An opportune time for India to further strengthen ties with both ASEAN nations
HISTORICAL BACKGROUND
The Filipinos, living over 7,000 islands, continue to be loyal to their immediate communities and still identify themselves by the particular barangay (boatload ) that brought their ancestors from the Indonesian islands in the early centuries of the Christian era. Without a strong historical tradition, a common language, or a national consciousness, and due to being constantly told by the foreign clergy and friars that they were intellectually inferior, allowed the Spaniards to rule with comparative ease for over 300 years. In 1899, the United States of America, the “new imperialist” with a sizeable navy, took over the Philippine Islands from the Spaniards, who had surrendered Manila, the capital city, in a behind-the-scenes transaction without scoring a military victory.
The years of relative non-involvement in Filipino affairs by US in late 1930s had made the Japanese interested in its lumber, hemp, and copra. They gained significant control over the iron, manganese, and copper mines. Soon after bombing Pearl Harbor in December 1941, the Japanese attacked Philippines. Though the US forces and Filipino guerrillas prevented a complete Japanese takeover, the Japanese left behind a mark on the natives with their industriousness and technology. This ultimately proved to be a blessing in the long run for the predominantly agrarian nation.
Modern Indian relations with Philippines date back to the Anglo-Spaniard War of 1860s when the British colonisers had dispatched 800 Indian soldiers to fight on their behalf. Trade contacts, however, date back several centuries. Several Sanskrit words in the Filipino language bear evidence of the old cultural exchanges. About 120,000 Indian-origin persons live there as citizens.
ECONOMIC & SOCIAL EVOLUTION
The US rule over Philippines benefited a minority of Filipinos involved in agricultural production and exports. The Americans, in vain, endeavoured to limit the size of landholdings owned by individuals and corporations, resulting in only a few thousand peasants, tenants, and workers, receiving new land titles. US capital was hesitant to invest in Philippines due to uncertainty regarding its independence. By 1940, only $14 million (0.2% of USA’s GDP) was invested, mainly in sugarcane, tobacco, and hemp plantations. Extensive imports of US manufactured goods prevented local industrialization, including handicrafts. Shipping and rail construction and operations, remained largely in British hands.
USA, however, contributed significantly to improving healthcare and education. 1,000 dispensaries and 40 hospitals were established, checking epidemics of cholera and smallpox, reducing infant mortality, and raising life expectancy from 14 years in 1900 to 40 years by 1940. The Taft Commission of 1901 had enabled 600 American primary teachers to establish universal, free, secular education. By 1922, 22% of public expenditure was allocated to education, extending free public education to every barrio (farming village). Literacy levels rose north of 50%, and Philippines saw more college and university students than any other Asian nation except Japan. English became the most spoken language, and substantive social changes ensued.
A HALTING DEMOCRACY, THE U.S. RELATIONSHIP, AND DIVERSIFICATION IN FOREIGN RELATIONS
The inspiration for the independent Philippines’ Constitution came from America, providing for a unitary government with centralized power in a directly elected President, separation of powers among the legislature, executive, judiciary, and a bicameral legislature. Despite the elaborate scheme of governance, the country witnessed numerous organized attempts at deviation, particularly during the long Marcos regime (1965-1985). Orderliness in democracy and restoration of human rights were pursued by his successor, Corazon Aquino (1986-1992), though communist insurgency and Muslim secessionists diverted her government’s attention from addressing the numerous economic and social ills. The return to traditional politics, dominated by a handful of known political-families blending wealth and power, had smeared the well-endowed nation with high levels of corruption, government inefficiency and widespread poverty. While the deviant behaviour of the elite persists, it is somewhat more manageable, largely due to adverse public opinion.
Initially, USA restricted the Philippines’ trade options, linked peso to the US dollar, and allowed outflow of its capital to US. Later, the peso-dollar linkage was severed, but US entrepreneurs continued to compete in local businesses on same terms as Filipino citizens. USA negotiated vast tracts of land for establishing two dozen military bases. Under nationalist pressure, their sizes were reduced, and Filipino jurisdiction was permitted. In the late 1990s, a volcanic eruption forced the closure of Clark Air Base, but the Subic Bay naval facility remains operational even now.
Philippines had its only dispute with an ASEAN nation in 1963 when it confronted Malaysia over Sabah, North Borneo, as both nations claimed the territory. However, upon Philippines relenting due to the possibility of Muslim fundamentalism spreading from Sabah, the two neighbours have since cooperated, both within and outside ASEAN.
While maintaining cordial relations with USA, Philippines has been diversifying its foreign relations. With Japan, it has built strong economic ties in trade and investment. Proximity between Philippines and China has grown not merely through bilateral trade and capital flows, but also in international arena. However, China’s ambitions in South China Sea, including its “nine-dash line” claims, creation of artificial islands, establishment of military bases, and unilateral Air Defense Identification Zones, have been a dampening factor. Philippines sought adjudication from the International Court of Justice regarding the Spratly Islands, nearby waterways, and Scarborough Shoal. Instead of going by the unanimous verdict in favour of Philippines, and in violation of the UN Convention on Law of the Sea (UNCLOS), China has chosen to aggressively enforce its claims, resulting in frequent confrontations and heightened regional tensions.
Philippines has gained open support in this contestation with China from Vietnam, Indonesia, Malaysia, and Brunei, with tacit backing from Singapore, Taiwan, Japan, and South Korea. All these nations have a direct interest in maintenance of unfettered navigation in South China Sea, a critical passage for one-third of global maritime trade. This solidarity is reshaping the region’s geopolitics, with ASEAN members leveraging their platform to strengthen ties and others aligning with Western powers led by USA. China’s persistent obstinacy is rapidly reshaping the geopolitics of the region. Solidarity is gradually manifesting itself among affected nations and is expected to extend to their economic and political ties. ASEAN members have an established platform to advance these collaborations, while others are increasingly drifting towards Western powers led by USA.
Since 2010, Philippines has recorded an average GDP growth of 6%. With a per capita income of $4,100, it is now a high-middle-income country transitioning from agriculture to industry and services. Agriculture’s GDP share has fallen to 8%, employing 25% of workforce. Industry, dominated by electronics, machinery, and electrical products, contributes 26%, while services dominate with 64%. Industrial output is exported to nearby Asian nations as well as to developed USA, while imports of rice, electronic components, chemicals, mineral oils, and plastics come from various global sources, annually exceeding exports by approximately $20 billion. Key challenges include an unemployment rate of 3.5%, poverty levels at 15%, significant income and wealth inequalities, and the frequent devastation caused by natural disasters.
The average household consumption constitutes 73% of GDP, government expenditure accounts for 14%, and capital formation is 24%. Such positive parameters have made its economy capable of doubling in size and per capita income by 2030. High levels of literacy and skills, strong gender parity, and significant women’s workforce- participation have supported the consistent growth of technology-based industries and services, which now occupy a lion’s share of the economy.
INDO-PHILIPPINES TIES
The two countries signed a Friendship Treaty way back in 1952 and a Trade Agreement in 1979. Bilateral trade has gradually but consistently increased to US$2.6 billion and remains in India’s favour. To boost exports, India can explore sending high-quality rice, the staple food in Philippines, as well as branded pharmaceuticals and affordable Indian motorbikes and three-wheelers, particularly battery-operated models. Under the India-ASEAN 2010 pact, trade flows have been significantly eased. Reciprocity requires India to increase imports, with electronic and electrical items, along with machinery for manufacturing, being promising candidates.
Indian businesses have been investing in Philippines, beginning with Aditya Birla establishing a textile mill that produces 40% of the country’s yarn. A more diversified investment bouquet needs to be explored to support local manufacturing for the large and growing domestic market, as well as for third countries. India’s prowess in digitalization, IT-enabled services, automobiles, energy, and infrastructure development can serve as key drivers to double bilateral trade and investments by 2030.
The Indian and Philippine Navies have been conducting joint training exercises, with their naval ships periodically undertaking goodwill visits. Training of personnel in one another’s establishments has been ongoing. Under a separate ASEAN pact, intelligence on terrorist activities and their movements is actively gathered and shared. Scores of Indian students enroll annually at the well-established Filipino colleges and universities for professional and other courses. During the celebration of 75 years of diplomatic relations last November, Indian Foreign Minister S. Jaishankar emphasized the importance of further strengthening bilateral defense ties, people-to-people connections, and education cum skill training initiatives.
All these areas are amenable for rapid and significant expansion.
BRUNEI DARUSSALAM
The small nation of Brunei Darussalam came into existence in 1984 having been a British protectorate since 1888. Covering 2,226 square miles with a population of half a million, it is located in the northwestern part of Borneo, facing South China Sea and surrounded by East Malaysia. Seventy per cent of its population is Malayan, with the country’s culture, customs, and ceremonies deeply rooted in its Malay heritage. A quarter of residents are of Chinese descent. In 1963, Brunei’s leadership proudly refused to join the Federation of Malaysia, successfully preserving its independent identity.
Oil and gas, discovered in 1929, have been the core economic pillars of Brunei Darussalam, transforming the country’s political and strategic significance. Its government, under a Sultan, operates as a benevolent autocracy. Initially, few individuals outside the ruling family held significant government positions, and it was only in late 1985 that the Brunei National Democratic Party of Singaporean origin, was allowed. By joining ASEAN, Brunei established an effective consultative mechanism to address concerns about its larger and stronger neighbours, Malaysia and Indonesia.
Brunei’s GDP, per capita income, and other macroeconomic indicators are consistent with those of a middle-income nation. Its gas exports are significant and surpass oil in value, but the country imports a wide range of essential goods and other merchandise. Its currency, the Brunei ringgit, or dollar, is strong and has been pegged to the Singapore dollar. The country has invested heavily in acquiring modern armaments for its defence while simultaneously building close bilateral ties with its next door neighbour, Singapore, on economic and strategic matters.
Brunei’s Wawasan, or the state vision, envisages achieving a significant reduction in reliance on hydrocarbons by 2035 through the promotion of downstream industries and setting up a string of economic clusters equipped with state-of-the-art infrastructure. The Vision recognizes that achieving these development goals requires prioritizing political stability, security, enhanced education, environmental sustainability, and the creation of robust social security networks. Cleaner industries being actively promoted include information and communication technology, halal manufacturing, tourism, and the development of natural attractions such as beaches, forests, and parks.
In the last 40 years, Brunei has assiduously built cordial relations with its immediate neighbours and China, which has actively sought greater integration with ASEAN. However, China’s assertive stance over South China Sea has prompted Brunei to diversify its external partnerships. The growing naval presence of USA and India in the Indo-Pacific, coupled with their focus on maritime security, has made both nations attractive partners for Brunei to safeguard its territorial waters.
In the evolving geopolitical landscape, India is carefully charting its moves. Last September, Prime Minister Narendra Modi travelled to Bandar Seri Begawan, Brunei’s capital, to assure Sultan Haji Hassanal Bolkiah of India’s commitment to further strengthening decades-old economic, cultural, and educational ties, while deepening strategic relations. Brunei exports natural gas and crude oil to India, and a satellite monitoring centre operated by ISRO in Brunei plays a critical role in India’s space program. The two nations are discussing collaboration in defence matters. Cementing of bilateral ties can also be pursued through Indian private investors establishing manufacturing facilities for electronics assembly, pharmaceuticals, healthcare, and digitalization to serve both local and ASEAN markets.
* Dr Ajay Dua, a development economist, is a former Union Secretary, Commerce & Industry.
The last piece in the Southeast Asia series on Indo-Singapore ties will follow.