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India and ASEAN’s Rapidly Growing Economies Ally to Accelerate

The long-lasting relationship between India and the Association of Southeast Asian Nations (ASEAN) has been beneficial to both nations. Between 2000 and 2017, there was over $514.7 billion worth of ASEAN investment flowing into India. In 2015-16, India’s exports to ASEAN were valued at $25 billion, with imports at $40.6 billion. Today, India and the Philippines, a member of ASEAN, are projected to be the two fastest growing economies in the world in 2018, boasting growth rates of 7.4% and 6.7%, respectively. The cumulative growth of the “ASEAN-5” comprising Indonesia, Malaysia, the Philippines, Singapore, and Thailand is forecast to total 5.3%. This kind of opportunity, however, has not gone unnoticed in Asia. Stronger influence from China on ASEAN nations over the last few years has pushed India to continue nurturing its economic ties with its southeastern neighbors.

Modernization of infrastructure is a top priority for all of the ASEAN nations and is mentioned as a primary goal in the ASEAN Economic Community (AEC) 2025 vision. The Asian Development Bank’s current figures indicate Southeast Asia’s infrastructure investment needs will total $2.8 trillion between 2016 and 2030, or about US$184 billion annually. China has stepped up in ASEAN with their One Belt One Road Initiative, but India is also making sure to keep pace, especially since India shares the need for advanced infrastructure. India, itself, could need $4.5 trillion for infrastructure by 2040. Because of this shared requirement, dozens of projects between ASEAN and India are already underway or in development.

In fact, construction on a more than 850-mile-long India-Myanmar-Thailand Trilateral Highway, an initiative connecting the three countries began just this month.

Several Thailand-based companies, operating in India, just announced plan to invest around $3 billion in the next three years period in the areas of green and brown field projects including energy, infrastructure and metals. Over the decades, nearly 30 Thai companies will be active in the infrastructure, real estate, food processing, chemicals, hotel and hospitality sectors in India.

Other projects, such as a railway link between New Delhi in India to Hanoi in Vietnam, the Mekong-India Economic Corridor (MIEC) connecting South and Southeast Asia, and the Stilwell road and Dawei deep-sea port in Myanmar are under consideration.

The infrastructure connection is also a huge part of ASEAN’s rising tech drive, one of the most transformative recent changes in the region. Under the Smart Nation initiative, Singapore aims to harness the use of digital and smart technologies to become a more economically competitive and livable global city. Malaysia has turned to artificial intelligence to solve its urban congestion woes and to herald a new era of smart city development in the country. Davao City in the Philippines alongside prominent tech player, IBM has already implemented IBM’s Intelligent Operations Centre (IOC) to support public safety and security.

To tap into these burgeoning technologies that will revolutionize urban centers throughout Asia, the National Research Development Corporation (NRDC) in India began building a massive, collaborative tech data bank as part of the ASEAN-India Innovation Platform. The proposed data bank will link existing data banks of available technologies in the ASEAN region, compiling information on technologies available in ASEAN and India under a single platform to make it easier for entrepreneurs and businesses to obtain information about these technologies. Besides developing the data bank, NRDC will also undertake other tasks like selection and validation of technologies through expert committees for identifying the potential technology in ASEAN members, generating more efficient Indian investment.

Digital payments and e-commerce are another space where ASEAN and India are prospering individually, but are prepared to blossom together. India and Singapore, two of the world’s leaders in mobile payments have begun working on the bilateral use of online payment using system such as Rupay and Singapore Network For Electronic Transfers (NETS) in both countries.

Complementing this push for connectivity, global logistics group Deutsche Post DHL Group is also working to link Indian companies with businesses in the ASEAN Economic Community (AEC) to strengthen India’s economic relations with Southeast Asian markets. This would work to boost efficient trade operations between the two nations, as well as bolster greater e-commerce connectivity.

This is all only a snapshot of the larger ASEAN-India picture. All of the emerging economies involved create opportunities for huge upside in markets where millions are just now reaching digitization.

Investors can gain exposure to Indian equities via the India ETF (INDA) and to ASEAN equities via the ASEAN ETF (ASEA). Joe Mac added Long ASEAN as a theme on March 28, 2018.


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