Column - Integration, openness go hand in hand

IT was significant that the Asian Business Leaders’ Conclave, held in Kuala Lumpur on Dec 14, 2016 was opened by speeches that were given by the prime ministers of India and Malaysia.

The theme of the conference was “Moving towards a boundaryless Asia,” a topic that had a waft of ambition that was enormous in magnitude.

There is little doubt that India and Malaysia should be partners in the venture to create a “boundaryless” Asia. Malaysia, by virtue of its economic standing in Asean and location, is poised to lead the project to achieve a boundaryless Asia. It also has the added advantage of enjoying extremely close ties with China, almost to the point of being highly favoured by China.

This has its roots in the diplomatic relationship that the current prime minister’s father, Tun Abdul Razak, had established with the giant at a time when most other countries held their distance from it. Prime Minister Datuk Seri Najib Abdul Razak has deepened those links.

India, for its part, has a more precarious relationship with China. While it seems that India has not quite figured how it will react to China, all indications point to an India that wants to keep its military and security questions quite apart from those pertaining to economic engagement. India has a fairly complex equation with China. At the level of economic cooperation, the two giants will share a fair bit of common ground. This is where India’s role as an intermediary will come in to play as it draws the major powers in Asia together, in an effort to link them with Southeast Asia. It is in this context that the Asian Business Leaders’ Conclave has importance, if any at all.

At this conference Prime Minister Modi stressed the importance of integration. He pointed out that “integration cannot happen without openness”. This is absolutely correct.

Without indicating the obstacles that lie in the way of openness – which he obviously could not have at an occasion such as the one he was participating in through video conferencing – Modi went on to stress how business-friendly India is turning out to be. Modi also tried to run through quickly on the successes that India has achieved in trying to transform itself.

India’s ability to act as the connecting bridge cannot work without its self-transformation, which in effect would imply liberalising its economy and facilitating “creative destruction”. Its old mould of socialism will not help it create a borderless Asia. There is no need to reiterate that China has itself re-invented its own form of capitalism while also maintaining the Communist party. There are definite domestic speed breakers that Modi has to deal with in pursuing the Boundaryless Asia plan.

Aside from handling domestic resistance to economic transformation, Modi will have to lay out a clear plan on how he wishes to contribute to a borderless Asia. There is, on one hand, the Regional Comprehensive Economic Partnership (RCEP) agreement that is being hammered out. This work in progress has not been completed within the scheduled timeline. There have been constraints and disagreements, and it is hoped that the RCEP will be ironed out by the end of 2017.

But then, the Boundaryless Asia project goes beyond RCEP, although all of Southeast Asia would fall within Asia and so would all of Northeast Asia. These are considerations that Modi would have to fix.

Malaysia as an open economy has been successful in achieving a high degree of openness. Trade and investment openness has been very much a part of the country’s domestic reform agenda. There are some limitations to Malaysia’s speed in opening up due to the exigencies of achieving some balance with local pressures. But, by and large, Malaysia stands high on this count. Expectations have risen, and now Malaysia is being compared with Singapore, a tough standard to match; but that would be the next hurdle to overcome.

Several commentators have criticised the Malaysian government for leaning excessively in favour of China. This may be a disadvantage in itself owing to concerns that Malaysia may fall within the folds of China once it is dragged into China’s sphere of influence. It is feared that this may happen via the massive infrastructure projects that Malaysia is getting into.

On the flip side, Malaysia may be able to take advantage of its closeness with China to join India in brokering a smooth, seemless Asia. This may result in the beginning of the much envisioned Asian Century, an Asia for Asia, one that will be the centre of global power and stability.

But the conclave did not go far enough to delve into the details of the plan. Neither did it outline the processes that would support the plan. The conference was more a meeting of industry leaders. A gaping absence was that of adequate representation from Chinese captains of industry and government officials.

One can only hope that this is one among many small steps towards achieving the goal of a Boundaryless Asia. At any rate, it is heartening that the leaders of both nations have an interest in the notion, and that the Indian corporate sector is keen to lend its support.

Shankaran Nambiar is author of the recently published book, “Malaysia in Troubled Times.” Comments: