ASEAN, which comprises Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand and Vietnam, was originally formed in 1967 with the aim of promoting economic progress and stability in the region. The region is home to a market of 600 million people If ASEAN were a single country, it would already be the seventh-largest economy in the world. Its combined GDP of USD 2.4 trillion was more than 25 percent larger than India’s economy in 2013. Home to more than 600 million people, it has a larger total population than the European Union or North America. ASEAN has the third largest labor force in the world, behind only China and India, and its youthful population is producing a demographic dividend. The region proved remarkably
resilient in the aftermath of the 2008 global financial crisis, and today gross government debt is less than 50 percent of GDP, far lower than the levels in many developed economies

Historically Burma, Thailand, Cambodia, Laos, South Vietnam, Malaysia and Indonesia have been
deeply influenced by Indian political ideas, religion, art and language. The spread of cultural influences has only made it easier for India and the ASEAN region to collaborate and explore avenues of mutual interest

One of the biggest potential for Southeast Asia in the near term is capturing a larger share of the India’s trade in goods and services, specifically exports. To date, exports have played a smaller role than consumption and investment in driving GDP growth in many ASEAN countries

Singapore, which is already active in the development of high technology defense materiel such as weaponry, weapons systems and land and marine vessels

Of the Southeast Asian nations, the largest exporter is Singapore, with total exports. Let's take a look at the countries where trade and export plays the biggest contributing role in Southeast Asia.

1. Singapore: Electrical and electronic equipment, as well as mineral fuels and oils
2. Malaysia: Malaysia exports goods led by palm oil, refined petroleum, petroleum gas and electrical and electronic products
3. Thailand: Thailand's exports are led by computers and electronics, rubber, delivery trucks, refined petroleum and gold
4. Indonesia: Indonesia exports petroleum gas, coal, palm oil and rubber.
5. Vietnam: Electronic equipment, crude petroleum, apparel and footwear, and coffee
6. Philippines: Electronics and electrical products such as integrated circuits, semiconductor devices, computers, transformers, etc., made up the biggest chunk of the country's exports
7. Brunei: This tiny oil rich nation exports crude petroleum and petroleum gas, followed by jewellery, diamonds and acyclic acids.
8. Myanmar: This resource rich nation has just emerged from decades of military rule and political suppression. Its exports consist largely of petroleum gas, rough wood and agricultural produce
9. Cambodia: Driven largely by various kinds of apparel
10. Laos: Exports comprise mainly of refined copper and copper ore, apparel and wood

Other Specific areas for investors from ASEAN to invest in India

Electronics and Semiconductor Design and Manufacturing (ESDM): The increasing demand for smartphones, tablets and consumer electronics is going to fuel the growth of the ESDM industry in India. The government is adding to the demand with initiatives such as ‘Digital India’ and Smart cities. The demand is expected to outstrip the production and services supply of ESDM by an estimated US$100 billion. While India possesses the skills and talent pool required for production in the ESDM sector, it would need expertise and assistance in building the fabrication and electronics manufacturing units, if it were to manufacture on its own

Defence and Urban Solutions: Singapore is a leader in urban solutions and defence technologies With Mr Modi pushing infrastructure and smart cities as a key plank of his development strategy, urban solutions -- a key Singapore strength offers opportunities for local companies from Singapore  . During.  Furthermore, a budget of US$7.5 billion has been set aside by the Government of India for the planning and development of the smart cities. Such smart cities will generate demand for urban solutions ranging from energy, waste and water to intelligent systems for city services. Singapore companies offering urban solutions sector can tap into the developing cities

During the Indian Prime Minister’s recent visit to Singapore, the two countries agreed to enhance cooperation in sustainable smart city development with Mr Modi urging Singapore to explore the possibility of developing urban centres under the Smart Cities Initiative. Another agreement on civil aviation will open opportunities for collaboration in development of Indian airports
Infrastructure: Infrastructure being one of the key areas of focus for the Indian government, has invited attention of international players. For example, Malaysian companies are looking at evaluating highway projects for investment under the hybrid-annuity model. Under this, 60% of the project cost has to be borne by the private investor. The remaining 40% will come from the National Highways Authority of India in five equal installments. The government will also bear the revenue risk in projects where there is a low anticipation of traffic flow

Consumerism: A driving force behind India’s consumer market is its growing middle-class. India is set to become the world's fifth largest consumer economy estimated at by 2025. This will create opportunities in food manufacturing, food services, e-commerce, electronics and trade in general merchandise which Singapore companies may capitalise on

Manufacturing: Under the Make in India initiative, 25 manufacturing sectors are actively promoted to increase the India’s share of domestic manufacturing from 11% to 25% of India’s GDP by 2025. The growth of manufacturing along key industrial zones such as the Delhi Mumbai Industrial Corridor8 are presenting new opportunities. Regional manufacturers can venture into the market by setting up local manufacturing of their products

Affordable Housing: Malaysia has worked a lot on affordable housing, which again is one of the focus areas of the Indian government

Renewable Energy:  To fulfill the energy requirements, India has set an ambitious target of installing 175 GW of renewable capacity by 2022. This needs an investment of US$ 120 billion.  This provides ample opportunities for regional companies in working towards alternative sources of energy

Healthcare :  India's expertise and proven capabilities in production of pharmaceuticals, especially generic medicines at affordable cost, advancement in healthcare sectors and science & technology, high quality education at reasonable cost could also be potential areas of investments by both sides.

Other areas where Government of India has eased FDI norms and would be of interest to investors from the ASEAN region, are :

    Townships, shopping complexes & business centres – all allow up to 100% FDI under the auto route. Conditions on minimum capitalisation & floor area restrictions have now been removed for the construction development sector. India's defence sector now allows consolidated FDI up to 49% under the automatic route. FDI beyond 49% will now be considered by the Foreign Investment Promotion Board. Govt approval route will be required only when FDI results in a change of ownership pattern. Up to 100% FDI is now allowed in coffee/rubber/cardamom/palm oil & olive oil plantations via the automatic route. 100% FDI is now allowed via the auto route in duty free shops located and operated in the customs bonded areas. Manufacturers can now sell their products through wholesale and/or retail, including through e-commerce without Government Approval. Foreign Equity caps have now been increased for establishment & operation of satellites, credit information companies, non-scheduled air transport & ground handling services from 74% to 100%. FDI policy on Construction Development sector has been liberalised by relaxing the norms pertaining to minimum area, minimum capitalisation and repatriation of funds or exit from the project. To encourage investment in affordable housing, projects committing 30 percent of the total project cost for low cost affordable housing have been exempted from minimum area and capitalisation norms.

As shared with IFIN Panorama Editorial Team



Mr Arunesh Chopra

IL&FS Global Financial Services, Pte Ltd. - Singapore

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