• Home
  • About RSIS
    • Introduction
    • Building the Foundations
    • Welcome Message
    • Board of Governors
    • Staff Profiles
      • Executive Deputy Chairman’s Office
      • Dean’s Office
      • Management
      • Distinguished Fellows
      • Faculty and Research
      • Associate Research Fellows, Senior Analysts and Research Analysts
      • Visiting Fellows
      • Adjunct Fellows
      • Administrative Staff
    • Honours and Awards for RSIS Staff and Students
    • RSIS Endowment Fund
    • Endowed Professorships
    • Career Opportunities
    • Getting to RSIS
  • Research
    • Research Centres
      • Centre for Multilateralism Studies (CMS)
      • Centre for Non-Traditional Security Studies (NTS Centre)
      • Centre of Excellence for National Security (CENS)
      • Institute of Defence and Strategic Studies (IDSS)
      • International Centre for Political Violence and Terrorism Research (ICPVTR)
    • Research Programmes
      • National Security Studies Programme (NSSP)
      • Studies in Inter-Religious Relations in Plural Societies (SRP) Programme
    • Future Issues and Technology Cluster
    • [email protected] Newsletter
    • Other Research
      • Science and Technology Studies Programme (STSP) (2017-2020)
  • Graduate Education
    • Graduate Programmes Office
    • Overview
    • MSc (Asian Studies)
    • MSc (International Political Economy)
    • MSc (International Relations)
    • MSc (Strategic Studies)
    • NTU-Warwick Double Masters Programme
    • PhD Programme
    • Exchange Partners and Programmes
    • How to Apply
    • Financial Assistance
    • Meet the Admissions Team: Information Sessions and other events
    • RSIS Alumni
  • Alumni & Networks
    • Alumni
    • Asia-Pacific Programme for Senior Military Officers (APPSMO)
    • Asia-Pacific Programme for Senior National Security Officers (APPSNO)
    • International Strategy Forum-Asia (ISF-Asia)
    • SRP Executive Programme
    • Terrorism Analyst Training Course (TATC)
  • Publications
    • RSIS Publications
      • Annual Reviews
      • Books
      • Bulletins and Newsletters
      • Commentaries
      • Counter Terrorist Trends and Analyses
      • Commemorative / Event Reports
      • IDSS Paper
      • Interreligious Relations
      • Monographs
      • NTS Insight
      • Policy Reports
      • Working Papers
      • RSIS Publications for the Year
    • Glossary of Abbreviations
    • External Publications
      • Authored Books
      • Journal Articles
      • Edited Books
      • Chapters in Edited Books
      • Policy Reports
      • Working Papers
      • Op-Eds
      • External Publications for the Year
    • Policy-relevant Articles Given RSIS Award
  • Media
    • Great Powers
    • Sustainable Security
    • Other Resource Pages
    • Media Highlights
    • News Releases
    • Speeches
    • Vidcast Channel
    • Audio/Video Forums
  • Events
  • Giving
  • Contact Us
Facebook
Twitter
YouTube
RSISVideoCast RSISVideoCast rsis.sg
Linkedin
instagram instagram rsis.sg
RSS
  • Home
  • About RSIS
      • Introduction
      • Building the Foundations
      • Welcome Message
      • Board of Governors
      • Staff Profiles
        • Executive Deputy Chairman’s Office
        • Dean’s Office
        • Management
        • Distinguished Fellows
        • Faculty and Research
        • Associate Research Fellows, Senior Analysts and Research Analysts
        • Visiting Fellows
        • Adjunct Fellows
        • Administrative Staff
      • Honours and Awards for RSIS Staff and Students
      • RSIS Endowment Fund
      • Endowed Professorships
      • Career Opportunities
      • Getting to RSIS
  • Research
      • Research Centres
        • Centre for Multilateralism Studies (CMS)
        • Centre for Non-Traditional Security Studies (NTS Centre)
        • Centre of Excellence for National Security (CENS)
        • Institute of Defence and Strategic Studies (IDSS)
        • International Centre for Political Violence and Terrorism Research (ICPVTR)
      • Research Programmes
        • National Security Studies Programme (NSSP)
        • Studies in Inter-Religious Relations in Plural Societies (SRP) Programme
      • Future Issues and Technology Cluster
      • [email protected] Newsletter
      • Other Research
        • Science and Technology Studies Programme (STSP) (2017-2020)
  • Graduate Education
      • Graduate Programmes Office
      • Overview
      • MSc (Asian Studies)
      • MSc (International Political Economy)
      • MSc (International Relations)
      • MSc (Strategic Studies)
      • NTU-Warwick Double Masters Programme
      • PhD Programme
      • Exchange Partners and Programmes
      • How to Apply
      • Financial Assistance
      • Meet the Admissions Team: Information Sessions and other events
      • RSIS Alumni
  • Alumni & Networks
      • Alumni
      • Asia-Pacific Programme for Senior Military Officers (APPSMO)
      • Asia-Pacific Programme for Senior National Security Officers (APPSNO)
      • International Strategy Forum-Asia (ISF-Asia)
      • SRP Executive Programme
      • Terrorism Analyst Training Course (TATC)
  • Publications
      • RSIS Publications
        • Annual Reviews
        • Books
        • Bulletins and Newsletters
        • Commentaries
        • Counter Terrorist Trends and Analyses
        • Commemorative / Event Reports
        • IDSS Paper
        • Interreligious Relations
        • Monographs
        • NTS Insight
        • Policy Reports
        • Working Papers
        • RSIS Publications for the Year
      • Glossary of Abbreviations
      • External Publications
        • Authored Books
        • Journal Articles
        • Edited Books
        • Chapters in Edited Books
        • Policy Reports
        • Working Papers
        • Op-Eds
        • External Publications for the Year
      • Policy-relevant Articles Given RSIS Award
  • Media
      • Great Powers
      • Sustainable Security
      • Other Resource Pages
      • Media Highlights
      • News Releases
      • Speeches
      • Vidcast Channel
      • Audio/Video Forums
  • Events
  • Giving
  • Contact Us
  • instagram instagram rsis.sg
Connect

Getting to RSIS

Map

Address

Nanyang Technological University
Block S4, Level B3,
50 Nanyang Avenue,
Singapore 639798

View location on Google maps Click here for directions to RSIS

Get in Touch

    Connect with Us

      rsis.ntu
      rsis_ntu
      rsisntu
    RSISVideoCast RSISVideoCast rsisvideocast
      school/rsis-ntu
    instagram instagram rsis.sg
      RSS
    Subscribe to RSIS Publications
    Subscribe to RSIS Events

    RSIS Intranet

    S. Rajaratnam School of International Studies Think Tank and Graduate School Ponder The Improbable Since 1966
    Nanyang Technological University Nanyang Technological University

    Skip to content

     
    • RSIS
    • Publication
    • RSIS Publications
    • CO16243 | Indian Ocean: Re-energising Trade Integration in IORA
    • Annual Reviews
    • Books
    • Bulletins and Newsletters
    • Commentaries
    • Counter Terrorist Trends and Analyses
    • Commemorative / Event Reports
    • IDSS Paper
    • Interreligious Relations
    • Monographs
    • NTS Insight
    • Policy Reports
    • Working Papers
    • RSIS Publications for the Year

    CO16243 | Indian Ocean: Re-energising Trade Integration in IORA
    Pradumna Bickram Rana

    03 October 2016

    download pdf
    RSIS Commentary is a platform to provide timely and, where appropriate, policy-relevant commentary and analysis of topical and contemporary issues. The authors’ views are their own and do not represent the official position of the S. Rajaratnam School of International Studies (RSIS), NTU. These commentaries may be reproduced with prior permission from RSIS and due credit to the author(s) and RSIS. Please email to Editor RSIS Commentary at [email protected].

    Synopsis

    The recent inaugural Indian Ocean Conference (IOC 2016) while well-timed and successful in projecting India’s soft power, failed to come up with concrete recommendations to re-energise trade within the region. This should be a key focus of IOC 2017.

    Commentary

    THE RECENT India-led inaugural Indian Ocean Conference (IOC 2016) held in Singapore on 1-2 September was well-timed – just when mistrust of China has increased in the region because of its actions in the South China Sea. It was also successful in projecting India’s soft power in the East Asian region. However, although an entire session was devoted to “commerce” (international trade and investment issues), the Conference failed to come up with concrete recommendations to re-energise trade integration among the 21-member Indian Ocean Rim Association (IORA). This should be a key focus of IOC 2017 to be held in Sri Lanka.

    As is well-known, in the bygone era the Indian Ocean was an active thoroughfare of commercial and religious traffic. Subsequently during the colonial period, trade on the Indian Ocean was fragmented. Presently, intra-regional trade among the IORA members is about 25 per cent of their total trade. But a large chunk of this is trade between ASEAN and Australia: Trade among other IORA members is relatively low. How can intra-regional trade among IORA members be re-energised?

    From Look East to Act East

    India’s Look East Policy (LEP) was initiated by Prime Minister Narasimha Rao in the early 1990s as part of the country’s economic reform package. The objective of the Look East Policy was to promote India’s economic linkages with the 10-member ASEAN. The policy was successful. India’s trade with ASEAN has surged and the country participates actively in various fora initiated by ASEAN such as the ASEAN Regional Forum, and the East Asia Summit. India also holds summit-level dialogues with ASEAN.

    In 2014, Prime Minister Narendra Modi upgraded the LEP to the Act East Policy amidst much fanfare. The Act East Policy has the strategic dimensions which the LEP did not have. Also the coverage of the Act East Policy is broader as it covers not only ASEAN but also Korea, Japan, Australia and the Pacific Island countries. But what more? If an answer cannot be provided, then the move from Look East to Act East could simply mean a change in nomenclature, nothing more.

    At the IOC 2016, India’s Foreign Secretary, Mr S. Jaishankar, emphasised that “For the Indian Ocean to attain its true potential, it is imperative that India which is the centre of gravity, should be a facilitator rather than an obstruction. That requires a smoother movement of goods and people within India but also to its immediate neighborhood and beyond”.

    What should be the components of India’s Act East Policy and what type of trade policies should India’s neighbouring IORA members in South Asia, the Gulf region and Africa adopt in order to re-energise trade integration in IORA? The findings of my on-going research provide some answers.

    Paradigms of Trade

    Under the traditional theory of trade, developing countries produced labour intensive goods which they then exchanged for relatively capital and skill intensive goods produced by the more advanced countries. All separate tasks involved in producing a good were done entirely at home. But now the way many goods are produced and traded around the world is no longer the same as before.

    Production is sliced and diced into separate fragments and production of parts and components are spread around the world linked together as production networks or supply-chains. Nike is a well-known example of this phenomenon. While research and design of shoes remain in the United States, most of Nike’s production is in developing countries. Nike relies on production facilities in around 50 countries mostly in Asia and Latin America.

    East Asia is dense with production networks. It is estimated that East Asia accounts for nearly 45 per cent of global production network or supply-chain trade with China and the ASEAN countries in the lead. To benefit from these developments in East Asia, India and its neighbouring IORA members should (i) link themselves to production networks in East Asia; and (ii) develop production networks in manufacturing and services within their own region. Such actions would allow the IORA region to benefit not only from the static complementarities of the traditional trade theories but also the dynamic complementarities associated with the new international trade theory.

    Trade Policies in India and Neighboring IORA members

    The Act East Policy in India and trade policies in India’s neighbouring IORA members should comprise the following five, sometimes overlapping, components:

    • First, these countries need to improve the environment facing the private sector through governance, regulatory, labor market, and legal reforms so that their scores in the World Bank’s Ease of Doing Business Index would increase.

    • Second, these countries should improve their information and communications technology (ICT) systems so that supply chains can be coordinated and managed efficiently.

    • Third, India and neighbouring IORA members should strive to reduce logistics costs including trade facilitation at the border. With product fragmentation, efficient logistic service is a key determinant of a country’s competitiveness.

    • Fourth, these countries should support on-going efforts to enhance physical connectivity within the region as this would reduce trading costs and enhance trade competitiveness. The Trilateral Highway, the Kaladan Project, the Mekong-India Economic Corridor, and the Bangladesh-China-India-Myanmar Economic Corridor projects should be supported. Maritime connectivity within the IORA region should also be improved.

    • Finally, a Trans-Indian Ocean Partnership among the IORA members should be established. This would complement the ASEAN-driven Regional Comprehensive Economic Partnership (RCEP) and be the IORA’s answer to the US-led Trans-Pacific Partnership (TPP) and the EU-US led Trans-Atlantic Trade and Investment Partnership (TTIP).

    About the Author

    Pradumna B. Rana is Associate Professor and Coordinator of the International Political Economy Programme in the Centre for Multilateralism Studies (CMS) at the S. Rajaratnam School of International Studies (RSIS), Nanyang Technological University, Singapore.

    Categories: Commentaries / Country and Region Studies / International Political Economy / Regionalism and Multilateralism / East Asia and Asia Pacific / South Asia / Southeast Asia and ASEAN

    Last updated on 03/10/2016

    RSIS Commentary is a platform to provide timely and, where appropriate, policy-relevant commentary and analysis of topical and contemporary issues. The authors’ views are their own and do not represent the official position of the S. Rajaratnam School of International Studies (RSIS), NTU. These commentaries may be reproduced with prior permission from RSIS and due credit to the author(s) and RSIS. Please email to Editor RSIS Commentary at [email protected].

    Synopsis

    The recent inaugural Indian Ocean Conference (IOC 2016) while well-timed and successful in projecting India’s soft power, failed to come up with concrete recommendations to re-energise trade within the region. This should be a key focus of IOC 2017.

    Commentary

    THE RECENT India-led inaugural Indian Ocean Conference (IOC 2016) held in Singapore on 1-2 September was well-timed – just when mistrust of China has increased in the region because of its actions in the South China Sea. It was also successful in projecting India’s soft power in the East Asian region. However, although an entire session was devoted to “commerce” (international trade and investment issues), the Conference failed to come up with concrete recommendations to re-energise trade integration among the 21-member Indian Ocean Rim Association (IORA). This should be a key focus of IOC 2017 to be held in Sri Lanka.

    As is well-known, in the bygone era the Indian Ocean was an active thoroughfare of commercial and religious traffic. Subsequently during the colonial period, trade on the Indian Ocean was fragmented. Presently, intra-regional trade among the IORA members is about 25 per cent of their total trade. But a large chunk of this is trade between ASEAN and Australia: Trade among other IORA members is relatively low. How can intra-regional trade among IORA members be re-energised?

    From Look East to Act East

    India’s Look East Policy (LEP) was initiated by Prime Minister Narasimha Rao in the early 1990s as part of the country’s economic reform package. The objective of the Look East Policy was to promote India’s economic linkages with the 10-member ASEAN. The policy was successful. India’s trade with ASEAN has surged and the country participates actively in various fora initiated by ASEAN such as the ASEAN Regional Forum, and the East Asia Summit. India also holds summit-level dialogues with ASEAN.

    In 2014, Prime Minister Narendra Modi upgraded the LEP to the Act East Policy amidst much fanfare. The Act East Policy has the strategic dimensions which the LEP did not have. Also the coverage of the Act East Policy is broader as it covers not only ASEAN but also Korea, Japan, Australia and the Pacific Island countries. But what more? If an answer cannot be provided, then the move from Look East to Act East could simply mean a change in nomenclature, nothing more.

    At the IOC 2016, India’s Foreign Secretary, Mr S. Jaishankar, emphasised that “For the Indian Ocean to attain its true potential, it is imperative that India which is the centre of gravity, should be a facilitator rather than an obstruction. That requires a smoother movement of goods and people within India but also to its immediate neighborhood and beyond”.

    What should be the components of India’s Act East Policy and what type of trade policies should India’s neighbouring IORA members in South Asia, the Gulf region and Africa adopt in order to re-energise trade integration in IORA? The findings of my on-going research provide some answers.

    Paradigms of Trade

    Under the traditional theory of trade, developing countries produced labour intensive goods which they then exchanged for relatively capital and skill intensive goods produced by the more advanced countries. All separate tasks involved in producing a good were done entirely at home. But now the way many goods are produced and traded around the world is no longer the same as before.

    Production is sliced and diced into separate fragments and production of parts and components are spread around the world linked together as production networks or supply-chains. Nike is a well-known example of this phenomenon. While research and design of shoes remain in the United States, most of Nike’s production is in developing countries. Nike relies on production facilities in around 50 countries mostly in Asia and Latin America.

    East Asia is dense with production networks. It is estimated that East Asia accounts for nearly 45 per cent of global production network or supply-chain trade with China and the ASEAN countries in the lead. To benefit from these developments in East Asia, India and its neighbouring IORA members should (i) link themselves to production networks in East Asia; and (ii) develop production networks in manufacturing and services within their own region. Such actions would allow the IORA region to benefit not only from the static complementarities of the traditional trade theories but also the dynamic complementarities associated with the new international trade theory.

    Trade Policies in India and Neighboring IORA members

    The Act East Policy in India and trade policies in India’s neighbouring IORA members should comprise the following five, sometimes overlapping, components:

    • First, these countries need to improve the environment facing the private sector through governance, regulatory, labor market, and legal reforms so that their scores in the World Bank’s Ease of Doing Business Index would increase.

    • Second, these countries should improve their information and communications technology (ICT) systems so that supply chains can be coordinated and managed efficiently.

    • Third, India and neighbouring IORA members should strive to reduce logistics costs including trade facilitation at the border. With product fragmentation, efficient logistic service is a key determinant of a country’s competitiveness.

    • Fourth, these countries should support on-going efforts to enhance physical connectivity within the region as this would reduce trading costs and enhance trade competitiveness. The Trilateral Highway, the Kaladan Project, the Mekong-India Economic Corridor, and the Bangladesh-China-India-Myanmar Economic Corridor projects should be supported. Maritime connectivity within the IORA region should also be improved.

    • Finally, a Trans-Indian Ocean Partnership among the IORA members should be established. This would complement the ASEAN-driven Regional Comprehensive Economic Partnership (RCEP) and be the IORA’s answer to the US-led Trans-Pacific Partnership (TPP) and the EU-US led Trans-Atlantic Trade and Investment Partnership (TTIP).

    About the Author

    Pradumna B. Rana is Associate Professor and Coordinator of the International Political Economy Programme in the Centre for Multilateralism Studies (CMS) at the S. Rajaratnam School of International Studies (RSIS), Nanyang Technological University, Singapore.

    Categories: Commentaries / Country and Region Studies / International Political Economy / Regionalism and Multilateralism

    Last updated on 03/10/2016

    Back to top

    Terms of Use | Privacy Statement
    Copyright © S. Rajaratnam School of International Studies. All rights reserved.
    This site uses cookies to offer you a better browsing experience. By continuing, you are agreeing to the use of cookies on your device as described in our privacy policy. Learn more
    OK
    Latest Book
    CO16243 | Indian Ocean: Re-energising Trade Integration in IORA

    Synopsis

    The recent inaugural Indian Ocean Conference (IOC 2016) while well-timed and successful in projecting India’s soft power, failed to come up with concre ...
    more info