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ASEAN And India – A Partnership For Our Time, Lecture delivered

By: Rodolfo C. Severino, Secretary-General of the ASEAN , RIS
Venue: New Delhi
Tuesday, 09 Jan, 2001

India-ASEAN Eminent Persons Lecture

delivered by Rodolfo C. Severino,

Secretary-General of the Association of Southeast Asian Nations

Research and Information System for the Non-Aligned

and Other Devoping Countries

New Delhi, 9 January 2001

I feel deeply honored to give today the eleventh India-ASEAN Eminent Persons Lecture, to follow in the footsteps of such distinguished statesmen as Dato Seri Dr. Mahathir Mohamad, Prime Minister of Malaysia; Dr. Thaksin Shinawatra, leader of the party that apparently won last Saturday’s parliamentary elections in Thailand; Dr. Juwono Sudarsono, then Minister of Education and Culture of Indonesia; Datuk Seri Syed Hamid Albar, Foreign Minister of Malaysia; Dr. C. Rangarajan, Governor of Andhra Pradesh; Ambassador Tommy Koh of Singapore; and eminent ASEAN and Indian scientists and thinkers.

This lecture series is one of the central components of the ASEAN-India Dialogue. A dialogue is nothing if it does not foster closer understanding between the interlocutors. In fact, the word “dialogue” literally means an exchange of knowledge. And the lecture series is precisely that. I hope that today I can contribute to this exchange of knowledge that is a vital part of our dialogue, of the relationship between ASEAN and India. And I thank the Indian Government for this opportunity and for its hospitality. ASEAN also appreciates the role of RIS in the Lecture Series. A better Indian focal point could hardly be found.

The partnership between India and ASEAN member-countries, of course, goes back a long way, at least in multilateral diplomacy. India and most countries in Southeast Asia have, since the 1950s and the 1960s, taken similar positions — indeed, have often coordinated their positions — at the United Nations, in the Group of 77, in the Non-Aligned Movement, and in international economic forums. India was a leading force in the Bandung conference of 1955. The power of Indian political and economic philosophy influenced much public policy in the developing world, including many in Southeast Asia.

Yet, it was only in 1995 that India became a Dialogue Partner of ASEAN, eighteen years after ASEAN initiated its pioneering system of dialogue partnerships. Today, India fits easily in that system, and one wonders why it became an ASEAN Dialogue Partner only five years ago. There is a good reason for this.

The ASEAN dialogue system started out in the 1970s on the basis of the Dialogue Partners’ capacity to extend official development assistance to the ASEAN member-countries. This is why, until 1991, ASEAN’s Dialogue Partners were all from the developed world — Australia, Canada, the European Union, Japan, New Zealand and the United States. In the 1970s and part of the 1980s, the substance of the dialogue system was largely the development assistance that flowed from the Dialogue Partners to ASEAN.

The ASEAN dialogue system has since expanded, deepened and broadened. This is a reflection of and a response to the momentous and inter-related changes that have taken place in the ASEAN nations, in the foreign-policy outlook of the Dialogue Partners, and in the relations among nations in the Asia-Pacific region.

With their rapid economic expansion and growing economic openness, the development of the first six ASEAN members has been fuelled more and more by trade and investments and less and less by foreign aid. To be sure, the four newer ASEAN members and one or two of those hardest hit by the recent financial crisis continue to need development assistance; but, by and large, such assistance figures far less prominently in the economic strategies of ASEAN members as well as of the donor nations.

At the same time, in the traditional donor nations, aid programs are now motivated more by humanitarian and domestic political considerations than by compelling strategic calculations. The Cold War has ended, and the power configuration in the Asia-Pacific is in flux. The strategic situation requires multilateral consultation, bilateral dialogue and political engagement and no longer firm alliances cemented by relationships of economic as well as military dependence. Trade and investments flow much more freely around the world, driven by market forces and, with rare exceptions, no longer by political and strategic concerns.

Adjusting to these new realities, ASEAN has altered its dialogue system so as to embrace nations that have strategic roles to play in the region or can engage ASEAN in comprehensive economic relationships. Thus, South Korea became a full Dialogue Partner in 1991, India in 1995, and China and Russia in 1996. In the ASEAN Regional Forum, ASEAN is engaged in political and security dialogue and consultations with all the Dialogue Partners and, more recently, with Mongolia and North Korea, as well as with Papua New Guinea, ASEAN’s lone observer.

A Rightful Place for India

On strategic, economic and political grounds, India has a rightful place in the ASEAN dialogue system as it is today, with as strong a claim to that position as any of the other Dialogue Partners.

For many centuries, Indian civilization has deeply influenced the cultures of all of Southeast Asia. Large Indian communities live among the people of Southeast Asia. India has participated constructively in United Nations activities in Indochina. With Myanmar’s admission into the association in 1997, India now has a common land border with ASEAN. The ASEAN Regional Forum has benefited from India’s long experience in global security affairs. In recent years, India has deliberately fostered a “Look East” policy in foreign affairs, including resolute efforts to strengthen ties with ASEAN as a group. ASEAN, of course, welcomes this, as it considers India to have a strategic role to play in the region. As an expression of the “Look East” policy, the Prime Minister of India is now on a visit to two ASEAN members.

In the past, many Southeast Asian countries and India shared a common view of international economic relations. They viewed with dismay how the international terms of trade were moving progressively in favor of the developed countries, which produced and exported mainly manufactured goods, and against the developing countries, which produced and exported raw commodities. India, Southeast Asia and other developing countries sought to redress this situation by protecting and nurturing so-called infant industries that produced for the domestic market as many as possible of the goods that they used to import from the developed countries.

At around the time of ASEAN’s founding in 1967, the members of the new association had begun to come to the conclusion that the protectionist, import-substituting regime of economic development had reached its limit. Protectionism was breeding inefficient industries, whose products had a limited market at home. They decided that, in order to enlarge their markets and thus generate more jobs, they had to go for the global marketplace, putting their foremost asset — their abundant and inexpensive labor — to good use in international competition. At the same time, opening the domestic market to foreign investment attracted financial resources, technology, modern production methods, and so on. In many cases, competition resulted in lower prices. The Southeast Asian countries thus acquired a stake in an open global marketplace — in terms of market access for their own exports, the salutary effects of competition in their domestic markets, and the freer flow of foreign direct investment. One can actually say that ASEAN was, to some extent, founded on the principles of the free market.

The Indian economy had a longer protectionist, import-substituting, planned and regulated phase. India used this opportunity to develop industries of great economic, scientific and social significance. Pharmaceuticals, food processing and certain types of advanced industry are outstanding examples. Since 1991, however, India has been gradually opening up its market, de-regulating its economy, and privatizing some public sector enterprises. Many sectors of the economy have been opened to foreign investment, and market forces given freer play.

Common Economic Interests

ASEAN and India have thus, once more, found common economic interests — in free markets and in the freer flow of foreign direct investments. But they also recognize a common stake in ensuring that free markets in goods, services and capital benefit countries like them and all the people within them.

It is from this standpoint that they are to deal with today’s phenomenon of globalization. At its most basic, globalization means the free flow of goods, services, capital, information and labor. Theoretically and at its most ideal, it is the most efficient use of the factors of production for the good of all.

It is in this sense that almost all countries have come to accept globalization as desirable, or even inevitable — at least as far as most goods and most services are concerned. This is why almost countries that are still outside the World Trade Organization want to come in — from China and Russia to Laos and Cambodia. Nations believe that, on balance, it is better to be in than out.

However, it has also been pointed out that globalization, as carried out so far, is inequitable, at least in its results – inequitable between some developed countries and most developing countries, and between sectors in the same country. As currently practised, globalization means opening markets to the goods of the leading industrial nations, such as high-technology products and financial services, while developed-country markets are closed to the goods that the least developed countries are most capable of producing, like garments and textiles. It allows certain developed countries to use their massive resources to subsidize their agricultural exports in unfair competition with those of other countries. It has enabled strong countries to abuse anti-dumping measures.

Within nations, the free international flow of goods, services, capital and information and the competition that it fosters tend to widen the gap between those who live in the cities and those who live in the countryside, between workers in the industrial export sector and the knowledge industries and those who work in subsistence agriculture, between the skilled and the unskilled, between the educated and the illiterate, between those who can enjoy the increasingly broader choice of consumer goods and those who live from hand to mouth.

What We Can Do

All these points have been made abundantly by many who know much more about these things than I do, most recently in Seattle, in Davos, in Washington, D. C., and in Bangkok, and in many meetings that I have attended. The question is: what can countries like India and ASEAN members do about it?

At the international level, they must continue to cooperate in pressing for access to the developed markets of those products in which developing countries are most competitive. They must work together for the dismantling of pernicious agricultural-export subsidies and anti-dumping abuses. They must join their voices in calling for the better international management of volatile short-term capital flows, and for the relief of the world’s most indebted nations. They must jointly press for the more effective and substantive transfer of technology from the multinational corporations that operate in their midst. They must more strongly seek a bigger voice in the international trading and financial systems. They must, together, keep up the pressure.

Even as we work to make the international trading and financial systems fairer and more equitable, we have to do what it takes to make ourselves more competitive in the world — in terms of markets, services and investments. Whether the international system is fair or not, whether the international playing field is level or not, countries like ours have to gird themselves for the rigors of the international competition that is so vital for the health of the global economy and of individual economies.

Integrating ASEAN

In ASEAN, one of the ways in which we seek to strengthen our competitiveness is to hasten and deepen the integration of our economies. We in ASEAN have recognized that the only way to compete for markets and investments in a globalized economy is to create the large integrated market that foreign direct investments seek. Such investments would take into account the large domestic consumer base that an integrated market represents. They would also factor in the economies of scale that would strengthen their competitiveness in the global marketplace.

For all practical purposes, the ASEAN Free Trade Area is now in place, a market with a population half the size of India’s and with a gross domestic product of the same magnitude as China’s. We are now working on integrating the ASEAN market for services. We have opened each of our economies almost completely to investments from other ASEAN countries, including joint ventures with outside investors. The great diversity of ASEAN’s economies gives the investor a wide choice of where in ASEAN to invest.

Beyond trade and investment, the recent financial crisis has forcefully brought home to ASEAN governments the necessity of cooperating closely in financial matters. We have set up a system of joint surveillance of our economies, including periodic peer reviews by finance ministers and mutual encouragement in the pursuit of economic and financial reform. We have expanded and strengthened the currency swap arrangement through which ASEAN members are to provide financial resources to one that may suffer temporary financial difficulties.

ASEAN recognizes the fast-growing importance of information and communications technology. It is resolutely working toward creating e-ASEAN, toward enabling ASEAN’s people to develop and use that technology the better to compete economically and otherwise to improve their lives. Last November, ASEAN’s leaders signed the e-ASEAN agreement, which commits their countries to cooperate in providing the legal and policy environment for the development of information and communications technology and of e-commerce, liberalizing trade in ICT goods and services, harmonizing standards for ICT products and processes, training people in the new technologies, laying the ASEAN information infrastructure, and fostering the use of ICT to improve government services and in education, health, rural development and other social purposes.

ASEAN knows that it must integrate the markets of Southeast Asia, cooperate financially and get into the information age if it is to have a chance of competing with continent-sized nations like India and China and with free trade areas that are rising elsewhere in the world.

Regional market integration and regional cooperation are necessary for nations to thrive – or even survive – in a globalized economy; but they are not enough. Regional arrangements can only do so much. Each nation has to do for itself what only sovereign nations can do – ensure that people have the productive skills, the physical health and the economic means to contribute to and benefit from economic development. Quite apart from its inherent value, the quality of a nation’s people – and of its governance – in most cases determines the strength of its economy. This is particularly true in today’s globalized economy, where knowledge and intellectual skills have an increasingly large role.

For a nation, this means essentially a single-minded endeavor to lift the quality of mass education, including that of women and girls, to provide training in the skills needed in today’s industries, to open up access to knowledge and information, to set up social safety nets for times of national or personal crisis, to improve public health care, to accelerate rural development, to raise the incomes of the poor to a level that provides a decent living and expands the domestic market.

ASEAN is cooperating in some of these areas – in the training of women and out-of-school youth, in the design of social safety nets, in rural development. But regional cooperation can do little more than foster the exchange of information, of best practices, of technical help. The basic and controlling decisions have to be made at the national level. Essentially, such decisions involve the re-allocation of resources and other items of national policy, and only sovereign nations can make them. The devotion of resources to education, training, health and nutrition requires moving money into these vital areas and out of other activities – and using that money efficiently and honestly. Social safety nets by their very nature demand the transfer of resources from one social sector to another. Attention to rural development may mean a shift of national priorities. Each nation has to decide for itself how to manage the flow of information, if it does so at all, and how to connect with the rest of the world.

The Role of Democracy

This clearly cannot be left to the workings of the market. The state has to intervene. But, in most cases, the state will intervene on behalf of education, training, health, nutrition, social safety nets, and rural development – and devote the necessary resources to them — only if it is pressured to do so, only if rural folk, women, workers, consumers, and the public at large are mobilized on behalf of their own and their families’ interests. Such mobilization can happen only in a democracy – democracy, to be sure, in a form suitable to each country’s circumstances – but democracy nevertheless; genuine democracy, in which the people participate in their own governance, have their voices heard and their interests taken into account, where government and corporate processes are transparent, where government and corporate leaders are accountable – where, I might add, the rules are enforced equally on all and nobody, no party, is above the law.

It is in this light that the concept of democracy and its role in development has to be examined and re-examined – in the light of its substance and achievement rather than of its form and trappings, in the light of both principle and pragmatism.

Here, I invoke the penetrating insight of that eminent son of India, Amartya Sen – the insight that weaves through much of his distinguished work, his insight into the truth that the exercise of personal freedom and of political and civil rights is not only a good in itself but is an important instrumentality for economic development and the improvement of human welfare.

For validation, we need not look farther than Sen’s own country, this country. India has many problems – illiteracy, the disadvantaged status of many women, rural poverty, undernourishment, the bureaucratic legacy of a controlled economy. But Indian democracy, imperfect though it may be, places India in position to deal with the challenges of development and globalization and exploit their promise. ASEAN, too, is headed that way, proceeding at different paces and taking different forms, to be sure; but it has to be headed that way. It is the only way.

Areas for Cooperation and Dialogue

Here, then, are vital areas for ASEAN-India cooperation and dialogue, for two-way learning, mutual understanding and, where appropriate, common action.

Economic ties are, of course, the usual and obvious starting point for links between countries and regions. For many years, trade and investment between ASEAN and India have been severely hampered by the lack of knowledge and contact between the business communities and by the differences in ways of doing business. The trade with India of the first six ASEAN members more than doubled in the three years from 1994 to 1997, from US$3.5 billion to US$8.9 billion, dipping to US$7 billion and US$7.7 billion in 1998 and 1999. Yet, even at its peak, ASEAN’s trade with India was less than two percent of the region’s total trade.

The business communities certainly have to do the trading and investing, but the public sector can help spread updated information about business conditions and opportunities. Perhaps, trade facilitation measures being adopted in ASEAN could be extended to India. These include customs coordination, product harmonization, and mutual recognition arrangements. At the policy level, we could learn from each other how most effectively to harness the forces of the market, to plug into the global economy, and to deal with globalization.

A joint study is currently being done on how to establish linkages between India and the ASEAN Free Trade Area. A similar study has been completed with respect to the closer partnership between AFTA and the Closer Economic Relations of Australia and New Zealand. Others are contemplated on ASEAN-China and ASEAN-Japan economic linkages. Such studies could shed light on one another’s subject and, considered jointly when the time comes, could form the basis of an overarching system of easier trade flows and other economic relations in the Asia-Pacific.

A great success story has been the development of India’s pharmaceutical industry, which has given to India’s people the blessings of effective and affordable drugs. ASEAN countries, some of which are plagued by the high prices of essential drugs, could certainly learn from India’s experience in this area, including its adaptation of the pharmaceutical industry to the issue of trade-related intellectual property rights, or TRIPS. The ASEAN Working Group on Technical Cooperation on Pharmaceuticals could serve as the vehicle for ASEAN-India cooperation.

Information technology is another obvious area for ASEAN-India cooperation. India has swiftly acquired fame for its software industry. ASEAN has its e-ASEAN program. For all of India’s success and despite pockets of achievement in ASEAN, both India and ASEAN, except for Singapore, lag far behind the developed countries in terms of the usage and penetration of IT. ASEAN and India could work together in evaluating their state of readiness for the digital age and identify areas where action is needed and what action to take. This effort could include an index of readiness and an annual progress report. ASEAN and India ought to cooperate in the absolutely essential endeavor of producing the necessary critical mass of trained personnel through the maximum use of the private sector. ASEAN and India could establish a process of consultation on the use, experimental to begin with, of IT for education, health care, employment, small and medium enterprises, and rural development. Because IT is evolving, and evolving fast, we might set up channels for the regular exchange of experience and information on IT developments.

Similarly, ASEAN and India could cooperate in laying the scientific basis for specific policies pertaining to the issue of the trade in and consumption of genetically modified organisms.

Cooperating in Human Development

India and most ASEAN countries face the same problems of human development, of developing the human potential for productive work and a fulfilling life. India and ASEAN countries have scored brilliant successes and suffered massive failures in different areas. I have already cited India’s pharmaceutical industry as something for ASEAN to learn from. Indian advances in medical research, particularly in tropical medicine, are well known. ASEAN could benefit from cooperating with India in the surveillance and control of communicable diseases, especially those that ASEAN has identified to be of urgent priority.

Similarly, ASEAN and India have broad scope for cooperation in training their people to survive and thrive in an economically competitive world. ASEAN and India have started programs of cooperation in higher education and in an impressive range of scientific and technological fields, many of them esoteric, all of them useful. However, mutual learning in mass education and in the training of women and out-of-school youth would be useful, too.

As a consequence of the recent financial crisis, ASEAN has of late been devoting attention to social safety nets and has adopted an action plan for this purpose. ASEAN and India could learn from each other in the design, assessment and implementation of social protection programs. Cooperation in information technology could include the use of IT and the extension of modern telecommunications for rural development and the empowerment of rural folk.

Finally, India and ASEAN countries could share their experiences in and their approaches to questions of public and corporate governance, the transparency of official and business transactions, and the people’s participation in public life. The importance of these questions has become much clearer in a globalized world in the information age. They are also delicate questions, and they have to be addressed with due regard to nations’ sensitivities and their particular histories and other circumstances. But they ought to be addressed — at least, initially, at the academic level.

Most of the cooperative measures that I have indicated are modest ones, and perhaps for that reason practical. I believe that they will help enrich the texture of ASEAN-India relations and give substance to them. I am confident that I speak for ASEAN when I say that ASEAN values immensely India’s strategic engagement in our part of the world. I am sure that India will also find its involvement with Southeast Asia useful to itself. This is both because of Southeast Asia’s inherent value and because such an involvement will help to strengthen and enlarge India’s ties to East Asia, a part of the world that is of great strategic and economic importance to it.

For both sides, this is the ultimate significance of the ASEAN-India dialogue partnership