Indo-Pacific Economic Corridor-Integrating South and Southeast Asian Economies
In recent times the trans-regional economic corridors have gained a lot of attention from the world. They are popularly being considered to be the drivers of growth by including the lagging regions in the development processes. It is expected to result in poverty alleviation, increase in income, generate employment opportunities, and reduces regional disparity. But what is important is to realize that these Economic corridors do not operate in isolation rather they connect important areas of economic activities in defined geography that provides a distinctive comparative advantage in order to yield better results for all the stakeholders. As the world realizes the benefits of economic integration the ideas of economic corridors in South-Asia and southeast Asia have gained popularity in recent times.
The idea of Indo-Pacific Economic Corridor
Indo-Pacific Economic Corridor (IPEC) is one such economic block that aims for economic integration in order to promote stability in the region by fostering connectivity. The term "Indo-Pacific" has currently gained currency due to the rise of China, and the arrival of external powers in the region. To address the rising economic importance of the region the US. administration shifted its focus from Asia Pacific to a broader concept of Indo pacific. The idea of Indo pacific can be seen under the extension of the United States foreign policy with the introduction of Pivot to Asia in 2011 to rebalance Asia. The construct of Indo-Pacific called for much greater cooperation in the field of economy, politics, and security. Though the idea of Indo pacific gained a lot of momentum, it still suffers from the lack of cohesive economic structure. To address this problem the idea of (IPEC) emerged in 2013 during Indo-US Strategic Dialogues. IPEC aimed at economic integration of South Asia is recognition of the Pacific and the Indian ocean as one single entity. It brings two seemingly diverse theatres together and gives it a unified heft. It could be seen as the US initiative to build its influence in the region. IPEC's vision is to enhance physical infrastructure, economic integrations, energy markets, digital connectivity, and people-to-people contact. The other major power in the region is India that has shown interest in taking a more prominent role. The changing of Pacific Command to Indo-Pacific command signalled towards a shift in the USA's policy towards the east and the importance of India in realizing its strategic planning. The US sees its economic and strategic future linked with the region. The Malacca strait between India and the Pacific serves as the main choke point for world commerce making this region one of the most economically viable regions in the world. The region has observed greater cooperation between the USA and its allies Japan and Australia and the growing closeness of these three with India. These recent dynamics and materialization of the Quad, which has enhanced the concept of Indo pacific is seen to be a counterbalance strategy against the rising belligerence of China in the region.
Connectivity in the region
There might be differences in the construct of India and the USA when it comes to the Indo-Pacific, but something both countries agree on is the centrality of ASEAN in the region. China’s adventurism in the South China Sea has alerted the countries around and beyond. IPEC is considered by many as a counter to China's most ambitious project, which is the belt and road initiative (BRI). Both Washington and New Delhi realize that no single country can counter the rise of China in the Indo-pacific. Thus, a call for a more collaborative effort in the region, integrating all regional and sub-regional organizations is encouraged. The growing salience of Indo pacific in the global discourse has provided new strength to the India-ASEAN relations. In 2018 Shangri-La Dialogues, India’s Prime Minister Narendra Modi came forward with India's vision for Indo-Pacific and retorted India's call for a free and open Indo- pacific with ASEAN's centrality, and also signaled for the willingness of India to take a more proactive role. He said, "we believe in a free, open, and inclusive Indo-Pacific region, which includes all nations in this geography and others who have a stake in it".
IPEC provides an opportunity to play a major role to develop the Indo-Pacific as a positive construct of development and connectivity. India’s ‘Act East Policy’ (AEP) compliments the vision of IPEC of integration of South Asia and Southeast Asia. AEP realizes connectivity as the key to enhance India-ASEAN relations. In 2018, India provided a line of credit of $1billion to ASEAN for connectivity and infrastructure projects. Good air connectivity already exists between India and the ASEAN countries. India in the last few years have been trying in a direction to enhance connectivity in the digital domain too. For India to realize its Act East policy, Myanmar plays an important role as it acts as a link between India and Southeast Asia. IPEC helped in providing new vigour to the India-Myanmar-Thailand trilateral highway. These moves to strengthen connectivity will also lead to the development of and progress of the northeast region of India. India’s idea of Security and Growth for All in the Region (SAGAR), ideally coalesces into India's Indo-Pacific policy. India also extended a line of credit to Bangladesh for infrastructure and social sector development. India inaugurated Chabahar port last year in Iran in order to bypass Islamabad. This port is set to provide India a gateway for connectivity to and from Afghanistan and Central Asia. the potential to develop the North-South Transit corridor is further being explored. In an attempt to strengthen bilateral economic ties and implantation of the Indo pacific cooperation last year in December, the Jakarta-India Task Force agreed on a plan to develop connectivity between Aceh- Andaman and Nicobar Island where India plans to build a port in Sabang. India also plans on expanding its presence in the Ganga-Mekong subregion (GMS). Recently, India-Japan-Australia signed an agreement to enhance supply chains in the region. India formalized its relations with the Islands of Indo-pacific with the establishment of the Forum for India-Pacific Islands Cooperation (FIPIC).
In Southeast Asia, the establishment of ASEAN has played a big role in the economic integration of the region, which has also led to many regional initiatives to enhance connectivity. It has initiated multiple projects like the ASEAN energy cooperation, transport facilitation, and sub regional initiatives like Greater Mekong Subregion (GMS), Indonesia-Malaysia-Thailand growth triangle, Mekong River Commission, Brunei Darussalam-Indonesia-Malaysia-Philippines-East ASEAN Growth Area (BIMP-EAGA), etc. The opening of the bridge between Thailand and Myanmar last year has brought the East-West Economic Corridor (and economic bloc along a 1,700-kilometer land route from Vietnam to Myanmar via Laos and Thailand), a step ahead in connecting the Indian Ocean and the South China Sea. All these connectivity projects are set to reshape the supply chain of the region and provides an opportunity for better integration in the global value chain. These projects would help generate employment, increase trade along the routes, and eventually help in reducing dependence on China.
Challenges to IPEC
Though there lies a huge potential for IPEC if realized, the challenges of integrating such diverse regions have their own challenges. The intra-regional connectivity in ASEAN is still not impressive and a lot needs to be done. The Masterplan to connect ASEAN has not been realized yet. South Asia faces major challenges due to the mistrust in the region. One of the other major reasons for connectivity not reaching its likely potential in South Asia is the isolation of the second largest country of the region, that is, Pakistan. Pakistan is not just the second-largest country in the region but also is the strongest pillar of China that it uses to contain India's influence in the region. The China Pakistan Economic Corridor (CPEC) under the BRI violates India's sovereignty but is a great geostrategic asset for China. Similarly, the connectivity initiatives under SAARC have been in limbo for a long time due to lack of trust and political energy among member countries to enhance cooperation. India, to bypass Pakistan, has been looking for several other alternatives, BIMSTEC is one such initiative in that direction. Another major concern is Myanmar, though Burma’s democratic Transitions have opened investment opportunities, the domestic politics, and ethnic conflicts, and heavy investment of China under BRI in Myanmar poses a challenge to the development projects, with Myanmar being the most important country for India to enhance its connectivity with the rest of South-east Asia as it serves as the lynchpin between both the regions. Another serious challenge that IPEC faces is the cost of the project. The cost can be humongous for such an extensive project and would require a lot of assistance. As per ADB estimates the cost of connecting South Asia and Southeast Asia is going to be around $73.2 bn and the funds allotted for the same remains far below the estimated amount.
Conclusion
The Economic Corridor is still in its initial stages, since the scepticism around such a massive integration project still remains. The recent pandemic is going to change dynamics in the global order and has already affected the development projects all around the world. The newly elected democratic government in the United States is also going to have some impact on the policies. Though the recent developments in the Indo-Pacific, like the signing of RAA between Japan and Australia have signalled towards a more strengthened stance against China. Indo-Pacific is a concept that has grown out of a convergence of Interest in the region and IPEC helps in realizing that interest. The region has become the epicentre of economic activities and trade making it an attractive destination to enhance economic gains, while a more integrated, open, and free Indo pacific challenges rising China and its assertiveness in the region. For the USA it serves larger geo-economic and geo-politic benefits. Though moves like that of leaving the Trans-Pacific Partnership raises the question of the US's involvement in the region, at the same time, the rising bilateral cooperation among the Quad countries are strategic signals for greater involvement of the USA in the region. US and India have come a long way, and USA finds India as an important partner in the region. Though India and the US are set to play a major role, a lot would depend on the synergy between regional and subregional groupings. The strategic powerplay in the region can't prove to be sufficient to drive such a project. Domestic politics and the implementation of policies of different countries will also play a crucial role.
REFERENCES
[1] https://www.mea.gov.in/distinguished-lectures-detail.htm?854
[2] https://www.orfonline.org/research/indo-pacific-economic-corridor-a-vision-in-progress/
[3] Indo-Pacific Economic Corridor: Opportunities and Challenges | EAST ASIA RESEARCH PROGRAMME (earp.in)
[4] https://stanleycenter.org/publications/report/NPDinSEA908.pdf
[5] https://foreignpolicy.com/2011/10/11/americas-pacific-century/
[6] Myanmar: The Key Link between South Asia and Southeast Asia by Hector Florento, Maria Isabela Corpuz :: SSRN
[7] https://thediplomat.com/2015/06/aseans-connectivity-challenge/
[8] https://economictimes.indiatimes.com/topic/Indo-Pacific-Economic-Corridor
[9] https://banyanglobal.com/wp-content/uploads/2017/06/Indo-Pacific-Economic-Economic-Corridor.pdf
[10] The Indo-Pacific: just a China containment strategy? (eiu.com)
[11] Emerging Trans-Regional corridors: South and Southeast Asia | ORF (orfonline.org)
[12] https://www.eurasiareview.com/10022017-emerging-trans-regional-corridors-perspectives-from-south-and-southeast-asia-analysis/
[13] https://www.adb.org/publications/economic-corridor-development-and-what-it-can-achieve-in-asia-subregions
[14] The New Battle for Access and Influence in the Indo-Pacific | Foreign Affairs
Pic Courtesy- Pankaj K Jha
(The views expressed are personal.)
