Catalyzing Indo-ASEAN Investment Relations

A Presentation by

Mr. S. R. RaoExecutive Director

Export-Import Bank of IndiaNovember 24, 2008, New Delhi

TREND IN INDOTREND IN INDO--ASEAN ASEAN INVESTMENT RELATIONSINVESTMENT RELATIONS

4

Trend in FDI Flows in ASEAN Region

19.9

35.239.1

51.260.5

5.414.2 13.8

22.2

33.5

0.0

10.0

20.0

30.0

40.0

50.0

60.0

70.0

2003 2004 2005 2006 2007

FDI Inflows FDI Outflows

Strong Growth in Investments (US$ bn)

FDI inflows to ASEAN region increased more than three-fold, during 2003 to 2007FDI outflows from ASEAN region increased more than six-fold, during the same periodScope for further FDI outflows from the region

Source: UNCTAD

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India-ASEAN Investment Relations

Singapore is the second largest source for India’s global FDI inflows FDI from ASEAN region into India during the period April 2000 – July 2008 totaled US$ 6.0 bnASEAN accounted for 8% of India’s total FDI inflows (US$ 74.8 bn), during the same periodThus, scope for attracting more FDI from the ASEAN region ASEAN region’s stock of FDI outflows amounted to US$ 243 bnin 2007; ASEAN region’s annual FDI outflows in 2007 stood at US$ 33.5 bnScope to enhance ASEAN’s FDI into India

Country-wise FDI Inflows from ASEAN, April 2000-July 2008, (US$ mn)

India's Global FDI Inflows 74830.2ASEAN Total 6050.3Singapore 5808.5Malaysia 155.4Thailand 42.7Indonesia 33.9Myanmar 9.0Philippines 0.7Vietnam 0.1

Source: Department of Industrial Policy and Promotion, MOCI, Govt. of India

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India-ASEAN Investment Relations

Singapore is the largest

destination for India’s global FDI

outflows.

Indian Investments in ASEAN

region amounted to US$ 9.7 bn,

during April 1996 to December

2007.

Thus, ASEAN’s share in India’s

total FDI outflows accounted for

19.6%, during the same period.

Country-wise FDI Outflows to ASEAN, April 1996-December 2007, (US$ mn)

India's Global FDI Outflows (Approvals) 49701.5ASEAN Total 9726.0Singapore 8906.6Vietnam 308.5Indonesia 165.8Thailand 154.8Malaysia 80.1Myanmar 71.4Philippines 24.3Cambodia 14.5

Source: Department of Economic Affairs, MOF, Govt. of India

EXIM BANK: EXIM BANK: INITIATIVES IN ASEAN REGIONINITIATIVES IN ASEAN REGION

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Range of Products & Services

Pre-Shipment

Export Marketing

Export Production

Export Product

Development

Import Finance

Advisory Services

Investment Abroad

Post-Shipment

At All Stages of Export Business Cycle

INFORMATION

AdvisoryServices

Knowledge Building

SUPPLEMENTS FINANCING PROGRAMMES

Value Based Services to Exporters

FINANCING, FACILITATING INDIAFINANCING, FACILITATING INDIA’’S TWO WAY TRADE & INVESTMENTS TWO WAY TRADE & INVESTMENT

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Financing Programmes

Financing Programmes (Various Currencies)

Export CreditExport Credit Import CreditImport Credit Loans for Exporting UnitsLoans for Exporting Units

Medium / Long Term

- Lines of Credit

- Buyer’s Credit

- Supplier’s Credit

Short Term

- Pre/Post Shipment Credit

- Import Loan for capital goods

- Bulk Import Loan for Raw Materials

- Term Loans for expansion/ diversification/ new projects/ export product development/ export marketing/ research & development

- Term Loans for overseas equity investment

- Direct equity stake in Indian/ Overseas ventures of exporting companies

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LINES OF CREDITA Catalyst for Trade Promotion

LOC is a proactive mechanism to promote exports of goods and services from India to target countries.SMEs can significantly benefit with no payment risks. Besides its own LOCs to overseas entities, Exim Bank also extends and operates LOCs at the behest of the Government of India.During 2007-08, 17 LOCs amounting to US$ 704 mn. extended.106 LOCs covering 93 countries across continents, with credit commitments aggregating US$ 3.45 bn are available for utilisation.

In the ASEAN region, Exim Bank of India has extended ten LOCs;Government of Lao PDR - transmission lines, hydro power, rural electrificationMyanma Foreign Trade Bank, Myanmar (six LOCs) - railway system, hydro power, refinery, wire manufacturingGovernment of Vietnam (two LOCs) - hydro power, general purposeGovernment of Cambodia - purchase of water pumps, transmission lines

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EximExim BankBank’’s Project & Services Exportss Project & Services Exportsin the ASEAN Regionin the ASEAN Region

Pioneering Role in Promoting Project ExportsProject and Services Exports

Exports of projects and services, broadly categorised into Civil engineering construction projects, Turnkey projects, Consultancy services.The Bank has been supporting a number of project exports, funded by multilateral agencies and Government of India in countries namely; Indonesia, Cambodia, Myanmar, Malaysia, Singapore, Thailand, and Vietnam, in the region.

Exim Bank supported Project Exports Contracts in ASEAN include:Voltas Ltd. for Cooling plant project in Singapore;Titan industries Ltd. for Plain gold jewellery project in Singapore;Ceat Ltd. for Tyres plant project in Singapore;Kirloskar Brothers Ltd. for supply of Pump-sets and allied equipments in Cambodia;Atul Ltd. for Acid technical plant project in Indonesia and Thailand;GHCL Limited. for Soda ash project in Malaysia;IRCON for supply of diesel locomotives, construction of rail link, installation and commissioning of track work in Malaysia;RITES for Assembling and servicing locomotives in Myanmar;Engineers India Ltd. for providing technical assistance to Steel mills in Myanmar;Ajanta Pharma Ltd. for Pharmaceutical project in Viet nam;

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Promoting investment in the Promoting investment in the ASEAN RegionASEAN Region

Supporting two-way investments

Comprehensive assistance:

Pre investment advisory services

Finance available for:

Greenfield projects;

Overseas acquisitions directly or through special purpose vehicles

Direct equity participation in Indian ventures abroad

Joint investments by Indian and overseas company in third country markets in addition to facilitating investments into India.

Exim has provided finance to 238 ventures set up by 192 Indian companies in 63 countries. Aggregate loans extended for overseas investment amount to Rs. 122.8 bn.

Finance through debt and equity

Brownfield expansion

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Promoting investment in the Promoting investment in the ASEAN RegionASEAN Region

Supporting two-way investments

The Bank has supported several such ventures in ASEAN region in various sectors, which include among others, iron and steel, chemicals and chemical products, real estate and property, and mining. Some of these ventures include:

Phoenix Overseas Ltd. in Singapore (Shoes and footwear components );

Aban Singapore Pvt. Ltd. in Singapore (Oil drilling);

Krishna Industrial Corporation Ltd. in Malaysia (Chemicals, acid);

Ultramarine and Pigments Ltd. in Malaysia (Pigment manufacturing);

Thirumalai Chemicals Ltd. in Malaysia (petrochemicals)

PT Jindal Stainless steel Indonesia in Indonesia (Stainless steel)

TIL Ltd. in Myanmar (Plastic manufacturing)

Vallabhdas Kanji Ltd. in Vietnam (Spices)

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Research & AnalysisResearch & AnalysisKnowledge Building: Research Publications

Research Studies on products, sectors, countries, macro economicissues relevant to international trade and investment

Sector Studies assessing export potentialBilateral Trade and Investment Studies

Vietnam, Cambodia and Lao PDR : A Study of India’s Trade & Investment PotentialUnion of Myanmar: A Study of India's Trade and Investment PotentialBIMST - EC Initiative : A Study of India's Trade and Investment Potential with Select Asian Countries.ASEAN Countries: A Study of India’s Trade and Investment Potential

International Trade Related StudiesForeign Investment Related Studies

FDI Flows and Investment Policies in India and Select Asian Countries: A Comparative AnalysisExport of Financial ServicesInternational Joint Ventures and Technology Transfer in Developing Countries: Theoretical AnalysisForeign Investment and Host Country Interaction: A Strategic ApproachInternational Technology Transfer and Stability of Joint Ventures in Developing Countries: A Critical Analysis

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Promotional Activities

Exim Bank as Consultant

Feasibility study for setting up an Exim Bank in Malaysia

Export Development Project : Vietnam, Ukraine, Armenia

Establishing an Export Credit Guarantee Company in Zimbabwe

Blueprint for establishing Exim Bank in Zimbabwe

Feasibility study for setting up the Afrexim Bank

Designing of Export Financing Programmes – Turkey, South Africa

Mauritius – Study on Projecting Mauritius as an Investment Hub for Indian Firms

Feasibility study for establishment of an export credit and guarantee facility for GCC countries

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Institutional LinkagesInstitutional Linkages

World Bank

Asian Development Bank

African Development Bank

EBRD

MIGA

IFC

UNCTAD

Multilateral Agencies Trade & Invt. Promotion Agencies Export Credit Agencies

ECICS Ltd., Singapore

ITPC, Vietnam

ENDEC, Singapore

JETRO

Hatton National Bank Ltd. Sri Lanka

Netherlands Council for Trade Promotion

ITC, Geneva

Exim Bank Malaysia

Exim Bank Thailand

PT Bank EksporIndonesia

Exim Bank Romania

Czech Export Bank

Hungarian Exim Bank

JBIC

US Exim Bank

Exim Bank of China

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Forum of Asian Exim Banks

The Forum, conceived and initiated by Exim Bank of India in 1996, seeks to provide a mechanism for participating countries to enter into a process of dialogue while providing an opportunity for cooperation in areas that transcend trade and investment, such as social sectors capacity building and governance.

First meeting of Asian Exim Banks held in India in 1996. Annual meetings are held in different countries by rotation

Members comprise Exim Banks from India, Indonesia, Malaysia, Thailand, Philippines, China, Japan, Korea and Australia.

Tokyo Consensus signed in November, 2006 by member institutions at the 12th Annual Meeting in Japan, to further regional cooperation.

13th Annual Meeting held in Bali, Indonesia in November 2007; 14th Annual Meeting held in Sydney, Australia in October 2008.

To enhance cooperation and forge a stronger link in Asian region

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Trade Facilitation Network

Promoting South-South Trade & Investment

At the joint initiative of the Bank and UNCTAD, a Global Network of Exim Banks and Development Financial Institutions (G-NEXID) was launched in March 2006 in GenevaAnnual Meetings to deliberate upon measures to foster long-term relationship, share experience and strengthen financial cooperation to promote trade and investment 2nd Annual Meeting, held in Geneva on March 22, 2007, witnessed the technical launch of G-NEXID’s official website (www.gnexid.org);3rd Annual Meeting held in Geneva during April 2008.G-NEXID has been granted ‘observer’ status by UNCTADCurrently, there are 24 members in G-NEXID;Bank Ekspor Indonesia, Jakarta and Export Import Bank of Thailand, Bangkok are from the ASEAN region.

ENHANCING INDOENHANCING INDO--ASEAN COOPERATION: ASEAN COOPERATION: BROAD APPROACHBROAD APPROACH

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Broad ApproachTrade and Investment Relations

Scope for further enhancing trade with ASEAN, as India accounts for 2.4% of ASEAN’s total trade

Country specific focus with sector specific focus, as India’s exports are similar with certain product groups exported by ASEAN.

Trade in dissimilar products provide the impetus for a strong bilateral trade relation

ASEAN countries can benefit from India’s liberal trade and investment policy

Scope for attracting more FDI from the ASEAN region, as ASEAN accounts for 8% of India’s total FDI inflows

India’s skilled manpower could be highly beneficial to newly industrialised ASEAN economies

Indo-ASEAN collaborative ventures could provide useful insights for strengthening the investment ties.

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Broad ApproachRegional Cooperation

Regional cooperation is essential for infrastructure development

Mekong-Ganga Cooperation (MGC) brings together Cambodia, Lao PDR, Myanmar, Thailand, Vietnam and India

Regional Integration through Regional Export Credit Agency

Cooperation in financial services assumes a pivotal role in facilitating financial exchanges among participating countries

A Regional Export Credit Agency for Asia (RECAA) could facilitate regional economic integration through increased intra-regional trade

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Broad ApproachAsian Economic Community

Formation of Asian Economic Community encompassing ASEAN, China, Japan, Korea and India could lead to;

Linkages by efficient road, rail, air and shipping servicesLarge scale movement of people, capital, ideas and creativity

Wider Dissemination of InformationRelating to bilateral trade and investment opportunitiesIncreased visits by trade and industry delegationsSpecialised trade and industry fairs/ exhibitions/ buyer-seller meetsSpecialised ‘Made in India’ exhibitions and seminars in ASEAN region

Linkages with IPAs, Chambers of Commerce and other InstitutionsServes to enhance access to information about investment opportunitiesPotential areas of investment- upcoming projects- regulation

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Broad ApproachEntrepreneurship Development & Inst. Building

Sharing of expertise and experience – particularly in SME sectorSMEs could play an important role in newer ASEAN members such as Vietnam, Lao PDR, Myanmar and CambodiaCluster development and technical assistanceInstitutional tie ups with CFTRI and Entrepreneurship Development Inst (EDI)

Presence of Indian Banks/Industry AssociationsSetting up of branches, rep offices & developing of correspondent banking relationships with select banks in the regionCommercial relations through industry associations – setting up of offices in ASEAN region and vice versa.

Cooperation in Information and Communication TechnologyASEAN Countries could tap India’s expertise in Information and Communication Technology (ICT) servicesASEAN could utilize India’s strength in Business Process Operations (BPOs) as well.

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Broad Approach

India – A growing Investment Hub

Scope to further enhance ASEAN’s FDI into India

Several firms from ASEAN already operative in IndiaSingapore - Temasek Holdings, Ascendas' Information Technology Park, Port of Singapore Authority (PSA), The Government of Singapore Investment Corporation (GIC)

Malaysia - M/s Unisphere Sdn. Bhd., Usaha Tegas Sdn. Bhd., Pembinaan Redzal Sdn. Bhd., Genting Power Holding Ltd., M/s Telecom Malaysia Bhd., JM Corporation Bhd., Road Builder (M) Holdings Bhd., Bumi Highway Bhd.

India increasingly emerging as attractive investment destination;Corroborated by findings of internationally reputed agencies

Potential sectors for investment:SoftwareConstructionTelecommunicationBiotechnology

Power and oil refineryElectrical equipmentsTextilesBanking and finance

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Exim Bank:Partner in Globalisation

TechnologyCapital (Foreign Investment)Raw MaterialsCapital Goods

Final Products

Capital Goods

Capital(Overseas Ventures)

Product Development

Production

Marketing

Pre shipment

Post shipmentVALUEVALUE ADDITION

ADDITION

EXPORT

EXPORT

MMII

TTRR

OOPP

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