Mekong – India Economic Corridor (MIEC): g ( )Building Block of ASEAN‐India Connectivity
Prabir DePrabir De
ASEAN – India Centre
RIS, New Delhi
Symposium on ASEAN‐India Connectivity
27 November 2013 Bangkok27 November 2013, Bangkok
ASEAN‐India trade growing exponentially, showing signs of production networksg g p
India’s trade with ASEAN growing exponentially, 23% CAGR
US$ 7 13 billion in 2000 Partner 2000 2009 2012 CAGRUS$ 7.13 billion in 2000
US$ 76.26 billion in 2012
ASEAN as India’s partner in 2012
(US$ billion) (%)ASEAN 7.13 41.32 76.26 23.16ASEAN+3 14.57 101.47 182.23 21.48
11% export share; 9% import share
ASEAN‐India FTA in goods from 2010, services + investment to be
World 92.96 422.85 787.68 17.57ASEAN share* (%) 7.67 9.77 9.68
added in 2013
RCEP a new hope to Asian integration; account for 21% of
ASEAN+3 share* (%) 15.67 24.00 23.14
*Share in country’s total tradeSource: Calculated based on DOTS, IMFintegration; account for 21% of
India’s goods export (2012)
India’s low trade with CLMV co ntries sho ing potential
,
countries, showing potential
Rise in trade in parts and components in capital goods
Estimated trends in India’s trade in P&C with Southeast Asia
Source: De (2013)
Emerging production networks between India and ASEANASEAN
India’s Import of ACE from Thailand India’s Export of Yarn to Bangladesh Case: Southeast Asia Case: South Asia
Source: De and Saha (2013) based on Kimura (2012)
Connectivity‐induced production networks between India and Southeast Asia
Potentials in building production networks between India’s Northeast and Myanmar in (i) India
ASEAN
Illustration of Future Production Networks Scenario between India and Myanmar in RMGs
y ( )bamboo and wood products, (ii) pharmaceuticals and preparations, (iii) rubber products, (iv) food
Consumer
Myanmar
India
Consumer
products, (v) refined petroleum products, (vi) other non‐metallic mineral products, (vii) cement, and
Consumer
EU
(vii) garments.
Networks in services industry between India’s Northeast and
Consumer
Agglomeration*
Japan
USA
Myanmar may also take a formal shape (presently conducted informally at a lower scale) in (i) Headquarters or affiliates
Unrelated firms with same firm
Consumer
Consumer
health, (ii) tourism, (iii) education, and (iv) transport and communication.
Unrelated firms with same firm nationalityUnrelated firms with different firm nationality
Source: Drawn based on Kimura (2012)
India’s trade potential with ASEAN likely to cross US$ 200 billion by 2020cross US$ 200 billion by 2020
To unlock the o u oc epotential, India and ASEAN need
hto strengthen regional connectivity andconnectivity and integration, particularly through cross‐border infrastructureinfrastructure.
*Based on AvW gravity model with certain conditions
Source: De (2013)
Key barriers to ASEAN‐India trade and production networks: Stylized factsp y f
Inadequate infrastructure – national and regional (inadequate and poor stock and link of infrastructure)( q p )
High non‐physical barriers
Lack of trade facilitation and absence of regional transitLack of trade facilitation and absence of regional transit
High NTMs, particularly TBTs
Unfavourable currency particularly in border tradeUnfavourable currency, particularly in border tradeInconsistent and difficult border crossing proceduresDifferent standards on vehicles and drivers acrossDifferent standards on vehicles and drivers across countriesRestrictions on entry of motor vehicles Service link costs outweigh trade liberalization benefits
Connectivity is central to ASEAN‐India strategic partnership
ASEAN – India Eminent Persons Group Report 2012ASEAN – India Vision Statement 2012 at Commemorative Summit
strategic partnership
ASEAN‐India Summit 2013Two major windows: – FTA (software) – e.g. RCEP, Single Window in Customs, a.o( ) g , g ,
» Paperless trade– Connectivity / services links (hardware) – e.g. Trilateral Highway, MIEC, a.o,» Seamless trade
Connectivity in India on two structures:– National connectivity [DMIC DFC etc ]National connectivity [DMIC, DFC, etc.]– Regional connectivity [TH, KMTTP, MIEC, etc.]India’s regional connectivity with ASEAN with two axis:
North East India [m ltimodal + intermodal t pe]– North East India [multimodal + intermodal type]– Southern India [multimodal]
India – Southeast Asia physical connectivity projects
1. Kaladan Multimodal Transit Transport Project
2. India – Myanmar – Thailand Trilateral Highway (TH)
3. Mekong – India Economic Corridor (MIEC)g ( )
4. Integrated check posts (ICP) at Moreh
5. TH extension to Cambodia, Lao PDR and Vietnam
6 New corridor India Myanmar Lao PDR Viet Nam Cambodia6. New corridor ‐ India‐Myanmar‐Lao PDR‐Viet Nam‐Cambodia
7. Rih – Tidim Road in Myanmar
8. Delhi – Hanoi Railway Link
9. Imphal – Mandalay bus and air services
10. Sitwee SEZ*
11. BCIM economic corridor*
12. MIEC‐SKRL link*13. India – ASEAN open sky*14. India – ASEAN ocean shipping network*14. India ASEAN ocean shipping network15. India – ASEAN gas and oil pipeline*16. India – ASEAN ICT link**Proposed
National corridor projects in IndiaNational Highway Development Project (NHDP) since middle of 1990s. – Golden Quadrilateral (GQ) project (5,846 km of highway; Delhi, Mumbai,
Chennai, Kolkata, and Delhi)
– NS corridor (North‐South corridor), which connects Srinagar toNS corridor (North South corridor), which connects Srinagar to Kanniakumari,
– EW corridor (East‐West corridor), which connects Porbandar to Silchar.
NHDP III IV V under implementations (about 11 000 km)NHDP III, IV, V under implementations (about 11,000 km)
Delhi‐Mumbai Industrial Corridor (DMIC)
Chennai‐Ennore Port Road Connectivity Project
Chennai‐Bangalore‐Mumbai Industrial Corridor (CBMIC)
PRIDe (Peninsular Region Industrial Development) Corridor
A it D lhi K lk t I d t i l C id (ADKIC)Amritsar ‐ Delhi ‐ Kolkata Industrial Corridor (ADKIC)
Dedicated Freight Corridors (DFC)
High Speed Rail Corridorg p
ECEC of Asian Development Bank (ADB)*
*Proposed
National corridors, having regional implications
Source: SARD/ADB
Source: Indian RailwaysMIEC
Mekong – India Economic Corridor (MIEC), a landbridge between India and Southeast Asiag
MIEC involves integrating the four Mekong countries (Myanmar, Thailand Cambodia and Vietnam)Thailand, Cambodia and Vietnam) with India.Strong synergy with Southern Economic Corridor of GMSEconomic Corridor of GMSIt connects Ho Chi Minh City (Vietnam) with Dawei (Myanmar) via Bangkok (Thailand) and Phnomvia Bangkok (Thailand) and Phnom Penh (Cambodia) and further linking to Chennai in India.Augment trade between India andAugment trade between India and ASEAN by reducing travel distance and removing supply side bottlenecks.Approx. investment US$ 88 billion*
Source: ERIA
MIEC alignment and linking industries
Source: ERIA
MIEC – Connecting industrial space
Tamil Nadu
Dawei
Tidel Park coimbatore
ASCENDAS IT Park
Nanguneri SEZ
Ennore SEZ
P b l SEZ
Biotech SEZIT/ITES SEZPharmaceutical SEZ
Andhra Pradesh
MIEC
SEZPerambalur ‐ SEZ
Auto City SEZ
Bio ‐ Pharmaceuticals SEZ
Pharmaceutical SEZApparel ParkTextile and Apparel Semiconduct SEZ
MIEC
Phnom
Bio Tech SEZIT & ITES SEZTEXTILES SEZ
Karnataka HCM Agglomerated Area
Penh SEZSricity
Food Processing SEZ
Bangkok Agglomerated Area
MIEC‐ Key ActionsCompletion of Mekong ASEAN‐India Trade Facilitationbridge in Neak Loung(National Road No. 1) in Cambodia
ASEAN India Trade Facilitation Initiative
Border customs harmonization Cambodia
Develop the Dawei Deep‐sea port
Simplification of customs documentations
Removal of NTMsBuild the highway between Kanchanaburi and Dawei
Build the spur railway line
Removal of NTMs
ASEAN‐India Transit Transport Agreement (AITTA)Build the spur railway line
Kanchanaburi and Dawei, SKRL with Chennai
g ( )
– Transit and Paperless Trade
Consultations with ADB, ESCAP and (multimodal) Strengthen ASEAN‐India shipping network
ERIA
Stronger Coordination mechanism and institutional arrangement
Networks between seaports of India and ASEAN
and institutional arrangement
ASEAN to Streamline NTMs(%)
Overall Core Non‐core
Brunei 46 29 32
Overall Core Non‐coreFood 63 29 51Cheminals 59 39 36
( )
Cambodia 6 4 4
Indonesia 100 45 100
Light manufacturing 39 18 23Metals 37 15 25Machineries 48 30 33
Lao PDR 20 20
Malaysia 43 36 21
Myanmar 100 100 8
Others 48 24 28
Singapore NTM on Pharma Products
Labeling is required for di i (i l hiMyanmar 100 100 8
Philippines 100 5 100
Singapore 27 21 14
Technical Measures‐Labeling
medicines (incl. chineseproprietary medicines), poisons and cosmetic products for reasons of public health and safety.
Medicines Act (Chapter 176) ‐ Health Products Regulation Group
Thailand 11 4 9
Vietnam 34 22 14
Thai NTM on Pharma Products (HS 3003.90)8130: labelling; 8150: inspection
Imports of medicaments are subject to product registration, labeling, advertisement control,
Food and Drug Administration, Ministry of Public Health
ASEAN 49 27 32 inspection, and quarantine requirement by the Thai FDA on the basis of public health and life protection.
ASEAN‐India Transit Transport Agreement
• Single‐stop and single‐window customs operation t b d iat border crossings
• Building a common template for running andfor running and maintenance of transport corridor(s) and MRA on value added services.
• MRAs have to be signed on motor vehicles drivingmotor vehicles, driving license, vehicle certificates, insurance, etc. Source: ADB
“Look East” India‐ASEAN Connectivity
Source: Rana (2013)
Policies for enhancing ASEAN‐India production networks
Reduction in network set‐up cost
Reduction in service link cost
Reduction in production cost per se
• Investment • Tariff and NTM • Liberalization of
High‐level FTAs
liberalization• IPR protection• Competition
removal• Trade facilitation• Enhancing
production‐supporting services
• Investment policy institutional
connectivityliberalization
• Investment • Enhancing physical • Upgrading facilitation/promotion
connectivity (including hard and soft logistics
infrastructure services such as electricity supply and EPZs
Development agenda
infrastructure development)
• Reducing
• Enhancing agglomeration effects through SME
transaction cost in economic activities
development• Strengthening
innovationSource: Adapted from Kimura (2012)
Factory Asia syndrome moving to South Asia, connectivity overFuture directions and major challenges
Factory Asia syndrome moving to South Asia, connectivity over Bay of Bengal important.Air cargo growing faster than ocean cargo, ASEAN and India need more airportsmore airports. Strengthening multimodal link between East, Northeast and Southern part of IndiaBuilding infrastructure at land border ASEAN to streamline NTMs, facilitating production networks and tradeEnvironment friendly multimodal transportFunding of regional connectivity projects
Institutional mechanism, financing instrumentsJapan to come forward for their enterprises
Skill developmentSkill developmentChallenges ‐ land acquisition, environment, a.oStronger coordination and political leadership
Thanaleng (Lao PDR) and Nonkhai (Thailand)
d b d ( h ) d hConcluding remarks
• Trade between India (South Asia) and Southeast Asia is the major development, and likely to grow heavily.
• Presence of regional infrastructure is negligible; lackPresence of regional infrastructure is negligible; lack in connectivity will slow down the integration process
• India ASEAN connectivity holds the key to deeper• India‐ASEAN connectivity holds the key to deeper Asian integration
• Stronger connectivity will facilitate production g y pnetworks between South and Southeast Asia.
• Value added services of connectivity crucial for integrating South Asian industries with GPNs / GVCsintegrating South Asian industries with GPNs / GVCs
• An integrated action plan for achieving a larger common market (South and Southeast & East Asia) b 2020 i i dby 2020 is required.
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Thank youprabirde@hotmail com;[email protected]; [email protected]
