By Collins Chong Yew Keat
KUALA LUMPUR, Malaysia: Prime Minister Anwar Ibrahim’s visit to India creates a new power move that will benefit the region.
In wanting to increase fallback options and to strengthen the country’s security deterrence, India provides the crucial and safest alternative, as Malaysia seeks to secure a more welcomed security partner.
Malaysia stands as a vital and emerging economic player in the South East Asian region, and with the new focus on future driven critical sectors including on energy transition, digital economy, high technology led economic transformation, critical minerals, semiconductors and EV and others, Malaysia presents a new economic opening for India and complements its Act East Policy.
Bilateral trade totalled US$43.3 billion last year. In 2023, Malaysia became India's third-largest trading partner within ASEAN, with exports primarily driven by palm oil and electronics. Indian tourist arrivals in Malaysia have surged by 165% to 325,000 compared to 2019 figures.
India’s commitment to keep the Indo-Pacific region inclusive, peaceful, rule-based, and open, is in line with ASEAN’s AOIP (ASEAN Outlook on Indo-Pacific). India’s IPOI (Indo-Pacific Oceans’ Initiative) and SAGAR (Security and Growth for All in the Region) initiatives have reaffirmed India’s image as a responsible stakeholder and security provider in the region.
India's digital economy grew 2.4 times faster than the economy between 2014 and 2019 generating around 62.4 million jobs. The size of the digital economy has grown from US$108 billion in 2014 to US$223 billion in 2019.
India is overhauling its local infrastructure domain in a massive leap of physical development. Highways are built at a rate of 28km a day, and railways at 12km a day. The number of airports has doubled in the last 9 years to 148 now.
The need to undertake policy reforms is critical in improving the ease of doing business and a greater investment inflow, which has seen reforms in land acquisition, labor laws, and regulatory frameworks being simplified.
The Make in India initiative that was launched in 2015 covered 27 sectors of the economy, and the manufacturing sector in GDP is set to increase from 13% to 21% of GDP by 2031.
India’s stock market became the 4th largest in the world last May in 2023. It will remain as the fastest growing major economy, expanding three times the pace of the global average with a growth rate of 6-7% until the end of this decade.
As the country emerges from the pandemic, however, a new pattern of growth is getting more visible. India has rolled out a national “tech stack” with rapid digitalisation and connectivity that have transformed the nation, shifting from an informal cash economy into a new century of technology and digital driven reform and advancement. This new core has turbocharged India to be the world’s third-largest startup scene after America’s and China.
Rapid growth in the past several decades has seen the acceleration in urbanization, industrialization, and household incomes. Policy reforms undertaken by Modi have seen several long term strategic action plans in place.
Startups, digital creators, unicorns, gig economy , these are the new vocabulary of the new Bharat, as argued by Modi and the dream of the next 1000 years hinges on the chess moves set by Modi in his reform drive and in tackling core fundamentals including poverty, housing, and income levels.
Modi aspires to turn India into a vishwaguru, or “teacher to the world”. In this sense, technological prowess is his answer.
Beijing’s rapid ascendency in the past three decades have transformed the entire power and economic equation in the region, and until recently, there is no adequate power balancer to this new power dynamic apart from the West.
India became the 5th largest economy (GDP of US $3.75 trillion economy) by September 2022, rising from 10th position in 2014 to 5th largest in a span of 9 years. In latest projections, India is set to become the world’s 3rd largest economy by 2027, in the next three years, providing the critical buffer and alternative to the Chinese led drive.
It is now the most populous nation on Earth with a population of 1.4 billion. Most importantly, the median age is just around 28 years, and a rising population of about 900 million in the working age (15-60 years).It remains a relatively young nation with 65% below the age of 35 years.
For the next 20 years, 25% of the increase in global energy demand is going to come from India, with the target of net zero emissions by 2070. New Delhi is ranked 3rd in the renewable energy country attractive index.
India's semiconductor industry is expected to reach $8.32 billion in 2024, growing annually by 8.68%. The country aims to become the world's largest semiconductor manufacturing hub within 4-5 years, focusing on integrated circuits and system-on-chip technologies.
Malaysia forms an integral plan of its Act East Policy, as Malaysia is strategically located within India’s necklace of diamonds counter balancing strategy against China. India’s strategic dominance and base in Andaman Sea and Nicobar Island chain will further strengthen its blue water navy and power postures.
Malaysia is also heavily dependent on India for its domestic food supply.
In March, Malaysia’s government put in a request to import an additional 500,000 metric tonnes of rice from the world’s largest rice exporter. The request was on top of an earlier rice export quota of 170,000 metric tonnes allocated for Malaysia for the year.
With renewed traditional threats especially in the region from the South China Sea conflict to tensions in East Asia, Malaysia will get greater security assurances from increased interoperability exchanges with the Indian military and deepening defence partnerships which will create further leverage and options for the country, especially in seeing how the next flashpoints and geo-strategic focus will be in the Indian Ocean and the strategic pathways of Straits of Malacca and the Nicobar Island chain.
Malaysia must continue to deepen economic ties with India, but also in gaining enough multiplier impact to have the spillover effects in terms of bolstering people to people ties and gaining higher trust and confidence in the sphere of top level government to government engagements and the synergy among the business and the youth segments, transcending Track I and Track II alone.
The overall domain of deeper trust and economic interdependence will create a solid foundation moving forward.
Malaysia must increase economic, technological and trade presence in the next economic giant and to capitalize on India’s booming technology and digital economy and the critical areas of scientific advancement in advancing greater security assurances and bolstering joint support and trust in facing common geopolitical threats and challenges.
The visit by Prime Minister Anwar must set the new foundation towards a new path of deep-rooted critical ties for mutual returns and shared peace and prosperity.
*Collins Chong Yew Keat is Foreign Affairs, Strategy and Security Analyst with Universiti Malaya.*
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