India pivots to Southeast Asia to counter China’s growing clout

India pivots to Southeast Asia to counter China’s growing clout

SAM Staff,

In 2016, India approved just $157.7 million of combined investments in Indonesia, Malaysia, Philippines, Thailand and Vietnam. Over the same period, China approved $5.7 billion worth. Malaysia and Indonesia were the biggest recipients, with $1.8 billion and $1.4 billion respectively.

Chinese funds, however, often come with strings attached, such as requirements that Chinese labor, materials and finance be used. Politicians in the region have used this to stir up public fears about Chinese encroachment, particularly when temperatures are running hot over territorial disputes.

Asean residents are torn in their perceptions of China’s rise, wanting to resist influence while recognizing their economic dependence. A 2016 FT Confidential Research survey of 5,000 consumers across the Asean-5 countries showed that most think their governments should not accept China’s demands in the South China Sea dispute. However, with the exception of Vietnamese respondents, most also said the response to the dispute should not be to reduce reliance on Chinese trade.

Re-enter the elephant

Unease about dependency on China creates an opportunity for a renewed push by India into the region. However, the failure of previous efforts justifies caution.

India’s “Look East” policy of the early 1990s, which aimed to bolster relations with the booming economies in Southeast Asia through improved land and sea connections, was scuppered by the Asian financial crisis. In a second iteration of “Look East,” launched in 2002, India attempted to broaden its scope by including China, Japan, South Korea, Australia and New Zealand. However, its attention strayed with the emergence of and its involvement in the Brics, a loose association of the biggest emerging economies, and wandered further after the global financial crisis.

Modi’s “Act East” policy is the latest plan, with the main goal to improve infrastructure connections, particularly with Asean countries in the Greater Mekong sub-region — Laos, Cambodia, Myanmar, Vietnam and Thailand. This pivot has been largely welcomed by Asean, but India now has to demonstrate its commitment. One way would be to finish long-delayed flagship projects such as the India-Myanmar-Thailand Trilateral Highway, which was initiated in 2002 but has already missed its completion date. The Modi government has set a new deadline of 2020.

India has also differentiated its regional push this time by presenting itself as a security counterweight to China. In an op-ed published in 27 newspapers across Asean in January, Modi wrote that Asean-India relations are “free from contests and claims” and that both parties believe in “sovereign equality of all nations irrespective of size”.

India will be helped in its goals by the simultaneous efforts of the U.S., Japan and Australia to contain China’s geopolitical influence in the region, partly by building infrastructure projects to rival China’s Belt and Road Initiative. However, India’s renewed push into Southeast Asia will only succeed if Modi’s words are translated into action.