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Fear of Indian pros holding up services deal: Malaysia

Economic Times, India

Fear of Indian pros holding up services deal: Malaysia

3 March 2011

NEW DELHI: The proposed agreement between India and the Association of Southeast Asian Nations (Asean) to open up investments and services sector has met with resistance from some members of the 10-nation bloc who are concerned that free movement of professionals will impact their own workforce.

"We should have got the agreement going last year," Malaysian trade minister Mustapa Mohamed said at the India- Asean business fair organized by the ministry of commerce and industry in association with Ficci. "We certainly hope to do so this year."

Some member-nations are apprehensive about the movement of people as they are not sure of its impact on their own workforce , Mohamed said. However, there is an understanding that the relationship will not be complete without an agreement on services, he added.

India and Asean implemented a free trade agreement in goods last year. The pact seeks to eliminate duties on more than 4,000 products over six years. The two sides had agreed to extend the agreement to services and investments and were hoping to implement it by the end of 2010.

Philippine trade and industry secretary Gregory Domingo said his country’s constitution "constrained" it from fully opening the services sector. He said the country faces problems not only with India but also with other Asean nations.

"We realise India is an important part of our trade and investment and we will try to move forward," he said. India’s trade with Asean countries grew by 22% to $50.33 billion in 2010. This included $22.52 billion of Indian exports and $27.81 billion imports.

"With the coming into force of the India-Asean trade in goods agreement, both sides are confident that the trade target of $70 billion by 2012 would also be achieved", commerce and industry minister Anand Sharma said.

While gains for India were not very big in the goods agreement as duties in Asean countries were already low, stronger benefits are expected once the services and investment agreement is signed. Asean countries hold huge potential for Indian professionals like teachers, nurses, accountants and architects.

The country, however, is not placing all its bets on the India-Asean free trade agreement to make inroads into the services market. While it already had a comprehensive trade agreement covering services with Singapore, it has signed another one with Malaysia and agreements with Indonesia and Singapore are in the pipeline.

If we cannot tackle them as a group, we will deal with them individually, seems to be the underlying idea.