India-Asean Economic Cooperation: Fostering Greater Trade and Investments

Michael Alfred V. Ignacio Commercial Counsellor Embassy of the Republic of the Philippines New Delhi

The ASEAN Economic Community

ASEAN

Economic Community at a Glance ASEAN Economy A Highly Competitive Economic Region With a combined GDP of US$2.6 trillion in 2014, ASEAN economy was the largest in the world and the

7th 3rd largest in Asia

ASEAN Population A Region Fully Integrated Community In 2014, ASEAN was the

3rd

largest market in the world with 622 million people behind only China and India

ASEAN FDI A World Class Investment Destination ASEAN attracted

US$136 billion

in FDI in 2014, accounting for 11% of global FDI inflows, up from only 5% in 2007

ASEAN Connectivity A More Connected Community Annual tourist arrivals were up from 62 million in 2007 to 105 million in 2014, almost half of which were intra-ASEAN

The rate of Internet subscription more than doubled from 11.8 per 100 inhabitants in 2007 to 28.6 in 2014

ASEAN Trade A More Integrated Market Total trade increased by nearly

US$1 trillion

between 2007 and 2014, with intra-ASEAN trade comprising the largest share of ASEAN's total trade by partner.

one vision one identity one community

Timeline ❖

The Association of Southeast Asian Nations (ASEAN) was established on 8 August 1967.

❖

The Member States of the Association are Brunei Darussalam, Cambodia, Indonesia, Lao PDR, Malaysia, Myanmar, Philippines, Singapore, Thailand and Viet Nam.

❖

The ASEAN Secretariat is based in Jakarta, Indonesia.

❖

In 2007 the AEC Blueprint was adopted

❖

In 2015 The AEC was formally established

Economy ❖

Between 2007 and 2014, ASEAN GDP nearly doubled to an aggregate of US$2.6 Trillion in 2014

❖

Current GDP per capita increased by 76% GDP per Capita across all 10 member states

❖

In 2014, the ASEAN was the 7th largest economy in the world and the 3rd largest in Asia

People ❖

In 2014, ASEAN Population was the 3rd largest in the world at 622 Million.

❖

Over half of its people are below 30 years of age in 2014.

❖

About half of all ASEAN Population are in Indonesia and the Philippines

Trade ❖

By end 2014, Total ASEAN Trade amounted to US$2.5 Trillion.

❖

24% of Total ASEAN Trade is comprised of Intra-ASEAN trading, among ASEAN member countries.

FDI ❖

Total FDI Inflows amounted to US$136 Billion in 2014.

❖

This was 11% of the world’s FDIs.

❖

Intra-ASEAN FDI comprised the 2nd highest source of Inflows at US$24 Billion, after the EU.

Connectivity

❖

ASEAN tourist arrivals were at 105 million in 2014.

❖

Half of the tourists were from within the ASEAN Region.

❖

Internet Subscription increased by more than 100% to 28.6 per 100 habitants.

ASEAN-India Relations ❖ The

ASEAN-India Framework Agreement on Economic Cooperation was signed in 2003, paving the way for the establishment of an ASEAN-India Free Trade Area (AIFTA)

❖ The

ASEAN-India Trade in Goods Agreement (AITIGA) was signed in 2009. The Philippines has since implemented its tariff commitments.

❖ The

ASEAN India Trade in Services Agreement and the ASEAN-India Investment Agreement were signed on November 2016. The ASEAN India Investments Agreement was ratified by the Philippines in December 2015.

❖ ASEAN-India

Services agreement is still pending ratification by the following countries: Cambodia, Indonesia, Lao PDR and the Philippines, following internal ratification review procedures of these countries.

❖ INDIA

is pursuing very strong engagements with ASEAN through its laudable ACT EAST POLICY

❖ ASEAN

and INDIA are part of the RCEP Trading Block

Philippines: your ideal gateway to the ASEAN Market ❖

100 Million Population Market with consistent average of 6% GDP Growth for the past 5 years or more.

❖

Entry into Force of the ASEAN Economic Community and access to 622 Million Population Economy

❖

Strategically located Freeports i.e.: Freeports: Subic Bay Freeport Zone (Marine Port) and Clark Freeport Zone (Airport) former US Bases and 300+ Economic Zones all over the Country with unmatched Fiscal and Non-Fiscal Incentives

Philippines: your ideal gateway to the ASEAN Market Critical Market Access

The country’s location is a critical entry point to over 600 million people in the ASEAN Market and a natural gateway to the East- Asian economies. The recent entry into force of the ASEAN Economic Community makes the South East Asian Region an important global trading block composed of countries consistently posting some of the highest economic growth rates int the world. The country is likewise placed at the crossroads of international shipping and airlines. Within Asia, the Philippines is reachable within 3 to 4 hours by plane.

Philippines: your ideal gateway to the ASEAN Market ❖

Like India, English is the main language of Business and is a major player in the Global IT-BPM Value Chain.

❖

Strategic Location - within 4 hours from every major East Asian Capital and easy access to the world’s Major Waterways and Air Routes

❖

The Only ASEAN country currently enjoying GSP + Privileges in the EU (Zero Tariffs on up to 6,000 product lines)

❖

US GSP availment, Foothold in the US Market for Goods and Services

❖

Entry into Force of the EFTAPhilippines FTA

❖

APEC-Member country

Tarlac Clark Subic Bataa

Manil

277 Fully Operating Economic Zones Philippine Economic Zone Authority - attached to the Department of Trade and Industry - is the Philippine government agency tasked to promote investments, extend assistance, register, grant incentives to and facilitate the business operations of investors in export-oriented manufacturing and service facilities inside selected areas throughout the country proclaimed by the President of the Philippines as PEZA Special Economic Zones. It oversees and administers incentives to developers/ operators of and locators in worldclass, r e a d y - t o - o c c u p y, environment-friendly, secured and competitively priced Special Economic Zones (see List of Economic Zones)

Tax & Fiscal Incentives ❖

5% Special Gross Income Earned

❖

Exemption from all Local and National Taxes

❖

Tax and Duty Free Importation of Equipment and Raw Materials

❖

Exemptions from Real Property Tax

❖

Free Movement of Finished Goods within the Freeport

❖

Special Visas for Investors

Philippines: your ideal gateway to the ASEAN Market Critical Market Access ❖

Proof of Concept: 14 out of the top 15 Indian IT-BPS Companies have chosen the Philippines as its second home, in keeping with standard industry demand for a secure and competitive secondary service delivery location

❖

Both countries have individual strengths and unique service offerings that are globally competitive and widely sought after

❖

English is a common language

Philippines: your ideal gateway to the ASEAN Market Critical Market Access The Philippine IT-BPS Growth Trajectory Philippine IT-BPM industry size 2006–2015; US$ billion

x%

YoY Growth

19% 22%

24% 25% 17%

34% 45% 3.4

# FTEs (~‘000)

31% 4.5

6.1

19% 16.1

22.0

18.9

13.2 11.0

8.9 7.1

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

236

298

371

424

527

640

777

917

1071

1100

1Philippines IT-BPM market as percentage of global offshore services market, in revenue terms Sources: BPAP, ACPI, CCAP, GDAP, HIMOAP, PSIA Copyright ©2014: BPAP. All rights reserved.

Philippines: your ideal gateway to the ASEAN Market Critical Market Access India’s IT-BPM Companies in PH NASSCOM TOP BPM Companies Rank

Company Name

NASSCOM TOP IT Companies Rank

Company Name

1

Genpact Ltd.

1

Tata Consultancy Services Ltd

2

Tata Consultancy Services Ltd

2

Infosys Ltd

3

Serco Global Services

3

Wipro Ltd

4

Wipro BPO

4

HCL Technologies Ltd

5

Infosys BPO

5

Tech Mahindra Ltd

6

WNS Global Services (P) Ltd

6

L&T

7

Firstsource Solutions Ltd.

7

Syntel Ltd

8

Aegis Ltd.*

8

MphasiS Ltd

9

Hinduja Global Solutions Ltd

9

Genpact India Pvt. Ltd.

10

EXL

10

MindTree Ltd **

Philippine IT-BPS Global Footprint & Key Markets Revenue Contribution by Regions (%, 100% = USD 18.4 BN)

77%

9%

5%

9%

IBPAP, Tholons Analysis

IT-BPS Services Delivered

IBPAP, CCAP, HIMOAP, Tholons Analysis

•

The Philippines remains the Global Leader in Contact Centers , exceeding growth projections by 3%

•

The Non-voice BPM market is being led by Finance & Accounting and the GICs, the market size of about USD 3.6 BN is expected to grow upwards of 22%

•

Healthcare Information Management Services crossed the USD 1 BN market employing ~80k employees

•

The Animation Services sees massive growth among the freelancing community

•

Game Development is another creative outsourcing strength with huge potential for collaboration.

Contact Center Service Offerings

Language Support

Philippine Trade & Investment Center in New Delhi ❖

The Philippine Trade and Investment Centre (PTIC) in New Delhi is the Commercial Section of the Philippine Embassy in New Delhi and the representative office of the Philippine Department of Trade and Industry in India supporting the Philippine Missions in Nepal, Pakistan, Bangladesh and Sri Lanka.

The Philippine Trade & Investment Centre Embassy of the Republic of the Philippines 50-N Nyaya Marg, Chanakyapuri, New Delhi, Delhi 110021, India Contact Details: +91 11 2410 5017 [email protected] investphilippinesindia.org