According to India Exim Bank’s Study, CLMV countries are amongst the fastest growing countries not only within the ASEAN region, but also globally. Moreover, CLMV countries have the lowest wage rates among ASEAN countries leading to lower costs of production.
Though the current pandemic and subsequent measures to contain the spread had hit economic activities hard in the first half in the region, through reduced tourist arrivals, disrupted supply chains and dwindling external demand, the economies are already on a path of recovery.
To catch up with the rest of ASEAN countries in terms of economic development, however, there is a growing demand for building infrastructure both in terms of new infrastructure and upgradation of existing infrastructure that are critical to sustain growth in the region. The current status of infrastructure (physical connectivity, digital and utility) indicates that except for Vietnam, infrastructure in the rest of CLMV countries needs to be scaled up to integrate themselves fully into the ASEAN Economic Community.
The study also highlights the crucial role infrastructure plays in facilitating trade and investment in the region. Despite recent improvements in infrastructure financing, the annual infrastructure deficit of ASEAN, including CLMV countries, continued to remain high at US$ 184 billion. In this regard, to facilitate infrastructure development and address the financing gap, innovative mechanism of financing besides traditional financing methods need to be explored to increase private sector involvement, which could include, among others, infrastructure bonds and public private partnership (PPP).
India and CLMV’s robust trade synergy, which grew much faster than average growth in India-ASEAN trade in the last decade is testimony to the longstanding partnership built over the years. In this context, the study identifies potential areas of cooperation between India and CLMV which include, among others, energy sector and water management, e-commerce and digital connectivity, and physical connectivity network including rail, road, air and sea. There is also an urgent need to improve the necessary border infrastructure at trading points to facilitate cross-border movement of goods between India and Myanmar.
Within India-CLMV partnership, companies from both India and CLMV would be able to benefit from improved connectivity and logistics, integrated supply chains, abundance of low cost skilled labor, resulting in spillover benefits such as technological upgradation, production efficiencies and improved regional competitiveness.
V Muraleedharan, Minister of State for External Affairs; Dr. Guru Prasad Mohapatra, Secretary, Department for Promotion of Industry and Internal Trade, Ministry of Commerce and Industry, Chhuon Dara, Secretary of State, Ministry of Commerce, Kingdom of Cambodia; Cao Quoc Hung, Deputy Minister of Industry and Trade, Vietnam; Ms Khemmani Pholsena, Minister of Industry and Commerce, Lao PDR; Dr Than Myint, Minister of Commerce, Myanmar, Mr. Uday Kotak, President, Confederation of Indian Industry, and Managing Director, Kotak Mahindra Bank, and Mr. Chandrajit Banerjee, Director General, Confederation of Indian Industry participated at the launch of the study.