The Association of Southeast Asian Nations (ASEAN)

Context:

Union Education Minister Shri Ramesh Pokhriyal ‘Nishank’ today addressed the inaugural ceremony of the ASEAN India Hackathon.

ESTABLISHMENT

• The Association of Southeast Asian Nations, or ASEAN, was established on 8 August 1967 in Bangkok, Thailand,
• with the signing of the ASEAN Declaration (Bangkok Declaration)
• The Founding Fathers of ASEAN, namely Indonesia, Malaysia, Philippines, Singapore and Thailand.
• Brunei Darussalam then joined on 7 January 1984,
• Vietnam on 28 July 1995,
• Lao PDR and Myanmar on 23 July 1997,
• Cambodia on 30 April 1999, making up what is today the ten Member States of ASEAN.
• The motto of ASEAN is “One Vision, One Identity, One Community”.
• 8^th August is observed as ASEAN Day.
• ASEAN Secretariat – Indonesia, Jakarta.

Member Nations

ASEAN

• 1967 – ASEAN was established with the signing of the ASEAN Declaration (Bangkok Declaration) by its founding fathers.
  • Founding Fathers of ASEAN are: Indonesia, Malaysia, Philippines, Singapore and Thailand.
• 1990s – Membership doubled after the changing conditions in the region following the end of the Vietnam War in 1975 and the Cold War in 1991.
  • Addition of Brunei (1984), Vietnam (1995), Laos and Myanmar (1997), and Cambodia (1999).
• 1995 – Members signed a deal to create a nuclear-free zone in Southeast Asia.
• 1997 – Adoption of ASEAN Vision 2020.
• 2003 – Bali Concord II for the establishment of an ASEAN Community.
• 2007 – Cebu Declaration, to accelerate the establishment of ASEAN Community by 2015.
• 2008 – ASEAN Charter comes into force and becomes a legally binding agreement.
• 2015 – Launch of ASEAN Community.
  • ASEAN Community is comprised of three pillars:
    • ASEAN Political-Security Community
    • ASEAN Economic Community
    • ASEAN Socio-Cultural Community

AIMS AND PURPOSES

As set out in the ASEAN Declaration, the aims and purposes of ASEAN are:

1. To accelerate the economic growth, social progress and cultural development in the region through joint endeavours in the spirit of equality and partnership in order to strengthen the foundation for a prosperous and peaceful community of Southeast Asian Nations;
2. To promote regional peace and stability through abiding respect for justice and the rule of law in the relationship among countries of the region and adherence to the principles of the United Nations Charter;
3. To promote active collaboration and mutual assistance on matters of common interest in the economic, social, cultural, technical, scientific and administrative fields;
4. To provide assistance to each other in the form of training and research facilities in the educational, professional, technical and administrative spheres;
5. To collaborate more effectively for the greater utilisation of their agriculture and industries, the expansion of their trade, including the study of the problems of international commodity trade, the improvement of their transportation and communications facilities and the raising of the living standards of their peoples;
6. To promote Southeast Asian studies; and
7. To maintain close and beneficial cooperation with existing international and regional organisations with similar aims and purposes, and explore all avenues for even closer cooperation among themselves.

FUNDAMENTAL PRINCIPLES

In their relations with one another, the ASEAN Member States have adopted the following fundamental principles, as contained in the Treaty of Amity and Cooperation in Southeast Asia (TAC) of 1976:

1. Mutual respect for the independence, sovereignty, equality, territorial integrity, and national identity of all nations;
2. The right of every State to lead its national existence free from external interference, subversion or coercion;
3. Non-interference in the internal affairs of one another;
4. Settlement of differences or disputes by peaceful manner;
5. Renunciation of the threat or use of force; and
6. Effective cooperation among themselves.

Institution Mechanism

• Chairmanship of ASEAN rotates annually, based on the alphabetical order of the English names of Member States.
• ASEAN Summit: The supreme policy making body of ASEAN. As the highest level of authority in ASEAN, the Summit sets the direction for ASEAN policies and objectives. Under the Charter, the Summit meets twice a year.
• ASEAN Ministerial Councils: The Charter established four important new Ministerial bodies to support the Summit.
  • ASEAN Coordinating Council (ACC)
  • ASEAN Political-Security Community Council
  • ASEAN Economic Community Council
  • ASEAN Socio-Cultural Community Council
• Decision Making: The primary mode of decision-making in ASEAN is consultation and consensus.

However, the Charter enshrines the principle of ASEAN-X – This means that if all member states are in agreement, a formula for flexible participation may be used so that the members who are ready may go ahead while members who need more time for implementation may apply a flexible timeline.

ASEAN-led Forums

• ASEAN Regional Forum (ARF): Launched in 1993, the twenty-seven-member multilateral grouping was developed to facilitate cooperation on political and security issues to contribute to regional confidence-building and preventive diplomacy.
• ASEAN Plus Three: The consultative group initiated in 1997 brings together ASEAN’s ten members, China, Japan, and South Korea.
• East Asia Summit (EAS): First held in 2005, the summit seeks to promote security and prosperity in the region and is usually attended by the heads of state from ASEAN, Australia, China, India, Japan, New Zealand, Russia, South Korea, and the United States. ASEAN plays a central role as the agenda-setter.

Strengths & Opportunities

• ASEAN commands far greater influence on Asia-Pacific trade, political, and security issues than its members could achieve individually.
• Demographic dividend – It constitutes 3rd largest population in the world, of which more than half is below thirty years of age.
• Economic:
  • 3^rd largest market in the world – larger than EU and North American markets.
  • 6^th largest economy in the world, 3^rd in Asia.
  • Free-trade agreements (FTAs) with China, Japan, South Korea, India, Australia and New Zealand.
  • Fourth most popular investment destination globally.
  • ASEAN’s share of global exports has also risen, from only 2 percent in 1967 to 7 percent by 2016, indicating the rising importance of trade to ASEAN’s economic prospects.
  • The ASEAN Single Aviation Market and Open Skies policies have increased its transport and connectivity potential.
• ASEAN has contributed to regional stability by building much-needed norms and fostering a neutral environment to

India and ASEAN

Indian growth has stalled in the face of global headwinds against trade, volatile commodity markets, stagnant private investment, weaker domestic consumption, and constrained government spending.

Asian potential

• Asia is becoming the world’s powerhouse and economic center. 
  • Economic contribution – research from the McKinsey Global Institute finds that Asia could generate more than half of the world’s GDP by 2040.
  • Cross-border flows – they are increasingly shifting towards the region, which is rapidly integrating. With 60% of goods traded, 56% of greenfield foreign direct investment (FDI) and 74% of journeys by Asian air travelers taking place within the region.

Asian connectivity

• There are 4 distinct sub-Asias which are diverse groups of economies with characteristics that complement each other and are fast becoming increasingly interconnected.
  • In the new era of regionalization, Asia is taking a lead. 
  • Historic account – Historically, India—and other countries in ‘Frontier Asia’ (Bangladesh, Sri Lanka, Kazakhstan, Uzbekistan, etc)—have had relatively low levels of integration when compared with the rest of the region. Only around 31% of their flows are intra-regional. 
  • What lies ahead – how they now respond to the shifting flows and the opportunities they present will be the key in defining and delivering its next chapter of growth. 

What India offers

• Services – account for 53% of India’s GDP
  • Young labor force – younger than China’s median age by around ten years
  • New markets for the rest of the region
  • Growth – despite the downturn, GDP in India is expected to grow at well above 5% for the coming period.

Adding Asia focus – opportunity # 1: Manufacturing

• Advanced Asian countries shift gears – countries like China move up the economic development ladder and phase out manufacturing in favor of a shift to R&D and knowledge-intensive manufacturing. There is room for India to become a larger sourcing base for global supply chains.
  • Example of mobile phones – the global sourcing value of mobile handsets is over $500 billion in scale. India could aspire for a 15-20% share of this footprint. 

What needs to be done for #1

• Improving infrastructure – Investments are needed to improve the logistical backbone supporting manufacturing. 
  • R&D – Incentives are needed to encourage future investments in R&D.
  • Innovation – Large-scale innovation hubs need to be developed to move to manufacture to the next phase and help to capture the demand opportunity.
  • Recent corporate tax cut – The recent move towards an attractive corporate taxation regime could provide the much-needed ignition to attract more investment for Make in India.

Opportunity # 2: Capital

• For development – India can benefit from the flows of capital and investment powering development.
  • Advanced Asia – which comprises Japan, South Korea, Singapore and China have been huge contributors to the development of ‘Emerging Asia’ – small highly interconnected economies like Indonesia, Malaysia, the Philippines, Thailand, Vietnam, etc.
  • Example – China accounts for 42% of total Asian outbound FDI in 2013-17 and 43% and 61% of Emerging Asia’s imports and exports respectively.

To do for #2

• Attract investments – while India is beginning to attract investment from firms across Asia, more needs to be done to realize the potential opportunity of investment flows from other countries.

Opportunity # 3 : Innovation

• Hub of innovation – East Asia has emerged as a leading hub that rivals the leading innovation hubs globally.
  • Technologies – It has already gained pole position in driving innovation relating to key disruption themes such as electric mobility, 5G telecom, and renewable energy. 
  • Patents – Nearly 65% of global patents stemmed from Asia between 2015 and 2017, derived from the 50 fastest-rising innovation cities in Asia.
  • This gives an opportunity for Indian firms to be a part of this Asia-wide innovation arc.

Opportunity # 4: Growth

• Rapidly growing Asia – is catapulting its major cities into leading consumption centers.
  • The market for India – This offers a market opportunity for Indian businesses ranging from IT services, tourism services, generic pharmaceuticals, automotive components, agrochemicals, and so forth. 
  • Reduce trade deficit – Just with China alone, India runs an over $50 billion of trade deficit. This could be narrowed down by targeting these export opportunities. The research found that about 420 cities in emerging markets could generate 45% of global growth, many of them residing in Asia.

Other initiative taken by India

• India and ASEAN already has 25 years of Dialogue Partnership, 15 years of Summit Level interaction and 5 years of Strategic Partnership with ASEAN.

Economic Cooperation:

• ASEAN is India’s fourth largest trading partner.
  • India’s trade with ASEAN stands at approx. 10.6% of India’s overall trade.
  • India’s export to ASEAN stands at 11.28% of our total exports. The ASEAN-India Free Trade Area has been completed.
  • ASEAN India-Business Council (AIBC) was set up in 2003 to bring key private sector players from India and the ASEAN countries on a single platform.

Socio-Cultural Cooperation:

Programmes to boost People-to-People Interaction with ASEAN, such as inviting ASEAN students to India, Special Training Course for ASEAN diplomats, Exchange of Parliamentarians, etc.

Funds: Financial assistance has been provided to ASEAN countries from the following Funds:

• ASEAN-India Cooperation Fund
  • ASEAN-India S&T Development Fund
  • ASEAN-India Green Fund
• Delhi Declaration: To identify Cooperation in the Maritime Domain as the key area of cooperation under the ASEAN-India strategic partnership.
• Delhi Dialogue: Annual Track 1.5 event for discussing politico-security and economic issues between ASEAN and India.
• ASEAN-India Centre (AIC): To undertake policy research, advocacy and networking activities with organizations and think-tanks in India and ASEAN.
• Political Security Cooperation: India places ASEAN at the centre of its Indo-Pacific vision of Security and Growth for All in the Region.

Challenges

• Regional imbalances in the economic and social status of its individual markets.
• Gap between rich and poor ASEAN member states remains very large and they have a mixed record on income inequality.
  • While Singapore boasts the highest GDP per capita—nearly $53,000 (2016), Cambodia’s per capita GDP is the lowest at less than $1,300.
  • Many regional initiatives were not able to be incorporated into national plans, as the less developed countries faced resource constraints to implement the regional commitments.
• The members’ political systems are equally mixed with democracies, communist, and authoritarian states.
• While the South China Sea is the main issue exposing the organization’s rifts.
• ASEAN has been divided over major issues of human rights. For example, crackdowns in Myanmar against the Rohingyas.
• Inability to negotiate a unified approach with regards to China, particularly in response to its widespread maritime claims in the South China Sea.
• The emphasis on consensus sometimes becomes the chief drawback – difficult problems have been avoided rather than confronted.
• There is no central mechanism to enforce compliance.
• Inefficient dispute-settlement mechanism, whether it be in the economic or political spheres.