Asean shifting focus from China to India

Southeast Asian nations, led by Singapore, are working to strengthen ties with India's surging economy as a welcome counterbalance to China, a leading US daily said.

China's meteoric rise in recent years, the Wall Street Journal said, had threatened their economic foundations even while providing another market for their goods.

"Governments across the region," the paper said, "are talking trade deals with India and urging their companies to take advantage of its growth, which was pegged at 10.4 per cent in the quarter ended December compared with a year earlier, surpassing China to become Asia's fastest-growing country during that period."

Leading the charge, the paper said, is Singapore, which was using its deep pockets and advanced economy to forge a bond that will help it grow along with an awakening India.

Promoting India's growth should also offset worries that China's fast expansion will leave the region overly reliant on its huge northern neighbour, it said.

"We in Southeast Asia have no wish to become merely an adjunct to the Chinese economy," Singapore's trade and industry minister George Yeo told members of the Confederation Of Indian Industry during a trip to India in February. "Hence, our decision to move closer to all economies that want closer links to us."

Trade between the Southeast Asian countries with India lags far behind than trade with China. Trade between China and the Association of Southeast Asian Nations, including Singapore, Thailand, Malaysia and Indonesia, amounted to $62 billion in 2003 - up 40 per cent from 2002. Asean's trade with India was at $12.3 billion in 2002, accounting for 2 per cent of Asean's total trade.

However, growing ties to China have brought a worry: Southeast Asia's success is becoming too closely tied to China. Singapore officials say multinational companies share those concerns.

Last year's outbreak of the Severe Acute Respiratory Syndrome (Sars) shut down factories and slowed trade, sending shivers through foreign companies that are increasingly relying on their Chinese operations.

The deals between India and Singapore, said the paper, were flowing in both directions. While Singapore companies have been expanding into India and buying into Indian companies, some of the biggest Indian companies have been moving into Singapore.

More than 1,400 Indian companies have offices in Singapore and 19 of the top 20 Indian technology firms, including Infosys Technologies and Wipro, have set up there.

Some have regional or Asia headquarters in Singapore while others use a "front office" there to approach the thousands of multinationals with operations in the city-state, it said.

"India is increasingly looking to engage Southeast Asia in a big way," said Madhav Sharma, who heads the Southeast Asian efforts of the CII out of his office in Singapore.

"Things are really looking up." Deals were expected to accelerate with the completion of a free trade agreement between Singapore and India in the next few months, said the paper. Also in the works, it noted, is an agreement between India and Asean, with a draft agreement signed last year.

Thailand is working on a bilateral trade agreement with india. India is optimistic that the "great mass of people" in southast asia will be a lucrative pool of customers for products such as generic drugs or motorcycles that its companies produce, said sharma. India's one billion population is obviously a draw for southeast asian companies as well.

India's success as an outsourcing destination -- a sore point among many in the us -- has been more or a two-way street in southeast asia, which has been another boon to build ties. Philippine call centres have attracted investments from some of india's big outsourcing firms while one of philippines' oldest will open three new offices in india.

Malaysia's construction sector has been profiting from india's growth. Malaysian companies, sharma said, are very involved in a number of infrastructure projects right now.

Singapore, the paper points out, was quick to capitalise on india's relaxation of trade and development restritions in the early 1990s. Singapore companies have invested in everything from indian ports to real estate development to communications.

Government-owned singapore telecommunications owns about 28 per cent of bharti tele-ventures, india's second largest privately-run cellular provider and a part of the new delhi-based bharti conglomerate.

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New route

• Southeast Asian nations plan enhanced trade ties with India to counterbalance China, says Wall Street Journal
• China's meteoric rise in recent years has threatened economic foundations even while providing another market for their goods
• Singapore using its deep pockets and advanced economy to forge a bond that will help it grow along with an awakening India