all major time zones in the region and its stable environment is free from natural hazards such as floods in Thailand, earthquakes in Indonesia and tsunamis in Japan.

Malaysia’s geographical location, at the head of the Straits of Malacca, the shortest sea route between Persian Gulf suppliers and the Asian markets, notably China, Japan, South Korea, and the Pacific Rim adds to its strategic importance. It is also a link between the Indian Ocean, the South China Sea and the Pacific Ocean.

For India, Malaysia is important for other reasons, not least the high concentration of people of Indian origin in the country who contribute about 3-4% of the Malaysian economy. In 2010, during a visit to Malaysia by Prime Minister Manmohan Singh—10 months after Najib’s India visit—both countries elevated their ties to a strategic partnership.

Since then, there have been exchanges between the defence secretaries and discussions on counter-terrorism covering drugs, arms and fake currency running and exchanges on security concerns emanating from the feelings of empathy that the large Tamil populations in India and in Malaysia had for the Sri Lankan Tamils and the rebel Tamil Tigers of Sri Lanka.

From Malaysia, Modi will travel to Singapore for a two-day visit on 23-24 November that is expected to see India and the city-state formally elevate ties to a strategic partnership, establish a formal dialogue between their defence ministers and deepen cooperation in skill development.

The priority accorded to ties with Singapore can be understood from the fact that Modi’s visit will be followed by President Pranab Mukherjee’s to the country in the early part of 2016 to push forward the partnership.

Singapore is India’s largest trade and investment partner in Asean, according to data from the Indian foreign ministry. It is one of the largest sources of foreign investment in India. Indian companies have investments worth about $33 billion in Singapore. There are about 6,000 Indian firms registered in the city-state, according to Indian government figures.

Some of the major projects Singapore is involved in India include drawing up plans for the city of Amaravati, which is the new capital of the state of Andhra Pradesh. Last year, the Jawaharlal Nehru Port Trust (JNPT) at Navi Mumbai signed a pact with the Port of Singapore Authority (PSA) for the construction of the port’s fourth container terminal.

Modi’s visit comes as India and Singapore mark 50 years of diplomatic relations. The two countries have enjoyed a problem-free relationship—in part because the people of Indian origin have been well integrated into the Singaporean mainstream, with many in public life and other professions.

A pointer to how close the two countries are can be gauged from the fact that the Singaporean army and air force use Indian bases and air space for their training.

“Singapore has been a steadfast friend of India, playing a major role in supporting the growth of India’s ties with the Asean," said an Indian official on condition of anonymity.

According to Srikanth Kondapalli, a professor of Chinese Studies at Jawaharlal Nehru University, Singapore’s backing of India’s enhanced ties with the Asean was also dictated by the desire for “balance" in the region. The unpredictable rise of China and the uncertainties associated with the possible disruptions that can be caused by increasing friction between China and neighbours in the region prompted Singapore to look at India, which is seen as a “benign power", he said.

C. Uday Bhaskar, an analyst with the Centre for Policy Studies, a New Delhi-based think tank, acknowledges India has many a time in the past disappointed many Asean countries “with over promises and under delivery. This is something that has to change and I hope the prime minister (Modi) will walk the talk when he meets with his interlocutors in Malaysia and Singapore."

A Singapore official who has worked with many Indian leaders in recent years noted “there is better comfort level in bilateral dialogues with India that do not exist with China or Japan. We are bringing branding, knowledge, soft skills and systems knowledge and are hopeful that Prime Minister Modi takes this friendship one step ahead" during the visit and later.

Soon after arriving in Singapore on 23 November, one of Modi’s key engagements will be to deliver the Singapore Lecture, where he is expected to outline the contours of India’s Act East policy, a second Singaporean official said. “We would like to know what ‘Act East’ is all about," said the second Singaporean official cited above.

On the second day, Modi will be meeting the top leadership of the country, including Prime Minister Lee Hsien Loong, and addressing an economic convention, where he is expected to speak about his “Make in India" and “Skill India" programmes and outline the measures taken by his government to improve the ease of doing business in India.

“...many companies here are keen to address issues related to the difficulties faced by them while doing business in India. They want to share their concerns on other related issues...," said the second Singaporean official cited above.

Besides this, six pacts are likely to be signed between the two countries on strengthening the strategic partnership and cooperation in skill development.

A statement by the Singaporean foreign ministry put out last month said upscaling the bilateral relations to a strategic partnership would entail “the expansion of cooperation in five focal areas: scaling up investment and trade; speeding up air and maritime connectivity; smart city development and urban rejuvenation; skills development and capacity building, and state focus to strengthen business and cultural links."

One of the items on the agenda for Modi’s visit includes a visit to Singapore’s Institute of Technical Education (ITE), which is a post-secondary education institution that imparts career-oriented technical skills to the youth in Singapore who do not make it to the university. ITE, which has a sprawling campus that churns out a 24,000-strong industry-ready labour force each year, has partnered with the Delhi government on skill development and recently signed a pact with the Rajasthan government on training about 500 youths in tourism and hospitality.

With almost 65% of 1.27 billion Indians aged between 18 and 35, Modi is aiming to equip them with the skills that will back his “Make in India" initiative, aimed at boosting manufacturing’s share of economic output.

“Singapore is an ideal partner to make all this happen," said an Indian official who did not want to be named.

India is also looking at Singapore establishing a skill training centre in India’s North-East as well as increased air connectivity between the region and Singapore besides Asean.

India’s North-East has been riven by a myriad insurgencies and Indian authorities are pushing for the speedy development of the region to ensure youth do not join the ranks of the insurgent groups whose demands range from autonomy to secession from India.

India will also be looking at importing numerous concepts in urban planning from Singapore to upgrade Indian cities. The Modi government has earmarked 4 trillion for its three urban planning and housing missions: Smart Cities, AMRUT (Atal Mission for Rejuvenation and Urban Transformation) and Housing for All.

On Singapore’s wishlist is an increase in the ease of doing business conditions in India and more slots for its air carrier Singapore Airlines to fly to India.

“We would like to see India being aggressive to push its development agenda and really work towards it by reforming the bureaucracy and laws dealing with the industry," said the first Singapore official quoted above. “We would like to see India playing offensive rather than defensive (on the economy)," the official said in the context of negotiations at the Regional Comprehensive Economic Partnership (RCEP)—the ambitious free trade agreement proposed between Asean and Australia, China, India, Japan, South Korea and New Zealand.

Asean has free trade pacts with these countries individually and is looking at a new arrangement that will cover trade in goods, trade in services, investment, economic and technical cooperation, intellectual property, competition, dispute settlement/legal and institutional issues and other issues to be identified during the course of negotiations.

Talks for the pact were formally launched in November 2012 at the Asean Summit in Cambodia. India’s reservations vis-a-vis its industries’ preparedness to deal with competition have slowed negotiations, upsetting partners like Singapore.

Biswajit Dhar, a professor of economics at the Jawaharlal Nehru University, said the status of RCEP negotiations is expected to figure in the talks between Modi and his Singaporean counterpart. “If India wants to be a relevant player in the Asean region in the years to come, it will have to be a part of RCEP, especially since it is a China-led process," he said.

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Updated: 20 Nov 2015, 12:54 AM IST
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