Prime Minister Narendra Modi with his Malaysian counterpart Najib Razak looks on as External Affairs Minister Sushma Swaraj and Malaysian Minister of Transport Dato’ Sri Liow Tiong Lai exchange documents at Hyderabad House in New Delhi.

The recent six-day visit of Malaysian Prime Minister Najib Tun Razak to India came at an opportune moment: this year marks the 60th anniversary of India-Malaysia diplomatic relations and emphasizes the success of India’s Look East, Act East policy.

Good Timing For FIATA

      For air & ocean cargo watchers, the timing is perfect. The FIATA World Congress, the world’s premier freight forwarding conference, begins October 4 in Kuala Lumpur, bringing the world to Malaysia’s doorstep.
      What’s more, next year’s FIATA World Congress (2018) will be held in India.
      Opportunities are ripe for development with India and Malaysia center stage at the next two FIATA World Congress gatherings.

      Incidentally, in 2015, Prime Minister Narendra Modi paid an official visit to Malaysia that led to the establishment of an ‘enhanced strategic partnership’ between the two nations.
      What is, perhaps, more notable is that this year is also the 25th anniversary of the India-ASEAN (Association of Southeast Asian Nations) dialogue partnership.
      It was important for India to have a dialogue and build relations with one of the foremost ASEAN members. Since Prime Minister Modi is a strong advocate of economic diplomacy, the prime focus of Prime Minister Razak’s visit was to strengthen economic ties with India.

The Joint Is Jumping

      The Joint Statement of the India-Malaysia CEOs Forum pointed out that Malaysia was India’s third largest trading partner in ASEAN. Bilateral trade between Malaysia and India stood at U.S. $12.8 billion in 2015-16, against U.S. $16.9 billion in 2014-15. The trade balance was in favor of Malaysia (U.S. $5.4 billion in 2015-16) and the two prime ministers hoped to see trade increase to U.S. $15 billion in the immediate future.

      The CEOs Forum also emphasized that one of the ways to increase trade would be to improve and expand bilateral rights in aviation.
      Malaysia maintains that the enhancement of bilateral rights would also coincide with India’s focus on enhancing air connectivity and hence the demand to review the Bilateral Air Services Agreement between India and Malaysia to expand the number of slots for airlines to operate between the two countries.
      The Malaysian CEOs also emphasized that Malaysian carriers could be given more rights, including travel to other countries through India.

      The Malaysian side also suggested—AirAsia Bhd. Executive Chairman and AirAsia X Group Chief Executive Officer Datuk Kamarudin Meranun was part of the delegation—that the Indian government waive off the mandatory five-year rule for carriers to start flying overseas. If the rules are liberalized, Air Asia India could fly overseas.
      Liberalization of air services would mean more services by Indian carriers to Malaysia and Southeast Asia and would help enhance investment and economic growth between both countries.
      “This,” said the statement, “will generate greater economic contribution for both countries via tourist arrivals, people to people communication, medical tourism, education, infrastructure development, and socio-economic growth.”

      The Air Services Agreement (the last was signed 50 years ago in 1967) that was signed would see a rise of around 2,000 additional seats for Malaysia from India.
      Transport Minister Datuk Seri Liow Tiong Lai, who was part of the Prime Minister Datuk Seri Najib Tun Razak’s delegation, said the extra seats were approved for the six cities of Chennai, New Delhi, Kolkata, Mumbai, Bengaluru, and Hyderabad.
      “With this, we can fly more Malaysians into India and the other way around too.
      “This will have a big impact on expanding our tourism potential,” Liow was quoted saying.
      He also said, “We are prepared to be liberal with India in line with Asean’s Open Skies policy,” he added.
      Under India’s National Civil Aviation Policy 2016, Liow said that for countries fully or partly within a 5,000 km. radius from New Delhi, extra air traffic rights could only be considered if India’s airlines were able to use up at least 80 percent of their entitlement.
      India’s airlines’ present rate of utilization to Malaysia was only about 5 percent.

      According to Liow, the new agreement is a breakthrough for the Malaysians.
      There have been constant efforts to boost air cargo between India and ASEAN nations.
      Reportedly, Research and Information System (RIS) for Developing Countries has been a major think tank espousing the cause of air cargo to ASEAN nations.
      Chaired by former Indian Foreign Secretary Shyam Saran, the ASEAN-India Centre (AIC) at RIS prepared the ASEAN-India Air Connectivity Report, which addressed the issues and challenges concerning the air connectivity between India and ASEAN, especially relating to air cargo that would help to unlock the trade potential of the region by removing constraints and bottlenecks to growth.

      The report came in the background of the “Make in India” and “Skill India” programs for which stronger air connectivity was an essential factor.
      The report has mentioned that more airlines in air cargo would boost trade between ASEAN and India and beyond.
      Stronger air connectivity with Southeast and East Asia would also provide a fillip to India’s “Make in India” and “Skill India” initiatives.
      The ASEAN constituted about 18 percent of international freight flow from India and about 11 percent international freight flow to India. With the exception of Thailand, all ASEAN countries recorded a freight deficit with India in 2015. That meant India exported more ‘weights’ than what it imported from ASEAN, and naturally was paying more towards freight.
      The study also recommended that since the share of air cargo compared to other modes of cargo transportation was fairly low in India, it was necessary to attract more cargo airlines from Southeast and East Asia to boost the trade not only between India, but also with the rest of the world.

      Although the ASEAN Open Skies Policy in part came into effect on January 1, 2015, it was yet to be fully operational.
      The ASEAN Single Aviation Market (ASAM) would lead to growth and development as it opened up the market to more competition.
      Greater connectivity between aviation markets arising from ASAM would encourage higher traffic flow and improve service quality while lowering airfares.
      The most important aspect of liberalizing aviation markets was the guarantee of third, fourth, fifth, and seventh freedoms of the air. If the additional air freedom right were given, opening of ASAM would be advantageous to Indian carriers to fly to Southeast Asia on a larger scale.
      A comprehensive ASEAN-India Air Transport Agreement (AIATA) is recommended to expand trade between ASEAN and India.
Tirthankar Ghosh