Economic relations through trade between India and the five member countries of the Association of Southeast Asian Nations (ASEAN) – formed in 1967 – namely, Indonesia, Malaysia, Philippines, Singapore, and Thailand, have a long history. This is especially so in the case of Indonesia, Malaysia, Singapore and Thailand where the influence of Indian culture is readily evident even today and is reinforced by a sizeable population of Indian origin living in these countries. Even the settlement of some Indians in the Philippines is a story which is a few decades old. Our purpose is not to authenticate this part of the world history but, within this historical background, to trace the present state of economic relations between India and the ASEAN countries especially since 1970 and to analyse the prospects for economic co-operation among these countries in the near future.

In this context, economic relations can be conveniently divided into three parts, namely, trade-based relations, investment- (and joint venture) based relations, and all other economic relations based on services such as tourism, shipping, and banking. Accordingly, this paper is divided into three main sections. Section I deals with the survey of trade relations; Section II with the survey of investment relations with special reference to the joint industrial ventures; and Section III with the survey of “other” economic relations. The concluding section (Section IV) highlights some of the prospective areas for expanding economic co-operation between India and the ASEAN countries.

TRADE RELATIONS

Table 1 presents data relating to India's exports, imports, and trade balance with the ASEAN countries and the world for the year 1971/72 and 1976/77 to 1979/80. Table 2 presents the rates of growth of exports and imports based on Table 1.

Growth of Trade

Trade between India and the ASEAN countries as a regional grouping as well as with the individual countries of this grouping grew at a rapid rate during the decade 1971/72 to 1979/80.

INTRODUCTION

Nepal's economic relations with the members of the Association of Southeast Asian Nations (ASEAN), mainly through trade and in a very small way through investment in joint ventures, are of relatively recent origin. From time immemorial, Nepal's economic relations have been primarily confined to its large neighbour, India. This was so until the early 1970s. Thus, as late as in 1974/75, Nepal's exports to the group of five ASEAN countries (namely, Indonesia, Malaysia, Philippines, Singapore and Thailand) constituted only 2 per cent of its total exports to the world, whereas its exports to India constituted 84 per cent of its total exports (see Table 2). Similarly, Nepal's imports from all the ASEAN countries in the same year made up nearly 2 per cent of its total imports from the world whereas the corresponding proportion of imports from India was 81 per cent. This position can easily be explained by the land-locked nature of the country and the traditional open border and easier transportation links existing with India for centuries, and also by the similarities in cultural, social, and religious values between the two countries. Until the 1960s, Nepal had exclusively depended on India for providing transit facilities for its trade with the countries overseas. Transportation links with its other large neighbouring country, China, have traditionally been weaker due to high mountains and difficult terrain.

It was only during the seventies that Nepal consciously started programmes of diversification of its economic relations with countries other than India, especially with the other countries of South Asia and the ASEAN grouping. This paper traces the changing profile of Nepal's economic relations with the ASEAN countries since 1974/75. The data base for Nepal's economy is quite weak. However, to the extent that data are available, we will draw upon them from the national and international sources. While the primary focus of the study will be on trade relations (Section II), “other economic relations” (such as investment in joint ventures in industries) will also be touched upon (Section III).

Towards a Definition of Desired Development Contributions

In an empirical investigation to establish and describe the actual contribution made by small and medium entrepreneurs to development, it must be known from the outset which section of the complexities of reality is to observed. Similarly, considerations about possible contributions to development presuppose the specification of what could or should be reached. It must therefore be established which values and contexts are being referred to when talking about development within a society. On analytical grounds, we propose a distinction between societal, social, and economic components.

The societal objective in many South and Southeast Asian countries – as indeed in Indonesia and Malaysia – has been determined by a fundamental political decision to strive for a parliamentary-democratic system with a mixed economy of the free enterprise type. This calls for efficient political and economic institutions as well as responsible individuals who are capable of actively organizing and operating them. Small and medium entrepreneurs can support societal development in this sense by their independent and autonomous action and activity. What is sought is a strong; dynamic, entrepreneurial middle class which is economically efficient, acts in a socially responsible manner and lends political support to the concepts of human rights and freedoms, 1iberal-democratic-social and governmental structures, and government by the rule of law.

The social objective – to set at least a minimum standard – is to ensure satisfaction of the basic material needs of the entire national population (that is, nourishment, clothing, accommodation, health care, and education). Entrepreneurs and managers in the private sector bear a social duty to contribute towards ensuring employment and income opportunities, a sufficient supply of goods, better living conditions for the work-force, their families and those otherwise concerned with the enterprise.

The economic objective is to deploy the national resources according to the principles of economics.

The institutional framework for the evolution and development of industrial relations comprises mainly the institutions of workers, employers, and the government which institutionalizes public labour policies through various means such as legislative enactments, executive or administrative orders, and judicial reviews. The objectives and functions of each of the three sides are either facilitated or constrained by environments. Two such important environments under which industrial relations operate are the economic and labour market environments. Their main features pertaining to the ASEAN countries were discussed in the preceding chapter. This chapter examines firstly, the institutional framework with focus on some of the important aspects of the evolution of industrial relations in the ASEAN countries. It then takes up the question of the hypothesized relationship between levels of structural transformation and patterns of industrial relations with specific reference to the ASEAN countries.

For the sake of expositional convenience, we will begin with an examination of the evolution of labour movements and industrial relations in the ASEAN region on a country-by-country basis. This will be followed by a comparison of similarities and differences among national industrial relations systems of the ASEAN countries.

Indonesia

In Indonesia, there are three main pieces of legislation that provide the legal framework for industrial relations. They are: a) the Collective Bargaining Laws of 1954 and 1963, b) the Labour Code (Conditions of Employment) of 1948, and c) the Labour Disputes Acts of 1957 and 1964. In addition to these labour legislation, various labour laws have come into force in the forms of governmental decrees and ministerial regulations.

Since 1974, the government has been actively promoting the state labour policy called Pancasila labour relations. This policy is based upon the Pancasila philosophy which emphasizes the following five principles:

1. Belief in the One Supreme God;

2. Just and civilized humanity:

3. The unity of Indonesia;

4. Democracy wisely led by the wisdom of deliberations among representatives;

5. Social justice for the whole of the people of Indonesia.

The purpose of this work was to examine emerging trends in the industrial relations systems of the ASEAN countries to seek an answer to the question: what is the scope for co-operation among the member countries of ASEAN in the field of industrial relations? One of the criteria for determining the scope for co-operation was the rule, as set out at the beginning, that similar patterns of industrial relations will widen and dissimilar ones will narrow down the areas for co-operation. It was, therefore, necessary to detect emerging patterns of labour and industrial relations in the ASEAN countries in order to apply this rule in a meaningful way. To discover the patterns of industrial relations it was desirable to compare theories of industrial relations, and to reformulate them, taking into account some of the distinctive features of the region. Hence, we developed a conceptual framework for the analysis of industrial relations emerging in the industrializing countries. We then presented some of the major features of the two important environmental subsystems in the ASEAN countries, namely, their economies and the labour markets. Then, we discussed the industrial relations systems of these countries, taking note of similarities in the systems and examining variations in them.

Labour and industrial relations systems have been undergoing profound changes in many industrializing countries. These are largely the result of changes in economic situations. As governments of many developing countries have an obsession to catch up with the more developed countries, their role in bringing about industrialization has increased. One of the requirements of rapid industrialization is capital accumulation on a larger scale. Therefore, governments desiring a rapid industrialization of their countries should facilitate the process of capital accumulation by using various policy measures. Since industrial peace is an important factor related to the process of capital accumulation, many governments have tried to make industrial relations commensurate with the need for industrialization.

However, the extent of emphasis on capital accumulation varies according to the stages of industrialization because of the relationship between the dictates of development and the stages of industrialization.

In the light of the recent discussions concerning closer co-operation among developing countries within Asia and the Pacific region, this study attempts to bring out the salient features of existing economic relations between Thailand (a member of the Association of Southeast Asian Nations [ASEAN]) and countries in South Asia. One of the objectives of this survey is to identify ways and means to improve trade, investment, and other economic exchanges between ASEAN in general, and Thailand in particular, and South Asia. Hence, there are four sections in this paper: trade relations; investment relations; other economic relations; and future co-operation.

TRADE RELATIONS

Before the British occupation of the Indian sub-continent in the last century, Thailand was actively trading with countries in South Asia. Some would even suggest that cultural and trade exchanges began in 320 BC in the reign of King Ashok. For our purpose, it suffices to say that trade flows between Thailand and South Asia have been taking place for several decades. In the last decade, the total value of trade between Thailand and South Asia increased from just under US$19 million to US$125 million (see Tables 1 and 2).

Exports of Thailand to South Asia

Exports of Thailand (see Table 1) to countries in South Asia in 1970 stood at US$8.22 million. By 1979, this figure had increased to US$80.79 million. India and Bangladesh were the two largest customers of Thai exports during the period, with Pakistan and SriLanka ranking third and fourth respectively. In terms of goods, the majority of Thai exports to South Asia consisted of food items, mainly rice, to the extent that fluctuations of rice exports changed the whole picture of trade in some years. Exports of raw materials were a distant second to food items, while the share of manufactured exports was less than 1 per cent in 1970 but increased to 25 per cent in 1979.

The Institute of Southeast Asian Studies (ISEAS) is an autonomous research centre for scholars and other specialists concerned with modern Southeast Asia, including ASEAN. Reflecting this interest, there are several region-wide programmes in economics, politics, and social change based at the Institute. Of particular importance is the work of the ASEAN Economic Research Unit (AERU).

Established in 1979 in response to the need to deepen understanding of economic change and political developments in ASEAN, AERU is guided by an Advisory Committee consisting of senior economists from the ASEAN countries. It has progressed steadily and now has more than twenty-five projects under way or at various stages of completion, with several more in the pipeline. Together, these projects encompass all the priority areas for research recommended by the group of experts invited to the inauguration of the Unit: namely, Investment, Industry and Trade; Finance and Monetary Aspects; Food, Energy and Commodities; Transportation/Shipping; and Political Factors in ASEAN Economic Co-operation.

The largest number of AERU projects come under the broad heading of “Investment, Industry and Trade”. Within this group, those relating to ASEAN's economic relations with its main trading partners are the most prominent, and the project on ASEAN-South Asia Economic Relations falls into this category. It consists of a review of economic relations between the individual ASEAN countries and South Asia on the one hand, and those between the countries of South Asia and ASEAN on the other.

The project was a joint undertaking between the Indian Council for Research on International Economic Relations, the Marga Institute, Colombo, and the Institute of Southeast Asian Studies, and the co-ordinators of the project were Dr Charan Wadhva, Professor of Economics and Marketing, Indian Institute of Management, and Dr Mukul Asher of the Department of Economics, National University of Singapore.

This is perhaps the first study of its kind on South Asia and ASEAN. It is therefore hoped that this pioneering effort will stimulate further research on the complexities and possibilities of the relationship between South Asia and ASEAN.

INTRODUCTION

The beginning of Malaysia-South Asia economic relations can be traced historically back to the pre-British and pre-Islamic period. Historical evidence suggests that brisk trade flows had taken place between the Indian and Malay kingdoms. In modern times, this relationship has grown stronger in absolute terms, although it has been overshadowed in relative terms by the emergence of stronger economic links which have dominated the external relations of Malaysia and South Asian countries. An attempt is made in this paper to outline and analyse the extent and pattern of Malaysia's economic relations with the South Asian countries.

MALAYSIA-SOUTH ASIA TRADE

The seventies witnessed increasing two-way trade flows between Malaysia and most of the South Asian countries. Malaysia's exports to and imports from South Asian countries during the period 1970-80 are given in Tables 1 and 2, respectively. Malaysian exports to South Asia as a whole increased from M$37.9 million in 1970 to M$929.5 million in 1980, while Malaysia's imports from South Asia rose from M$78.1 million in 1970 to M$269.1 million in 1980. It is clear that the growth in the trade flows had been very assymetrical, with Malaysia's exports to South Asia growing by 244 per cent and Malaysia's imports from South Asia registering an increase of 25.3 per cent over the decade. In other words, Malaysia's exports to South Asia had grown roughly ten times faster than its imports from South Asia.

Among the South Asian countries, India has almost always been the single most important trading partner of Malaysia. In 1970, India accounted for 50.7 per cent of Malaysia's exports to South Asia and by 1979 its share had increased to 73.3 per cent (see Table 3). India figures even more prominantly in the imports of Malaysia from South Asia: it accounted for 81.9 and 93.9 per cent of Malaysia's imports from South Asia in 1970 and 1979, respectively (see Table 4).

It is obvious from the preceding list of costs and benefits from the development of multinational banking that the final word on them is not yet in. It may take years to the final assessment of the costs of the international debt crisis. The evolution of new private institutions needed for the generation of information in a deregulated environment is not complete and should continue to evolve in response to new technologies and institutions.

Judgments of the costs and benefits are also coloured by the analysts' faith in unregulated markets on the one hand and the ability of governments to improve welfare through regulation on the other. These characteristics of analysts are highly correlated with their political views. For this reason, the assessment of multinational banking, like that of most economic institutions, often has political overtones.

However, there is a technical and politically rather neutral policy issue concerning multinational banks. During the 1970s the U.S. Government initiated negotiations for the international, collective imposition of regulation of the industry, administered through the IMF, the Bank for International Settlements, or a similar institution. These initiatives went nowhere, as most governments correctly judged that such regulation would push the banks into other countries, which would only be too glad to open their doors to them. There exists no conceivable, voluntary mechanism that could assure that such shifting of bank activities would not take place.

A more sensible policy for the control of multinational banking would be to eliminate the distortion caused by domestic reserve requirements. Not only do these requirements result in distortions in domestic financial markets, they also represent a strong incentive for moving banking operations abroad and into foreign currencies, as noted above. The elimination of these incentives does not require the abandonment of reserve requirements. It would only be necessary to pay interest on the central bank deposits of the commercial banks. That this is so, can easily be seen from the above numerical analysis.

This work is concerned with two main issues: emerging trends in industrial relations systems in the member countries of the Association of Southeast Asian Nations (ASEAN), and inter-country variations in the systems of industrial relations of these countries. The purpose of addressing these issues is to work out a basis for reflecting on prospects for co-operation among the member countries of ASEAN in the field of industrial relations.

ASEAN is an association of five Southeast Asian countries, namely. Indonesia, Malaysia, the Philippines, Singapore, and Thailand. It has experienced a healthy development in its less than two decades of existence. The member nations have defined and redefined the scope of their common interest over the years. They have identified various areas for co-operation, and have actively promoted the idea of regionalism. The area of labour and industrial relations has also come under the purview of ASEAN in the last few years.

A regional approach to labour and industrial relations has become an important theme to the governments, labour and employers in the ASEAN countries. This approach has the undertone of being different in mode and method from that prevalent in the more developed countries. The ASEAN Labour Ministers Meetings, the ASEAN Council of Trade Unions (ACTU), and the ASEAN Confederation of Employers (ACE) are the formal organizations through which this concern is being expressed, and plans of action for co-operation and co-ordination in the field of labour and industrial relations are being proposed. The idea of seeking common ground for co-operation in this area is a welcome one. But we should note with some frustration that not much concrete progress has been made in this respect yet.

Since co-operation or integration or convergence is facilitated by similarities and prohibited by dissimilarities in national industrial relations systems of member countries, the extent of their diversities and their enduring nature will ultimately determine the scope for co-operation. It becomes, therefore, necessary to examine, firstly, the emerging trends in or patterns of evolution of the industrial relations systems of the member countries, and then to look at the enduring nature of the variations among them.

National industrial relations systems are the products of interactions between actors and environments.

INTRODUCTION

Regional economic co-operation among the less developed countries (LDCs) has been receiving increasing attention as a means of achieving “collective self-reliance” in the context of South-South co-operation for promoting a “New International Economic Order”. In line with this is the recently mooted idea for the promotion of an integration scheme in South Asia, where almost a fifth of the world's population lives with a per capita GDP (gross domestic product) of only about US$150 – which is perhaps among the lowest in the world. In the same vein, one can also examine the possibilities and prospects for greater trade and investment co-operation between South Asia and the relatively richer and faster growing neighbouring countries of the Association of Southeast Asian Nations (ASEAN). This study is directed, to a limited extent, towards that end and with particular reference to Bangladesh. Specifically, an effort is made here to assess the current state of trade and tariff co-operation between South Asia and ASEAN in so far as it relates to the position of Bangladesh. This exercise, along with the knowledge on the current investment co-operation (see the paper by Siddiqi in this volume) will hopefully help to identify and formulate selected schemes for strengthening economic relations among the above-mentioned countries.

This study consists of four main sections. In Section II, projections relating to some major components of Bangladesh's balance of payments up to 1990 are presented. An attempt is made next in Section III to analyse the existing trade relations between the two regions with special reference to Bangladesh, providing in particular, a number of measures on trade intensities. Finally, such collaborative measures in the region as the Bangkok Agreement and the Asian Clearing Union are discussed in Section IV. Some observations are also made here on tourism in Bangladesh and on the country's national airlines and shipping facilities.