The signalling of an expanding Indian engagement with its strategic partners in Southeast Asia is evident through the continuous high level, and ministerial visits being undertaken. These partnerships built on a foundation of long historical and cultural ties have today expanded in its scope given the commonality of the multifaceted challenges faced by the nations in the region. Therefore, continuity of exchanges at the governmental, academic, and cultural level between India and its Southeast Asian neighbours are essential as they provide substance in shaping the emerging partnership. The Indian Prime Minister Narendra Modi, made a three nations Southeast Asia tour from May 29-June 2, 2018, which included Indonesia1, Malaysia and Singapore. These three nations are amongst India’s key strategic partners in the region. During the second leg of his visit the PM made a brief stopover in Kuala Lumpur, on May 31, 2018, where he met with the newly elected Prime Minister of Malaysia, Dr. Mahathir Mohammad. The Prime Minister’s then flew off Singapore for his official visit from May 31-June 2, at the invitation of Singapore’s PM Lee Hsien Loong.2
Both Malaysia and Singapore are very important partners for India as they are both India’s Strategic partners with whom we also share a robust economic relationship. Further, with the establishment of the Comprehensive Economic Cooperation Agreement (CECA) with both countries, it has further elevated the level of the economic engagement, making it the mainstay of the bilateral relationship. The figures below indicate the percentage of India’s trade with all the ten ASEAN States. In terms of India’s exports to the nations in ASEAN in 2016, Singapore has the highest share of 28 percent and Malaysia is at third position with a share of 16 percent. In terms of India’s import form the ASEAN States, Malaysia with 23 percent is the second largest after Indonesia, while Singapore with 18 percent is at the third position.
Figure One: India’s major Export Destination in ASEAN, 2016 (in percentage)3
Figure Two: India’s major Import Sources in ASEAN, 2016 (in percentage)4
Building India’s Partnership with Malaysia and Singapore
Since the establishment of India-Malaysia diplomatic relations in 1957, the relations have grown at the economic and defence level. After the signing of an MOU on Defence Cooperation in 1993, there have been high-level exchanges with visits by the Defence Ministers along with Staff talks between the three services being held regularly on an annual basis. Defence initiatives such as joint exercises which include “Harimau Shakti” are being held annually, along with Indian naval ships making regular port calls in Malaysia. Further, the Indian Air Force training team was deployed in Malaysia to train Malaysian pilots on the SU-30SKM aircraft from 2008-2010. During the visit to Malaysia on October 26-28, 2010, by the then PM Manmohan Singh, a Framework for Strategic Partnership between the two countries was established. The framework for a strategic partnership was established with the intent to elevate the bilateral relations to the level of a long term and strategic partnership. On November 23, 2015, during the official visit of PM Modi to Malaysia, both sides reaffirmed their determination to take the strategic partnership to the next level by deepening the existing areas of cooperation, while also exploring new areas.5
On July 1, 2010, India and Malaysia signed the CECA which came into force on July 1, 2011. The first CECA review meeting took place in New Delhi in December 2014. Today, Malaysia is India’s third largest trading partner in ASEAN. The bar diagram in figure three indicates India’s trade with Malaysia from 2013 to 2017.
Figure Three: India’s Trade with Malaysia, 2013-2017 (in US $ billion)6
From the figure it is seen that India’s export to Malaysia has increased from US $ 4.1 billion in 2013 to US $ 5.7 billion at the end of 2017. In terms of imports after reaching a high of US $ 11.1 billion in 2014, it has remained constant at US $ 9 billion. Therefore, the total trade from 2013 to 2017 has increased from US $ 13.4 billion to US $ 14.7 billion. India’s major export items as well as import items are given in figures four and five respectively. As indicated in figure four, some of India’s major export items to Malaysia consist of ships, mineral fuels, meat, machinery, and aluminium and its articles. In terms of India’s imports from Malaysia provided in figure five, it consist of animal and vegetable fats, mineral fuels, electrical machinery and equipments, machinery and mechanical appliances, and wood articles.
Figure Four: India’s Major Export items to Malaysia, 2016 (in percentage)7
Figure Five: India’s Major Import from Malaysia, 2016 (in percentage)8
Malaysia is also the 25th largest investor in India with Foreign Direct Investment (FDI) inflows of US $ 827.88 million from April 2000 to September 2016. Malaysian FDI in India is primarily focussed on roads and highways, telecommunications, oil and gas, power plants, tourism and human resources. India’s cumulative investment into Malaysia from 1980-2014 has been around US $ 2.31 billion, with more than 115 Indian companies including 61 Indian joint ventures, seven Indian Public Sectors Undertakings and 60 Indian IT companies operating in/from Malaysia.
Their areas of operation are manufacture of textiles and yarn, drugs and pharmaceuticals, glass containers, automobile associated activities, specialty chemicals, steel furniture, rubber products, services in IT, education, biotechnology, healthcare, etc. In terms of connectivity air links have improved significantly following a bilateral agreement in 2007 with about 170 weekly flights connecting various destinations of India and Malaysia.9
Prime Minister Modi, during his second leg of his three nation Southeast Asia tour met with Malaysian PM Mahathir in his office at Perdana Putra Complex, on May 31, 2018. The Indian PM while congratulating Dr Mahathir on his recent electoral win also thanked him for the warm welcome. Both leaders had a productive discussions on further cementing India-Malaysia ties through boosting their economic and cultural relations. According to External Affairs Ministry Spokesperson Raveesh Kumar, the two leaders had a productive exchange of views on strengthening the strategic partnership as Malaysia is a priority country for India’s ‘Act East’ policy.10
PM Modi also met with the newly appointed Deputy Prime Minister Datuk Seri Dr Wan Azizah Wan Ismail and Datuk Seri Anwar Ibrahim at KL International Airport’s Bunga Raya Complex before he left for Singapore. After their meeting PM Modi tweeted that he was delighted to have met Deputy PM Wan Azizah Wan Ismail and Mr Anwar Ibrahim. According to the PM’s tweet they had fruitful discussions on a wide range of subjects relating to India-Malaysia friendship.11 The meeting of the PM with the newly elected Prime Minster and members of the Malaysian government was significant as it showed the intent to provide continuity towards pursuing the India-Malaysia partnership.
India and Singapore share close ties rooted in strong cultural, commercial, and people-to-people links. The historical ties between the two nations can be traced back to the time of the Cholas. Further, both nations also share a common colonial connection being under the rule of the British, with India being one of the first countries to recognise Singapore in 1965. India and Singapore in October 2003 signed a Defence Cooperation Agreement and signed the CECA in 2005. In August 2014, during the visit of the External Affairs Minister Sushma Swaraj, the 5-S Plank was adopted in order to further enhance the bilateral relations. The five areas covered under the 5S Plank are: scale up trade and investment, speed up connectivity, cooperation in developing smart cities and urban rejuvenation, skill development through the establishment of centres, and State focus to ensure participation across the various States. During the visit of PM Modi to Singapore in November 2015, which also marked the 50th anniversary of the India-Singapore diplomatic relations, a Joint Declaration on a Strategic Partnership was signed which elevated the relations to a Strategic Partnership. Nine bilateral documents were signed in the areas of defence, maritime security, cyber security, narcotics trafficking, urban planning, civil aviation, and culture.12
In terms of economic relations there lies convergence of interests between the two nations given the economic opportunities in key sectors such as development of smart cities, financial sector, ports development, logistics, aviation, and so on. Since the conclusion of the India-Singapore CECA in 2005, bilateral trade has further expanded from US $ 6.7 billion in 2004-05, to reach a high US $ 24 billion in 2011. As indicated in the figure below, after a growth in bilateral trade, post implementation of the CECA, there has been a decline in terms of the total bilateral trade, falling from US $ 19.2 billion in 2013 to US $ 17.6 billion at the end of 2017.
Figure Six: India Trade with Singapore, 2013-2017(in US $ billion)13
There are a couple of reasons for this decline, first since refined petroleum products is the largest share of India’s exports to Singapore, and given the depressed oil prices in recent years, it has contributed to a fall in export value in this set of products. There is also the increased competition from other countries, particularly China that has also contributed to the decline in exports in several sectors. In recent years Singapore has developed certain strong manufacturing capacities in sectors such as petroleum refining, petrochemicals, certain speciality chemicals, a few steel making segments, high end electronics, optical and medical instruments and certain food industry areas, resulting in its smaller import basket. Further, with limited domestic consumption Singapore has the capacity to export much of the production. Other issues relate to restraint in market access through tariff barriers which undermine the trade potential.14 India and Singapore successfully concluded the second review of the CECA on June 1, 2018, in the presence of PM Modi and PM Lee. In the second review India and Singapore have agreed to expand the coverage of the tariff concessions for an additional 30 products, liberalise the rules of origin to provide more flexibility for Singapore exports into India to qualify for preferential tariffs, and also incorporate new products specific rules to enhance bilateral trade.15
In terms of investment, according to the cumulative foreign direct investment inflows into India from April 2000-March 2018, Singapore is at the second position after Mauritius with US $ 66,771 million, and constituting 17.72% of the India’s total FDI inflows.16 Further, Singapore is also India’s number two destination after Mauritius for its overseas direct investment (ODI). In terms of India’s cumulative ODI to Singapore from April 2014-December 2017, it stands at US $ 7884.45 million and constitutes 19.94 % of the India’s total ODI.17 Some of the major sectors of investment include IT, real estate, manufacturing, construction, renewable energy, and pharmaceuticals.18
In 2016, as indicated in figure seven, some of India’s major items of export consist of mineral fuels, ships and floating structure, pearls and metals, machinery and appliances, and organic chemicals. In terms of India’s import from Singapore as shown in figure eight electrical machinery, machinery, organic chemicals, plastic and its articles, and mineral fuels, are some of the major items.
Figure Seven: India’s Major Export items to Singapore, 2016 (in percentage)19
Figure Eight: India’s Major Import items from Singapore, 2016 (in percentage)20
The Indian PM during his visit to Singapore from May 31- June 2, stated that this bilateral relation fulfils the criterion of strategic partnership in the true sense. This according to the Prime Minister is with regard to the foundation based on the extraordinary heritage, the wealth of the human links and the strength of the shared values, through which both nations are building a partnership. Further, while addressing the business community in Singapore on May 31, 2018, the Indian PM stated that “...when India opened up to the world and turned to the East, Singapore became a partner and a bridge between India and ASEAN.... Singapore will remain a gateway to ASEAN and the broader East. This year, Sinagapore’s Chairmanship of ASEAN will take India’s relations with ASEAN further and farther ahead....”21
Prime Minister Modi during meeting with PM Lee Hsien Loong on May 31, 2018, expressed his optimism on the up gradation and improvement of the India-Singapore CECA, after the completion of its second review. The Indian PM also stated that India's progress provides unmatched opportunities to Singapore in key areas such as smart cities, urban solutions, financial sector, skills development, ports, logistics, aviation and industrial parks. The PM applauded the increasing investments by Singaporean companies in India. While also acknowledging Singapore being a top destination for India to make investments abroad the PM stated that it is also being used by Indian companies as a spring-board into the ASEAN region and other countries. During his discussion with PM Lee, both sides agreed to start a digital partnership which was defined as an area of natural partnership with unlimited possibilities. Agreements were signed at the Nanyang Technological University, to further enhance bilateral cooperation in higher education, science, technology and innovation. Both countries have agreed to further intensify their cooperating in the areas of skill development, planning and urban development. During the meetings agreement were signed for new initiatives, such as to help facilitate water supply in 115 districts of India. These agreements according to PM Modi would take bilateral cooperation to a new level while eventually benefitting the youth of India including the rural areas.22
During the meeting both leaders emphasised the importance of defence and security in the bilateral strategic partnership. PM Modi stated that India and Singapore are natural partners with a shared vision and strong defence relations, evident in the India-Singapore naval exercise or SIMBEX which is entering its silver jubilee year. Other defence initiatives include regular military training as well as the recently concluded bilateral logistic agreement.23 Both leaders discussed the issue of combating cyber security, extremism and terrorism, which was described as a major threat and an important area of bilateral cooperation. Given their shared concern on the global and regional challenges both sides reaffirmed their principled views on maritime security which includes openness, inclusiveness, transparency, peaceful settlement of disputes on the basis of international law, including the 1982 United Nations Convention on the Law of the Sea, while also reaffirming their commitment to a rules based order. PM Modi also emphasized the importance of ASEAN unity, its centrality and regional sustainability, through the institutions led by ASEAN. Further, he also conveyed India's firm commitment to an early conclusion of the RCEP Agreement and hoped for a fair, balanced and comprehensive agreement.24
India’s relations with Malaysia and Singapore may well have been built on a strong historical and cultural past. The presence of a vast Indian diaspora in both nations acts as a useful glue, in strengthening India’s relationship with the two countries. However, it must also be realised that today the relationship that India enjoys with Malaysia and Singapore is also on account of a growing interdependency in terms of economic and strategic interests. It is these interdependencies based on shared principles that helps elevate it into a natural partnership. The short visit of the Indian Prime Minister in order to meet with the new government in Malaysia is symbolic as it indicates a strong desire for continuity in building the partnership at the highest level of the government. The meeting with PM Lee on the other hand highlights the strong partnership shared between India and Singapore. Further, the meeting in Singapore also highlighted the significant opportunities of the existing partnership, by showcasing new areas for bilateral cooperation.
The current economic engagement along with the expanding defence cooperation which India enjoys with Malaysia and Singapore provides much scope for the bilateral to further expand in the years to come. Thus, well aware of the significance of these nations, the Indian Prime Minister prior to his departure stated that, “... I am confident that my visit to Indonesia, Malaysia and Singapore will provide a further boost to our Act East Policy and enhance our relations and engagements with all the three countries.”25
* The Author, Research Fellow, Indian Council of World Affairs, New Delhi.
Disclaimer: The views expressed are that of the Researcher and not of the Council.
1 For report on this see: https://icwa.in/pdfs/VP/2014/PMvisitIndonesiaVP25062018.pdf.
2 “Visit of Prime Minister to Indonesia, Malaysia and Singapore (29 May – 2 June, 2018)”, Ministry of External Affairs, May 28, 2018, http://www.mea.gov.in/press-releases.htm?dtl/29924/Visit_of_Prime_Minister_to_Indonesia_Malaysia_and_Singapore_29_May__2_June_2018, accessed on June 28, 2018.
3“Strengthening ASEAN-India Partnership: Trends and Future Prospects”, Export-Import bank of India, January 2018, https://www.eximbankindia.in/Assets/Dynamic/PDF/Publication-Resources/ResearchPapers/88file.pdf, accessed on June 28, 2018.
5“India-Malaysia Relations”, Ministry of External Affairs, January 2017, https://www.mea.gov.in/Portal/ForeignRelation/Malaysia_Jan_2017.pdf, accessed on June 28, 2018.
6 Malaysia, Export Import Data bank, Department of Commerce, http://commerce-app.gov.in/eidb/iecnt.asp, accessed on June 28, 2018.
7 “Strengthening ASEAN-India Partnership: Trends and Future Prospects”, Export-Import bank of India, January 2018, https://www.eximbankindia.in/Assets/Dynamic/PDF/Publication-Resources/ResearchPapers/88file.pdf, accessed on June 28, 2018.
8“Strengthening ASEAN-India Partnership: Trends and Future Prospects”, Export-Import bank of India, January 2018, https://www.eximbankindia.in/Assets/Dynamic/PDF/Publication-Resources/ResearchPapers/88file.pdf, accessed on June 28, 2018.
9“India-Malaysia Relations”, Ministry of External Affairs, January 2017, https://www.mea.gov.in/Portal/ForeignRelation/Malaysia_Jan_2017.pdf, accessed on June 28, 2018
10“PM Modi meets Malaysian counterpart Mahathir Mohammad”, DD News, May 31, 2018, http://ddnews.gov.in/national/pm-modi-meets-malaysian-prime-minister, July 2, 2018.
11“Modi: Fruitful meeting with Dr M”, The Star Online, June 1, 2018, https://www.thestar.com.my/news/nation/2018/06/01/modi-fruitful-meeting-with-dr-m/, accessed on July 2, 2018.
12“India-Singapore Relations”, Ministry of External Affairs, January 2018, https://www.mea.gov.in/Portal/ForeignRelation/Singapore_new_updated.pdf, accessed on June 29, 2018.
13 Singapore, Export Import Data bank, Department of Commerce, http://commerce-app.gov.in/eidb/iecnt.asp, accessed on June 29, 2018.
14“India-Singapore CECA: An Appraisal of Progress”, Research and Information System for Developing Countries, 2017, http://ris.org.in/pdf/INDIA_SINGAPORE_CECA.pdf, accessed on July 10, 2018.
15“Conclusion of the Second Review of the India-Singapore Comprehensive Economic Cooperation Agreement”, Ministry of Trade and Industry, Singapore, June 1, 2018, https://www.mti.gov.sg/NewsRoom/SiteAssets/Pages/Conclusion-of-the-second-review-of-the-India-Singapore-Comprehensive-Economic-Cooperation-Agreement/Press%20Release%20on%20the%20Conclusion%20of%20Second%20CECA%20Review%20-%201%20Jun.pdf, accessed on July 10, 2018.
16 “Fact Sheet on Foreign Direct Investment From April, 2000 to March 2018”, Department of Industrial Policy and Promotion, Ministry of Commerce and Industry, March 2018, http://dipp.nic.in/sites/default/files/FDI_FactSheet_29June2018.pdf, accessed on July 11, 2018.
17“Fact Sheet on Overseas Direct Investment from April 2014 to December 2017”, Department of Economic Affairs, Ministry of Finance, December 31, 2017, https://dea.gov.in/sites/default/files/ODI%20Fact%20Sheet%20from%20April%202014%20to%20December%202017.pdf, accessed on July 11, 2018.
18“India-Singapore Relations”, Ministry of External Affairs, January 2018, https://www.mea.gov.in/Portal/ForeignRelation/Singapore_new_updated.pdf, accessed on June 29, 2018.
19“Strengthening ASEAN-India Partnership: Trends and Future Prospects”, Export-Import bank of India, January 2018, https://www.eximbankindia.in/Assets/Dynamic/PDF/Publication-Resources/ResearchPapers/88file.pdf, accessed on June 28, 2018.
21“Prime Minister's Speech at the Business-cum-Community Event, Singapore (May 31, 2018)”, Ministry of External Affairs, May 31, 2018, http://www.mea.gov.in/Speeches-Statements.htm?dtl/29936/Prime_Ministers_Speech_at_the_BusinesscumCommunity_Event_Singapore_May_31_2018, accessed on June 28, 2018.
22 “English Translation of Press Statement by Prime Minister during visit to Singapore”, Ministry of External Affairs, June 1, 2018, http://www.mea.gov.in/Speeches-Statements.htm?dtl/29941/English_Translation_of_Press_Statement_by_Prime_Minister_during_visit_to_Singapore, accessed on June 28, 2018.
23“Prime Minister's Speech at the Business-cum-Community Event, Singapore (May 31, 2018)”, Ministry of External Affairs, May 31, 2018, http://www.mea.gov.in/Speeches-Statements.htm?dtl/29936/Prime_Ministers_Speech_at_the_BusinesscumCommunity_Event_Singapore_May_31_2018, accessed on June 28, 2018.
24“English Translation of Press Statement by Prime Minister during visit to Singapore”, Ministry of External Affairs, June 1, 2018, http://www.mea.gov.in/Speeches-Statements.htm?dtl/29941/English_Translation_of_Press_Statement_by_Prime_Minister_during_visit_to_Singapore, accessed on June 28, 2018.
25 “PM’s statement prior to his departure to Indonesia, Malaysia and Singapore”, PM India, May 28, 2018, http://www.pmindia.gov.in/en/news_updates/pms-statement-prior-to-his-departure-to-indonesia-malaysia-and-singapore/?comment=disable, accessed on June 28, 2018.