The Hindu Business Line : Bonding with Malaysia

IN MAY 2001, the then Prime Minister, Mr Atal Bihari Vajpayee, visited Malaysia, as part of the NDA Government's "look East" policy. His high-level Indian delegation included 70 business leaders, which indicated clearly what New Delhi wanted. More than three year later, the Malaysian Prime Minister, Mr Abdullah Ahmad Badawi, came to India heading a large delegation, "to build new bridges, construct new economic alliances and generate fresh economic cooperation" since his country was now "increasingly looking West — towards India and West Asia". Clearly, there is a strategic economic policy convergence between the two countries, which can yield large benefits to both.

Going by plain figures, the progress so far has been satisfactory. In 2001, when the bilateral trade was around $2.5 billion, Mr Vajpayee had said that the target was to double the level by 2004. Now, Mr Badawi thinks the bilateral trade would probably cross $4.5 billion by the end of this year (last year it was $3.2 billion). Yet this is not enough. As Mr Badawi pointed out rightly, while Indian investors have sunk nearly $500 million in petrochemicals, textiles, food manufacturing, chemical and rubber products in his country and Malaysian companies have invested similarly in India, these "appear very little when seen against the vastness of opportunity" provided by the two economies.

During Mr Badawi's visit 12 MoUs were signed in areas ranging from railways to biotechnology though two agreements of note were on cooperation in space (pooling of satellite capacities) and the construction of a new international airport at Hyderabad. But the litmus test will be the pace of implementation of these MoUs. Infrastructure, particularly roads, has been a prime area of interest for Malaysia, which had tried to get as large a slice as possible of the huge national road-building programme initiated by the Vajpayee Government. Kuala Lumpur is also looking ahead, and, given the time Mr Badawi spent visiting Bangalore, the focus is obviously the IT sector, probably trying to learn how it has made it big rather than actually participating in the business generated by it. Cooperation in the oil and gas sector is another promising sphere, New Delhi seeking a "wide-ranging partnership" with Kuala Lumpur in exploring and developing oil and gas fields in Iran and Russia.

If one remembers the strong protests made at the highest levels during Mr Vajpayee's visit to Kuala Lumpur in 2001 on the 75 per cent import duty levied on palm oil exports (accounting for a chunk of total Malaysian exports to India), Mr Badawi's suggestion that there should be "some form of a free trade agreement" between the two countries becomes easily understandable. Not that New Delhi will not stand to gain from such an arrangement but Malaysians stand to reap a richer reward simply because of the huge Indian market, which is not quite the case for India vis-à-vis Malaysia. Indeed, the economic importance of Malaysia to India has more to do with the former's place in the Association of South-East Asian Nations than anything else, an argument that can of course cut both ways because of Asean's access to the Indian market through Malaysia.

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