ASSOCIATION OF SOUTHEAST ASIAN NATIONS

SUBMITTED BY:
ABHA DHAWAN SHAGUN MALHOTRA SNEHA TIBREWAL JAISLEEN SINGH SAURABH TANEJA ARUN SIKRI MBA-IB (2010-12) SECTION-F AIBS

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INTRODUCTION

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ESTABLISHMENT The ASEAN bloc was established on August 8, 1967, when foreign ministers of five countries Indonesia, Malaysia, the Philippines, Singapore, and Thailand met at the Thai Department of Foreign Affairs building in Bangkok and signed the ASEAN Declaration, commonly known as the Bangkok Declaration. It is an Association for Regional Cooperation among the Countries of Southeast Asia.

MEMBERS

MEMBERS
ORIGINAL MEMBERS (1967)

INDONESIA

MALAYSIA

PHILLIPINES

SINGAPORE

THAILAND

BRUNEI DARUSSALAM (JANUARY 1984)

VIETNAM (JULY 1995)

MYANMAR (JULY 1997 )

CAMBODIA (APRIL 1999)

Lao PDR (July 1997)

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FACTS AND FIGURES

Population - 601 million Total Area - 4.5 million square kilometers Combined Gross Domestic Product - US$ 1800 trillion Total Trade - US$ 850 billion (approx)

Source : www.aseansec.org

AIMS AND PURPOSES

As set out in the ASEAN Declaration, the aims and purposes of ASEAN are: 1. To accelerate the economic growth, social progress and cultural development in the region through joint endeavours in the spirit of equality and partnership in order to strengthen the foundation for a prosperous and peaceful community of Southeast Asian Nations; 2. To promote regional peace and stability through abiding respect for justice and the rule of law in the relationship among countries of the region and adherence to the principles of the United Nations Charter;\ 3. To promote active collaboration and mutual assistance on matters of common interest in the economic, social, cultural, technical, scientific and administrative fields; 4. To provide assistance to each other in the form of training and research facilities in the educational, professional, technical and administrative spheres; 5. To collaborate more effectively for the greater utilisation of their agriculture and industries, the expansion of their trade, including the study of the problems of international commodity trade, the improvement of their transportation and communications facilities and the raising of the living standards of their peoples; 6. To promote Southeast Asian studies; and 7. To maintain close and beneficial cooperation with existing international and regional organisations with similar aims and purposes, and explore all avenues for even closer cooperation among themselves
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FUNDAMENTAL PRINCIPLES In their relations with one another, the ASEAN Member States have adopted the following fundamental principles, as contained in the Treaty of Amity and Cooperation in Southeast Asia (TAC) of 1976: 1. Mutual respect for the independence, sovereignty, equality, territorial integrity, and national identity of all nations; 2. The right of every State to lead its national existence free from external interference, subversion or coercion; 3. Non-interference in the internal affairs of one another; 4. Settlement of differences or disputes by peaceful manner; 5. Renunciation of the threat or use of force; and 6. Effective cooperation among themselves. ASEAN plus Three A forum for ASEAN plus China, Japan and South Korea primarily to deal with the trade and monetary issues facing Asia. Meetings held during each ASEAN Summit May lead to a common market, single currency and even a new Bloc comprising of Northeast and Southeast Asia.

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ECONOMIC OUTLOOK

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ECONOMIC OUTLOOK

The six major ASEAN countries have rebounded from the global economic crisis, with medium-term growth prospects returning to pre-crisis levels, according to the OECD Development Centre's 2010 Southeast Asian Economic Outlook. With economic recovery underway across the region, GDP growth will average 6% annually across the ASEAN-6 countries over the 2011-15 period, which is about the same level as the period 2003-07.

2010 Indonesia Malaysia Philippines Singapore Thailand Viet Nam 6 countries average 6.1 6.5 6.0 14.0 7.0 6.8 7.3

2015 7.1 5.3 4.4 4.5 5.1 7.2 6.0

Average 2003-07 5.5 6.0 5.7 7.5 5.6 8.1 6.1

Average 2011-15 6.6 5.5 4.6 4.7 5.2 7.1 6.0

Source: OECD Development Centre (MPF-SAEO 2010) To access excel format:http://dx.doi.org/10.1787/888932344957

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Despite this positive future growth still needs to be more balanced across the ASEAN countries: The global financial crisis has offered Southeast Asian countries an opportunity to rethink past growth strategies and define new development objectives. Both regional integration and national efforts will help promote more balanced growth in the region.

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Measures to Balance Regional Growth

To balance regional growth, Southeast Asian countries should take urgent action to improve medium-term fiscal frameworks, enhance external competitiveness by supporting new growth sectors and develop integrated regional transport infrastructure. 1. Improving fiscal policy frameworks is critical to implementing national development plans. ASEAN countries five-year development plans - aimed at infrastructure development, poverty reduction and social protection - will require solid public finances. Well-designed fiscal rules, independent fiscal institutions and mediumterm budgetary frameworks consistent with national development plans still need to be created, said the Development Centres Kensuke Tanaka. 2. Enhancing the external competitiveness of ASEANs priority sectors It is key to reaping the full benefits of creating an ASEAN Economic Community (AEC). A major challenge is reducing excessive export dependence on a narrow range of electronic products - mostly parts and components - and moving up the value chain. ASEAN countries should also develop more niche and specialty products within the nine priority goods sectors . For example, diversification into healthcare product markets would provide a new source of trade growth.

3. Developing a more integrated transport infrastructure It is necessary to foster regional and sub-regional connectivity. Challenges include overcoming excessively high transport costs, solving urban congestion and improving competition and efficiency in air-transport. Exploring new financing methods, such as infrastructure revenue bonds - already successful in OECD countries - could also be applied to the Southeast Asian transport sector. But infrastructure alone is not enough - ASEAN countries must improve transport sector policies and regulation while seeking to boost regional co-operation, particularly through multilateral initiatives and agreements.

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THE SOUTHEAST ASIAN ECONOMIC OUTLOOK The Southeast Asian Economic Outlook (SAEO) is the new regional economic outlook published by the OECD Development Centre and serves as the OECDs reference on Asias economic growth, development and regional integration. It focuses on the ten Association of Southeast Asian Nations (ASEAN) countries - Brunei Darussalam, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand and Viet Nam - and addresses relevant economic issues in China and India in order to fully reflect economic developments in the region.

ASEAN ECONOMIES SHOW RESILIENCE UNDER EASING HEADLINE INFLATION 14th June 2011 In general, ASEAN economies show resilience in growth in the second quarter of 2011 according to the latest Asian Business Cycle Indicators (ABCIs). However, the general trend masks diverse country performances. For instance, Malaysia and Thailand show upward movement in business cycles. Activity is picking up in Malaysia on the back of sound export performance (in particular electronics) and robust private consumption. Thailand, though had experienced a temporary impact of the Great Touhoku Earthquake in Japan, is recovering led by strong investment. Indonesia and Singapore maintained their growth momentum though not as robustly as in Malaysia and Thailand. Sound private consumption and investment, as well as stable business sentiment support growth despite weaker government spending in Indonesia. Continuing capital inflows and their volatility still constitute a challenge for policymakers. In Singapore, strong manufacturing output has contributed to the positive outlook.

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In the Philippines, the weaker outlook is due to a slowdown in export growth and remittances partly as a result of the Great Touhoku Earthquake and geo-political tensions in the Middle East and North Africa. Some signs of slowing appeared in China and India. Weaker consumption and sluggish exports to OECD countries will be the reason in China. Weak domestic sales (in particular cars) and the adverse impact of commodity price hikes explain the weaker prospect in India. A policy challenge in the region is to cope with inflationary pressures. Although headline inflation has peaked out in most Southeast Asian countries (except Vietnam), inflationary pressures still remain - as core inflation rates are high in Southeast Asia. Interest rates have been raised in most countries and additional increases are expected. In addition to interest rates, allowing more flexibility for exchange rates would be an option for some countries, such as Indonesia. The Great Touhoku Earthquake in Japan has had a temporary impact on activity and exports in some countries, such as Indonesia, the Philippines and Thailand but in general the magnitude of the negative impact appears to have so far been limited.

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THIS QUARTER IN ASIA includes data from 7 major Asian economies - China, India, Indonesia, Malaysia, The Philippines, Singapore, and Thailand and provides comparable information and early warning of potential macroeconomic risks in Asia. Two phases are identified by the diffusion index: - upwards when the diffusion index crosses the 50% threshold from below - downwards when the diffusion index passes the 50% threshold from above Four cyclical phases are identified by the composite indicator: - the composite indicator curve is above the long-term trend (i.e. horizontal line at 100) and decreasing - the composite indicator curve is below the long-term trend (i.e. horizontal line at 100) and decreasing - the composite indicator curve is below the long-term trend (i.e. horizontal line at 100) and increasing - the composite indicator curve is above the long-term trend (i.e. horizontal line at 100) and
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increasing

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2010

2015

AVERAGE 2003-07 5.5

AVERAGE 2011-15 6.6

INDONESIA

6.1

7.1

MALAYSIA

6.5

5.3

6.0

5.5

PHILIPPINES

6.0

4.4

5.7

4.6

SINGAPORE

14.0

4.5

7.5

4.7

THAILAND

7.0

5.1

5.6

5.2

VIET NAM

6.8

7.2

8.1

7.1

6 COUNTRIES AVERAGE

7.3

6.0

6.1

6.0

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MEMBERSHIP OF ASEAN COUNTRIES

COUNTRIES

WTO

IMF

WORLD BANK

UNITED NATIONS

IBRD

IFC

IDA

MIGA

ICSID

BRUNEI DARUSSALAM

YES

NO

YES

NO

YES

NO

NO

NO

YES

CAMBODIA

YES

YES

YES

YES

YES

YES

YES

YES

YES

INDONESIA

YES

YES

YES

YES

YES

YES

YES

YES

YES

LAOS

NO

NO

YES

YES

YES

YES

YES

YES

NO

MALAYSIA

YES

YES

YES

YES

YES

YES

YES

YES

YES

MYANMAR

YES

YES

YES

YES

YES

YES

YES

NO

NO

PHILIPPINES

YES

YES

YES

YES

YES

YES

YES

YES

YES

SINGAPORE

YES

YES

YES

YES

YES

YES

YES

YES

YES

THAILAND

YES

YES

YES

YES

YES

YES

YES

YES

NO

VIETNAM

YES

NO

YES

YES

YES

YES

YES

YES

NO

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TRADE VALUE PARTNER COUNTRY/REGI ON EXPORTS IMPORTS

SHARE TO TOTAL ASEAN TRADE TOTAL TRADE EXPOR TS IMPORTS

TOTAL TRADE

ASEAN CHINA EUROPEAN UNION-27 JAPAN USA REPUBLIC OF KOREA HONG KONG AUSTRALIA INDIA

199,587.3 0 176,620.10 376,207.30 81,591.00 96,594.30 178,185.40

24.6 10.1

24.3 13.3

24.5 11.6

92,990.90 78,795.00 78,068.60 82,795.10 82,201.80 67,370.30

171,785.90 160,863.70 149,572.10

11.5 9.6 10.1

10.8 11.4 9.3

11.2 10.5 9.7

34,292.90 40,447.40 56,696.70 11,218.60 29,039.30 14,810.80 26,520.30 12,595.50

74,740.30 67,915.20 43,850.10 39,115.80

4.2 7 3.6 3.3

5.6 1.5 2 1.7

4.9 4.4 2.9 2.5

UNITED ARAB EMIRATES 10,569.50 13,797.00

24,366.50

1.3

1.9

1.6

TOTAL TOP TEN TRADE PARTNER COUNTRIES 691,558.30 595,044.00 1,286,602.30 85.3 OTHERS 118,930.90 131,310.10 250,241.00 810,489.2 1,536,843.3 0 726,354.10 0 14.7

81.9 18.1

83.7 16.3

TOTAL

100

100

100

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COUNTRY WISE SHARE TO ASEANS TOTAL TRADE

United Arab Emirates 2% India 3% Australia 3% Hong Kong 4% Republic of Korea 5% Others 16% ASEAN 24%

China 12% USA 10% European Union-27 Japan 11% 10%

Source : SELF GENERATED through ASEAN Merchandise Trade Statistics Database

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COUNTRY WISE SHARE IN ASEAN'S TOTAL EXPORTS

United Arab Emirates 1% India 3% Australia 4% Hong Kong 7%

Others 15%

ASEAN 25%

China 10% USA 10%

Republic of Korea 4%

Japan 10%

Europea n Union27 11%

Source : SELF GENERATED through ASEAN Merchandise Trade Statistics Database

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COUNTRY WISE SHARE IN ASEAN'S TOTAL IMPORTS

United Arab Emirates 2% Australia India 2% 2% Hong Kong 2% Others 18% ASEAN 24%

Republic of Korea 6%

USA 9%

China 13% Japan 11%

European Union-27 11%

Source : SELF GENERATED through ASEAN Merchandise Trade Statistics Database

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INDIA ASEAN TRADE

ASEAN is Indias 4th largest trading partner after the EU, US and China. Indo-ASEAN trade relations have been scaling up at a compounded annual growth rate of 27 percent since 2000. India - ASEAN trade stood at 43.5 billion dollars in 2009-10 and is targeted to reach US$ 70 billion by 2012. India reportedly is the secteral dialogue partner of ASEAN since 1992. India and ASEAN have been organizing summit level meetings on an annual basis since 2002 and Free Trade Agreement (FTA) was signed by India and ASEAN countries in August 2009 in Bangkok. As per ASEAN-INDIA FTA, the ASEAN member countries and India will do away with at least 80 percent of import tariffs between 2013 and 2016, commencing from January 1, 2010. Also, tariffs on sensitive products will be brought down by 5 per cent in 2016, while tariffs will remain as it is for around 489 items of sensitive products. India and ASEAN are currently negotiating agreements on trade in services and investment. The services negotiations are taking place on a request-offer basis, wherein both sides make requests for the openings they seek and offers are made by the receiving country based on the requests. India has also made requests in a number of areas including teaching, nursing, architecture, chartered accountancy and medicine as it has a large number of English speaking professionals in these areas who can gain from job opportunities in the ASEAN region. India is also keen on expanding its telecom, IT, tourism and banking network in ASEAN countries. The deepening of ties between India and ASEAN is reflected in the continued buoyancy in trade figures. Indias trade with ASEAN countries has increased from US$ 30.7 billion in 2006-07 to US$ 39.08 billion in 2007-08 and to US$ 45.34 billion in 2008-09. During April September 2009-10, Indias trade with ASEAN was US$ 20.19 billion, according to data released by the Ministry of Commerce and Industry. In 2008-09, India's exports to ASEAN totalled US$ 19.14 billion. During April-December 2009-10, India exported goods worth US$ 12.8 billion to ASEAN, according to data released by the Ministry of Commerce and Industry. India imported goods worth US$ 26.3 billion in 2008-09 from ASEAN. During the period April-December 2009-10, India's imports from ASEAN totalled US$ 18.09 billion, according to data released by the Ministry of Commerce and Industry.

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Trade is one of the principal channels of Indias economic integration with ASEAN. With large potential for India and ASEAN countries to develop trade relations, it is one of the primary areas of concentration on both sides. This is especially relevant as there is growing consensus that Indias economic structure, being services oriented, is largely complementary to the manufacturing-oriented economies in ASEAN. Trade between ASEAN and India has increased over the past decade, keeping in line with efforts towards economic integration by both sides. This rise is especially large with respect to Singapore. Most notably, Indias imports from Malaysia and Singapore have risen more than 5 times. Imports from Thailand too, have risen favorably, exhibiting a trend of consistent increase with higher growth rates in successive years. However, Indian policy makers should be aware that India-ASEAN trade, though increasing, is not substantial enough compared to global figures and needs to be increased further to realize the potential between the countries. Services trade between India and ASEAN grew at more than twice the rate of merchandise trade. The Information and Communication Technology (ICT) services and related services were the major driving force behind services trade in India. The growth of this sector has been propelled by the nurturing of a pool of skilled ICT manpower, combined with an increasing international demand doe such competitive and skilled manpower. According to Gartner Research. Its cooperation with ASEAN countries like Singapore and Malaysia could create synergies for mutual benefit in this area as these countries already have highly developed capabilities in this field . We can see the development of trade Between INDIA and ASEAN countries for the year 2009-10 and 2010-11 from the table below.

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INDIAS COUNTRY WISE IMPORTS WITH ASEAN+2 MEMBERS

Country 2009-2010 2010-2011 %Growth Region: ASEAN +2 INDONESIA SINGAPORE MALAYSIA THAILAND VIETNAM SOC REP MYANMAR PHILIPPINES BRUNEI CAMBODIA LAO PD RP NEW ZEALAND AUSTRALIA Total 8,656.66 6,454.57 5,176.78 2,931.52 521.81 1,289.80 313.07 428.65 5.05 20.05 499.21 12,407.37 38,704.54 9,918.63 7,139.31 6,523.58 4,272.09 1,064.90 1,017.67 429.39 234.17 8.01 0.22 625.21 10,789.00 42,022.18 14.58 10.61 26.02 45.73 104.08 -21.10 37.15 -45.37 58.61 -98.90 25.24 -13.04 143.60

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COUNTRY

% SHARE IN % SHARE IN TOTAL TOTAL IMPORTS IMPORTS 2010 2009

INDONESIA SINGAPORE MALAYSIA THAILAND VIETNAM SOC REP

22.37 16.68 13.38 7.57

23.60 16.99 15.52 10.17

1.35 MYANMAR PHILIPPINES BRUNEI CAMBODIA LAO PD RP 3.33 0.81 1.11 0.01 0.05

2.53 2.42 1.02 0.56 0.02 0.00

NEW ZEALAND AUSTRALIA TOTAL

1.29 32.06 100.00

1.49 25.67 100.00

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% SHARE OF EACH COUNTRY IN IMPORTS BY INDIA 2009

INDONESIA SINGAPORE 22% 32% MALAYSIA THAILAND VIETNAM SOC REP MYANMAR PHILIPPINES 17% 1% 0% 0% 1% 1% 3% 1% 8% 14% BRUNEI CAMBODIA LAO PD RP NEW ZEALAND AUSTRALIA

% SHARE OF EACH COUNTRY IN IMPORTS BY INDIA 2010

INDONESIA SINGAPORE 26% 24% MALAYSIA THAILAND VIETNAM SOC REP 1% 1% 0% 0% 1% 2% 3% 10% 15% MYANMAR PHILIPPINES 17% BRUNEI CAMBODIA LAO PD RP NEW ZEALAND

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INDIAS COUNTRY WISE EXPORTS WITH ASEAN+2 MEMBERS

S.NO. COUNTRY

2009-2010

2010-2011

%GROWTH : REGION: ASEAN+2

1 2 3 4 5

SINGAPORE INDONESIA MALAYSIA THAILAND VIETNAM SOC REP

7,592.17 3,063.36 2,835.41 1,740.16 1,838.95

10,302.71 6,245.33 3,956.98 2,792.80 2,659.56

35.70 103.87 39.56 60.49 44.62

6 7 8 9 10 11 12

PHILIPPINES MYANMAR CAMBODIA BRUNEI LAO PD RP NEW ZEALAND AUSTRALIA TOTAL

748.77 207.97 45.54 24.44 16.93 255.17 1,384.96 19,753.83

882.74 334.42 63.91 25.29 14.06 194 1,717.03 29,188.83

17.89 60.80 40.34 3.48 -16.95 -23.97 23.98 389.81

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% SHARE IN TOTAL EXPORTS 2009 COUNTRY

% SHARE IN TOTAL EXPORTS 2010

SINGAPORE INDONESIA MALAYSIA THAILAND VIETNAM SOC REP

38.43 15.51 14.35 8.81

35.30 21.40 13.56 9.57

9.31 PHILIPPINES MYANMAR CAMBODIA BRUNEI LAO PD RP NEW ZEALAND AUSTRALIA TOTAL 3.79 1.05 0.23 0.12 0.09 1.29 7.01 100.00

9.11 3.02 1.15 0.22 0.09 0.05 0.66 5.88 100.00

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0%

% SHARE OF EACH COUNTRY IN EXPORTS FROM INDIA 2009

0% 1% 4% 0% 7% 9% 9% 14% 16% 1% SINGAPORE INDONESIA MALAYSIA 39% THAILAND VIETNAM SOC REP PHILIPPINES MYANMAR CAMBODIA BRUNEI LAO PD RP

% SHARE OF EACH COUNTRY IN EXPORTS FROM INDIA 2010

0% 0% 0% 1% 1% 6% 3% 9% 10% SINGAPORE INDONESIA MALAYSIA 35% THAILAND VIETNAM SOC REP PHILIPPINES MYANMAR CAMBODIA BRUNEI 21% LAO PD RP NEW ZEALAND

14%

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REGULATION FOR TRADE WITH INDIA

Trade of Goods:

With a view of expansion of trade in goods, the Parties agree to enter into negotiations in which duties and other restrictive regulations of commerce (except those permitted under Article XXIV (8)(b) of GATT) shall be eliminated on substantially all trade in goods between the Parties. (a) "Applied Most Favoured Nation (MFN) tariff rates" shall refer to the respective applied rates of the Parties as of 1 July 2004; and "non-tariff measures" shall include non-tariff barriers (b) Parties shall commence consultations on each others trade regime but not limited to the following: Trade of Services: Parties agree to enter into negotiations to progressively liberalize trade in services: Progressive elimination of substantially all discrimination between or among the Parties Expansion in the depth and scope of liberalization of trade in services beyond those undertaken by India and ASEAN Member States under the GATS Enhanced cooperation in services between the Parties in order to improve efficiency and competitiveness trade and tariff data customs procedures, rules and regulations

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FTP PROVISIONS

MARKETING DEVELOPMENT ASSISTANCE SCHEME

MDA is under operation through the Department of Commerce to support the following activities : Assist exporters for export promotion activities abroad Assist Export Promotion Councils (EPCs) to undertake export promotion activities for their product(s) and commodities Assist approved organizations/trade bodies in undertaking exclusive nonrecurring innovative activities connected with export promotion efforts for their members Residual essential activities connected with marketing promotion efforts abroad

ASSISTANCE TO INDIVIDUAL EXPORTERS FOR EXPORT PROMOTION ACTIVITIES ABROAD

Exporting companies with an f.o.b. value of exports of upto Rs. 15 crore in the preceding year will be eligible for MDA assistance for participation in trade delegations/BSMs/fairs/exhibitions abroad to explore new markets for export of their specific product(s) and commodities from India in the initial phase. Assistance would be permissible on travel expenses by air, in economy excursion class fair and/or charges of the built up furnished stall. This would, however, be subject to an upper ceiling mentioned in the table per tour.

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SNO.

AREA/SECTOR

NO. OF VISITS ELIGIBLE 1 1

MAXIMUM FINANCIAL CEILING PER EVENT RS. 1,80,000 RS. 1,50,000

1. 2.

FOCUS LAC FOCUS AFRICA (INCLUDING WANA COUNTRIES) FOCUS CIS FOCUS ASEAN +2 GENERAL AREAS TOTAL

3. 4. 5.

1 1 1 5

RS. 1,50,000 RS. 1,50,000 RS. 80,000* GENERAL AREAS

MIA SCHEME Objectives To promote Indias Export on sustained basis during 10th five year plan; Focus Product-Focus country approach; To evolve specific strategy for enhancement of export accessing new market or increasing share in existing market; Specific market, specific product approach through market study/survey

Scope To identify priorities of research relevant to Dept. of Commerce and sponsor studies consistent with priorities; WTO studies for evolving WTO compatible strategy; To support EPCs/Trade Promotion Organizations in undertaking market studies/survey for evolving proper strategy; To support marketing projects abroad on Focus Product Focus country basis;

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Activities to be funded under marketing project -Opening of showrooms; - Opening of warehouses; - Display in international Dept. stores; - Publicity campaign and Brand promotion; - Participation in trade fair etc. abroad; - Research & Product development; - Reverse visits of the prominent buyers from project focus countries; - Export potential survey of the states; - Registration charges for product registration abroad for pharmaceuticals, bio- technology and agro-chemicals; - Testing charges for engineering products abroad; - Support cottage and handicrafts units; - Support recognized associations in industrial clusters for marketing aboard;

ELIGIBLE AGENCIES: Financial Assistance to: - Dept. of Central Government & Organizations of Central/State Governments; - EPCs; - Registered Trade Promotion Organizations; - Commodity Boards; - Apex Trade bodies recognized under EXIM Policy; - Recognized Industrial clusters; - Individual exporters (only for testing and registration)

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FOCUS MARKET SCHEME (FMS) Objectives: To offset high freight cost and other externalities To select international markets with a view to enhance Indias export competitiveness in these countries.

Entitlement Exporters of all products to notified countries (as in Appendix 37C of HBPv1) shall be entitled for Duty Credit Scrip equivalent to 3% of FOB value of exports made from 27.08.2009 onwards

FOCUS PRODUCT SCHEME (FPS) Objectives To incentivize export of such products which have high export intensity / employment potential, so as to offset infrastructure inefficiencies and other associated costs involved in marketing of these products.

Entitlement Exports of notified products (as in Appendix 37D of HBPv1) to all countries (including SEZ units) shall be entitled for Duty Credit scrip equivalent to 2% of FOB value of exports made from 27.08.2009 onwards.

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FOCUS PRODUCT

LINKED ASEAN MARKET

BICYCLES AND BICYCLE PARTS

AUSTRALIA, NEW ZEALAND, CAMBODIA AND VIETNAM

AUTO COMPONENTS

AUSTRALIA, NEW ZEALAND, CAMBODIA AND VIETNAM

MOTOR CARS

AUSTRALIA, NEW ZEALAND, CAMBODIA AND VIETNAM

CHASSIS FOR MOTOR VEHICLES

AUSTRALIA, NEW ZEALAND, CAMBODIA AND VIETNAM

MOTOR CYCLES

AUSTRALIA, NEW ZEALAND, CAMBODIA AND VIETNAM

APPAREL AND CLOTHING ACCESSORIES

NEW ZEALAND, CAMBODIA AND VIETNAM

KNITTED AND CROCHETED FABRICS AND MADE UPS

AAUSTRALIA, NEW ZEALAND, CAMBODIA AND VIETNAM

OTHER MARKET LINKED FOCUS PRODUCTS

AUSTRALIA, NEW ZEALAND, CAMBODIA AND VIETNAM

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STATUS HOLDERS INCENTIVE SCRIP Objectives To promote investment in up gradation of technology of some specified sectors such as leather sector, textiles and jute sector, handicrafts, engineering sector etc. Status holders shall be entitled to incentive scrip @1% of fob value of exports made during 2009-10 and during 2010-11, of these specified sectors, in the form of duty credit. This shall be over and above any duty credit scrip claimed/availed

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Trade Promotion Activities

India currently has Joint Trade Committees with Brunei, Myanmar, Thailand and a Joint Working Group on Trade & Investment with the Philippines. India has established an ASEAN India Business Council (AIBC). India also has Joint Business Councils (JBC), established at the business level, with Singapore, Malaysia, Indonesia, Thailand, Vietnam and Philippines. Meetings of JBCs are held between the business communities of both sides to discuss a wide range of issues of mutual interest for expansion of bilateral trade.

As per ASEAN-INDIA FTA, the ASEAN member countries and India will do away with at least 80 percent of import tariffs between 2013 and 2016, commencing from January 1, 2010. Also, tariffs on sensitive products will be brought down by 5 per cent in 2016, while tariffs will remain as it is for around 489 items of sensitive products. India and ASEAN are currently negotiating agreements on trade in services and investment. The services negotiations are taking place on a request-offer basis, wherein both sides make requests for the openings they seek and offers are made by the receiving country based on the requests. India has also made requests in a number of areas including teaching, nursing, architecture, chartered accountancy and medicine as it has a large number of English speaking professionals in these areas who can gain from job opportunities in the ASEAN region. India is also keen on expanding its telecom, IT, tourism and banking network in ASEAN countries. The deepening of ties between India and ASEAN is reflected in the continued buoyancy in trade figures. Indias trade with ASEAN countries has increased from US$ 30.7 billion in 2006-07 to US$ 39.08 billion in 2007-08 and to US$ 45.34 billion in 2008-09. During April September 2009-10, Indias trade with ASEAN was US$ 20.19 billion, according to data released by the Ministry of Commerce and Industry. In 2008-09, India's exports to ASEAN totaled US$ 19.14 billion. During April-December 2009-10, India exported goods worth US$ 12.8 billion to ASEAN, according to data released by the Ministry of Commerce and Industry.

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India imported goods worth US$ 26.3 billion in 2008-09 from ASEAN. During the period April-December 2009-10, India's imports from ASEAN totaled US$ 18.09 billion, according to data released by the Ministry of Commerce and Industry. Trade is one of the principal channels of Indias economic integration with ASEAN. With large potential for India and ASEAN countries to develop trade relations, it is one of the primary areas of concentration on both sides. This is especially relevant as there is growing consensus that Indias economic structure, being services oriented, is largely complementary to the manufacturing-oriented economies in ASEAN. Trade between ASEAN and India has increased over the past decade, keeping in line with efforts towards economic integration by both sides. This rise is especially large with respect to Singapore. Most notably, Indias imports from Malaysia and Singapore have risen more than 5 times. Imports from Thailand too, have risen favorably, exhibiting a trend of consistent increase with higher growth rates in successive years. However, Indian policy makers should be aware that India-ASEAN trade, though increasing, is not substantial enough compared to global figures and needs to be increased further to realize the potential between the countries. Services trade between India and ASEAN grew at more than twice the rate of merchandise trade. The Information and Communication Technology (ICT) services and related Services were the major driving force behind services trade in India. The growth Of this sector has been propelled by the nurturing of a pool of skilled ICT manpower, combined with an increasing international demand doe such competitive and skilled manpower. According to Gartner Research. Its cooperation with ASEAN countries like Singapore and Malaysia could create synergies for mutual benefit in this area as these countries already have highly developed capabilities in this field. We can see the development of trade Between INDIA and ASEAN countries for the year 2009-10 and 2010-11 from the table below.

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Trade Promotion Activities with ASEAN + 2 countries

India has Joint Trade Committees with New Zealand, Fiji and a Joint Commission with Australia at the Ministerial level. India has Joint Business Councils (JBC), established at the business level, with New Zealand and Australia.

Meetings of JBCs are held between the business communities of both sides to discuss a wide range of issues of mutual interest for expansion of bilateral trade. India and Australia set up a joint feasibility study of a Free Trade Agreement (FTA) between the two countries in 2008.

The Joint Study Group has submitted its Report in May, 2010.India and New Zealand have started negotiations for a Comprehensive Economic Cooperation Agreement (CECA)/Free Trade Agreement (FTA) between the two countries. Three rounds of negotiations between the two countries have been held so far.

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SWOT ANALYSIS OF ASEAN

STRENGTHS Its Adaptable open export oriented economies It has Young, growing population and middle class Good FDI performance and strong production networks There are signs of Increasing institutionalization of regional cooperation Initiatives through the ASEAN Charter, AEC Roadmap, Master Plan on ASEAN

WEAKNESS Development gaps between and within countries (income, human capital, legal structures, institutions, infrastructure) Generally weak education systems and unskilled labor Difficult to integrate ASEANs skilled labor market Lack of manufacturing technological capability, regional R&D/innovation policy, and excessive reliance on FDI Absence of a strong regional bureaucracy

OPPORTUNITIES Central strategic location in Asia huge potential in neighboring markets (PRC and India)and strong cultural and historical links with them Potential to develop as regional hub in Asia for education, health, tourism, R&D, logistics, and financial services Potential for the AEC to tap from its large population and market size

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THREATS Exposure to external economic and financial shocks due to high degree of interdependence with US and Europe Erosion of the export based development model due to World imbalances Significant increase in natural disaster in recent years(drought, floods and earthquakes) Lack of integrated policy approaches in addressing climate change and food security

RECENT NEWS ARTICLES

1. One Community, One Destiny" Cambodia Takes Over as ASEAN Chair for 2012 Jakarta, 13 December 2011

Capping a productive year of meetings and outreach activities, H.E. I Gede Ngurah Swajaya, Permanent Representative of Indonesia to ASEAN, handed over the Chairmanship of the Committee of Permanent Representatives to ASEAN (CPR) to the H.E. Kan Pharidh, Permanent Representative of Cambodia to ASEAN, in Jakarta today. Indonesia's past year as Chair of the CPR was marked by several, significant milestones. For example, many documents endorsed and adopted by ASEAN Ministers
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and Leaders were finalised. Another key achievement, recognized with Indonesia as Chair, was the closer and stronger integration and cooperation among the ASEAN Member States and with its Dialogue Partners and friends.

Under its Chairmanship, Indonesia not only increased the ASEAN's international profile but also led the CPR to various provinces in Indonesia to reach out and interact with the people of Indonesia, up-close and personal.

Cambodia, as the incoming Chair of ASEAN, hopes to continue the work and sustain gains achieved by its predecessors. Members of the CPR and the Secretary-General of ASEAN, Dr Surin Pitsuwan, expressed their utmost support to Cambodia in continuing the works of ASEAN and in implementing its priorities set for 2012 under the theme of "One Community, One Destiny".

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2. Cambodian King Norodom Sihamoni , "ASEAN should aspire to preserve our culture and heritage, reduce poverty and socio-economic disparity" Phnom Penh, Cambodia, 23 December 2011 Dr Surin Pitsuwan, Secretary-General of ASEAN, and his delegation from the ASEAN Secretariat had an audience with His Majesty King Norodom Sihamoni yesterday, at the Royal Palace in Phnom Penh. The two sides discussed a broad range of issues. "The ASEAN Summit in Phnom Penh will be an excellent opportunity to discuss regional and global issues. We hope to contribute to peaceful cooperation on regional and global security, social issues, disaster management, sustainable development. We should promote and protect our cultural heritage, reduce poverty and the socio-economic disparity among the Member States", said the King. He expressed confidence that Cambodia's chairmanship of ASEAN would contribute to strengthening solidarity, trust and mutual confidence among ASEAN Member States and its Dialogue Partners. "I am deeply convinced that though the ASEAN Summit, Cambodia can contribute to advancing ASEAN Communitybuilding, democracy, human rights, fundamental freedoms, good governance, constitutional development, the rule of law and social justice for the ASEAN people", he said. The King expressed his gratitude to the Secretary-General and the ASEAN governments for providing Cambodia the opportunity to participate in meetings and negotiations under the umbrella of ASEAN. He shared his observation that ASEAN enables Cambodia to raise the country's profile in international affairs. "Cambodia needs ASEAN for our national interests", he said.

Dr Surin Pitsuwan suggested that the King could provide inspiration and direction during the Chairmanship. Dr Surin explained that ASEAN's Dialogue Partners and the global community have conveyed their full support of ASEAN, whom they view as a shining example of a successful regional organisation. He stressed that it is imperative for the region to rise to the occasion, since the global community is looking towards ASEAN to provide innovation and leadership to resolve global concerns. Noting King Sihamoni's deep interest in culture and the arts, particularly, in film and the performing arts, Dr Surin suggested that His Majesty share his aspirations and guidance to inspire the people of ASEAN and promote the region's rich cultural and artistic diversity. He expressed his concern that "ASEAN should not neglect the "soft issues"
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which touch our hearts and souls of our people". "ASEAN should create common projects to highlight its cultural heritage and raise awareness among the people, while deepening our understanding of our place in the globalised world", he said. He observed that the King could make a lasting contribution to ASEAN by providing guidance on research in the performing arts. King Sihamoni responded that he was in full cognisance of his duties. He expressed the hope that ASEAN could contribute to "building a world based on fraternity and friendship", and that he "is deeply convinced that cultural exchanges will bring peace, understanding and cooperation in a globalised world." Dr Surin Pitsuwan is on an official mission to Cambodia, the incoming Chair of ASEAN, during which he met with the Prime Minister Hun Sen, and Deputy Prime Minister and Minister of Foreign Affairs and International Trade, Hor Namhong. The delegation also met with Senior Ministers and Cham Prasidth, and Son Chanthol, who represent the Councils of the economic and socio-cultural pillars of the ASEAN Community.

3. ASEAN and China observe permanent landmark in Beijing, with the opening of the ASEAN-China Centre

Beijing, 16 December 2011 2011 marks the 20th anniversary of ASEAN-China ties, and the growing importance of the relationship by holding a reception celebrating the founding of ASEAN-China Centre (ACC) today.The Centre was launched at the sidelines of the 14th ASEAN-China Summit in Bali in November this year. "It is a special day today, as we witness an important milestone in ASEAN-China relations," said Mr Yang Jiechi, Chinese Foreign Minister, as he officiated the reception with Dr Surin Pitsuwan, Secretary-General of ASEAN. Mr Yang also gave his support to the China-ASEAN Beijing Economic Forum, which ended with a gala dinner and performance at the Reignwood Theatre this evening.He said China has always been a good friend with ASEAN, and the Central Government is committed to the peaceful development and the stability of the region."I have been to Nanning, Kunming, Chengdu, Wuhan, etc, and now, we are in Beijing - the cultural, political, science and technology and business capital of China, and the establishment of the ASEAN-China Centre here signifies the importance and commitment to the region's peace, stability, as well as prosperity," said Dr Surin.

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Earlier in the day, Dr Surin also met Mr Liu Qi, Beijing Party Secretary and member of the Poliburo.Mr Liu also gave his blessings and support to the ASEAN-China Centre, and the CABEF, adding that the forum should be an annual event. "We are holding the China (Beijing) International Fair for Trade in Services in May next year. Perhaps CABEF can be held in the sidelines of the Fair," suggested Mr Liu. Dr Surin also suggested boosting educational exchanges, with perhaps a dozen students studying in China and further suggested for China to invest in ASEAN to support ASEAN Connectivity projects. The ACC was set-up with the following objectives: a) to support the implementation of the Framework Agreement ; and various agreements on trade in goods, services, dispute settlement, investment and other agreements relating to economic cooperation signed under the umbrella of the Framework Agreement; b) to enhance two-way trade between ASEAN and China and further cultivate trade partnership in order to jointly promote exports to outside markets and achieve market expansion; c) to promote twoway flows of investment between ASEAN and China; d) to undertake activities to help investors and businessmen from less developed ASEAN Member States, especially Cambodia, Laos, Myanmar and Vietnam, in exploring trade and investment opportunities in China; e) to promote flows of tourists between ASEAN and China; f) to enhance interaction among the business communities of ASEAN and China; g) to increase people-to-people contacts, public awareness, mutual understanding, as well as active participation among the ASEAN and Chinese peoples through cultural and educational exchanges; and h) to synergise the potentials of ASEAN and China in order to enhance the region's appeal to external partners and facilitate access to ASEAN and Chinese ventures.

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REFERENCES

http://www.aseansec.org/about_ASEAN.html http://commerce.nic.in/

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