ASEAN and India is targeting an explosive growth in economic link, with a target of US$100 billion trade by 2015 and US$200 billion within a decade. That target is backed by explosive India and ASEAN GDP growth.
- India, according to the World Bank (Wikipedia), as of 2011, the Indian economy is nominally worth US$1.848 trillion; it is the tenth-largest economy by market exchange rates, and is, at US$4.457 trillion, the third-largest by purchasing power parity, or PPP. With its average annual GDP growth rate of 5.8% over the past two decades, and reaching 6.1% during 2011–12, India is one of the world’s fastest-growing economies. The average economic growths of ASEAN’s member nations during 1989–2009 was Singapore with 6.73 percent, Malaysia with 6.15 percent, Indonesia with 5.16 percent, Thailand with 5.02 percent, and the Philippines with 3.79 percent. This economic growth was greater than the average Asia-Pacific Economic Cooperation (APEC) economic growth, which was 2.83 percent.
Yet, while India is in the industrialize economy category, much of ASEAN have not reach that status. However, it is a stated target of many ASEAN countries to be an industrialized country. Pushing ASEAN towards industrialization, is mainly the Eurozone, USA and Japan Foreign Direct Investments (FDI) into ASEAN.
- Eurozone Dominates FDI
According to wikipedia, in 2009, realized Foreign Direct Investment (FDI) was $37.9 billion and increase by two-fold in 2010 to $75.8 billion. 22 percent of FDI came from the European Union, followed by ASEAN countries themselves by 16 percent and then followed by Japan and US. European Union and US has debt problems, while Japan should make tsunami recovery. China who helped Asia lead the global post-2008 recovery still grapples with 3-years high inflation. So, in the longterm all of the problems will give negative impact to ASEAN indirectly. There are possibility to push some programs of ASEAN Economic Community before 2015.
- China Dominates Trade
And with trade, ASEAN is mostly an exporting to global markets region. That export drive, have very much pushed, ASEAN’s GDP size. In 2010 (Wikipedia), ASEAN’s combined nominal GDP had grown to US$1.8 trillion. If ASEAN were a single entity, it would rank as the ninth largest economy in the world, behind the United States, China, Japan, Germany, France, Brazil, the United Kingdom, and Italy. And to spur trade growth, to mainly fuel further export opportunity, ASEAN have set off globally, to form Free Trade Area.
Here, in trading, China dominates, with China ASEAN targeting US$500 billion bilateral trade by 2015 and India ASEAN targeting US$200 billion by 2015.
- From wikipedia, ASEAN has concluded free trade agreements with China (expecting bilateral trade of $500 billion by 2015), Korea, Japan, Australia, New Zealand and most recently India. ASEAN-India bilateral trade crossed the $ 70 billion target in 2012. In addition, ASEAN is currently negotiating a free trade agreement with the European Union. Republic of China (Taiwan) has also expressed interest in an agreement with ASEAN but needs to overcome diplomatic objections from China.
ASEAN China FTA (From Wikipedia):
China first proposed the idea of a free trade area in November 2000. It had overtaken the United States as the third largest trading partner of ASEAN, after Japan and the European Union, when the free trade area came into effect. Between 2003 and 2008, trade with ASEAN grew from US$59.6 billion to US$192.5 billion.
China–ASEAN Free Trade Area is a free trade area among the ten member states of the Association of Southeast Asian Nations (ASEAN) and the People’s Republic of China. The initial framework agreement was signed on 4 November 2002 in Phnom Penh, Cambodia, with the intent on establishing a free trade area among the eleven nations by 2010. The free trade area came into effect on 1 January 2010. The ASEAN–China Free Trade Area is the largest free trade area in terms of population and third largest in terms of nominal GDP.
ASEAN members and the People’s Republic of China had a combined nominalgross domestic product of approximately US$6 trillion in 2008.The free trade area had the third largest trade volume after the European Economic Area and the North American Free Trade Area.
The free trade agreement reduced tariffs on 7,881 product categories, or 90 percent of imported goods, to zero. This reduction took effect in China and the six original members of ASEAN: Brunei, Indonesia, Malaysia, the Philippines, Singapore and Thailand. The remaining four countries will follow suit in 2015. The average tariff rate on Chinese goods sold in ASEAN countries decreased from 12.8 to 0.6 percent on 1 January 2010 pending implementation of the free trade area by the remaining ASEAN members. Meanwhile, the average tariff rate on ASEAN goods sold in China decreased from 9.8 to 0.1 percent.
ASEAN India FTA (from Wikipedia):
The signing of the ASEAN-India Trade in Goods Agreement paves the way for the creation of one of the world’s largest FTAs – a market of almost 1.8 billion people with a combined GDP of US$ 2.8 trillion. The ASEAN-India FTA will see tariff liberalisation of over 90 percent of products traded between the two dynamic regions, including the so-called “special products,” such as palm oil (crude and refined), coffee, black tea and pepper. Tariffs on over 4,000 product lines will be eliminated by 2016, at the earliest.
ASEAN-India trade grew at over 22 percent annually during the 2005-2011 period. Trade between India and ASEAN in 2011-2012 increased by more than 37 percent to $79 billion, which was more than the target of $70 billion set in 2009.
At the 10th ASEAN-India Summit in New Delhi on December 20 2012, India and ASEAN concluded negotiations for FTAs in services and investments. The two sides expect bilateral trade to increase to $100 billion by 2015, and $200 billion within a decade.
In 2008, the total volume of ASEAN-India trade was US$ 47.5 billion. ASEAN’s export to India was US$ 30.1 billion – a growth of 21.1 per cent in comparison with that of 2007. ASEAN’s imports from India were US$ 17.4 billion – a growth of 40.2 per cent in comparison to that of 2006. As for foreign direct investment (FDI), the inflow from India to ASEAN Member States was US$ 476.8 million in 2008, accounting for 0.8 per cent of total FDI in the region. Total Indian FDI into ASEAN from 2000 to 2008 was US$ 1.3 billion. The ASEAN-Dialogue Partners trade and investment statistic data can be accessed through http://www.asean.org/22122.htm.
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