ASEAN integration through growth triangle

Romeo A. Reyes, Jakarta

Fidel V. Ramos is seen by many in his country and elsewhere as the best President the Philippines has ever had. He is considered as best performer not so much in comparison to the underwhelming performance of his immediate predecessor and to the non- performance of his immediate successor as in his own right.

Apart from nation building, Ramos took a shot at sub-regional community building when he proposed expansion of cooperation between the southern border areas of the Philippines and their counterparts in Indonesia and Malaysia, along with Brunei Darussalam. He saw closer cross-border cooperation as one of the tools by which persistent secessionist sentiment in Muslim populated border areas fueled by striking socio-economic disparities could be overcome.

He probably drew inspiration from his diplomat father, Narciso Ramos, who was one of the five signatories of the 1967 Bangkok Declaration that established the Association of Southeast Asian Nations (ASEAN). The three other ASEAN leaders positively responded to Ramos' diplomatic initiative when the Brunei- Indonesia-Malaysia-Philippines East ASEAN Growth Area (BIMP-EAGA) was launched on March 24, 1994 in Davao City, Philippines.

The main objective of BIMP-EAGA was to stimulate and accelerate economic growth and development of the provinces comprising the growth area (Kalimantan, Maluku, Sulawesi and Papua in Indonesia; Sabah, Sarawak and Labuan in Malaysia; and Mindanao and Palawan in the Philippines) through sub-regional cooperation among each other and with Brunei, one of the more advanced ASEAN member countries (AMCs) but with a very limited domestic market.

Essentially, the strategy was to exploit the area's natural resource endowments, with due regard to environmental sustainability, and to promote trade, investment and tourism, using sub-regional cooperation as the principal tool.

Ten years after its launch, BIMP-EAGA has produced some concrete results. New and direct air and sea links between major urban centers have been opened thereby contributing to reduction of physical barriers to cross-border movement of goods and people.

In addition, uniform user fees have been adopted in selected ports, travel and exit taxes have either been harmonized or removed altogether for travel within EAGA, and long distance calls within EAGA have been reduced by 20 percent, thereby encouraging and facilitating business and personal transactions within the sub-region.

Indeed, these measures may have contributed to the observed increase in domestic and cross-border investments in hotel and other tourism-related facilities in the area. But there is no hard evidence yet to suggest that they have contributed to sub- regional integration.

Interestingly, Ramos' initiative to establish BIMP-EAGA was taken in 1992 when ASEAN economic ministers agreed on the Common Effective Preferential Tariff (CEPT) Scheme for the ASEAN Free Trade Area (AFTA). Ten years later, AFTA became a reality.

In October 2003, ASEAN Leaders decided to deepen and broaden economic integration beyond AFTA when they declared the formation of the ASEAN Economic Community (AEC). A year later in November 2004, they adopted an action program containing regional cooperation measures to realize the AEC by 2020.

By 2010, ASEAN is envisioned to function as a single market and production base in those sectors, including wood-based products, agro-based products, fisheries, air travel, and tourism, all of which are similarly targeted for priority development in BIMP-EAGA.

As a sub-regional cooperation scheme, BIMP-EAGA can be viewed as a sub-set of ASEAN. Consistent with that view, BIMP-EAGA initiatives to deepen sub-regional economic integration could be pursued within a broader ASEAN integration effort. Although the former is narrower than the latter in terms of geographic coverage and scope of cooperation, their long-term and fundamental goal, strategic objectives and tools are essentially the same.

Indeed, there is a strong case for closer cooperation between the two inter-country initiatives to allow fast-tracking of ASEAN economic integration in BIMP-EAGA. One measure that could be fast-tracked in the four BIMP countries and show-cased for the benefit of the rest of ASEAN is the removal of tariff on all products in five priority sectors cited above. BIMP countries could consider advancing the removal of tariff on cross-border trade earlier than 2007.

Implementation of other ASEAN regional cooperation measures to facilitate trade could also be accelerated in EAGA. These include simplification and harmonization of documents, formalities, procedures and practices related to customs clearance. For example, a common customs form, which is basic in any economic integration initiative, could be considered for immediate adoption in EAGA cross-border trade.

In addition to customs, special attention could also be given to immigration, quarantine and security with respect to cross- border trade. In the area of immigration, streamlining of rules and procedures in the issuance of working visa for BIMP nationals and closer cooperation between immigration authorities in their enforcement could be given special attention.

All of the above sub-regional cooperation measures could be duly reflected in the roadmap currently being prepared by the Facilitation Centre based in Kota Kinabalu, Malaysia "to chart the way forward" towards realizing the objectives of BIMP-EAGA.

The tension with respect to relations with Indonesia escalated recently because of territorial dispute over an island within EAGA in connection with the award of an oil reserve exploitation contract. These three BIMP countries cannot afford to let this tension erupt into an open conflict if the gains from decades of ASEAN cooperation are to be preserved.

Recent experience in handling the flow of migrant workers in the sub-region dictates closer and more effective cooperation between the originating and receiving country. Clearly, there is a signal emerging from the sub-regional market that provides incentives for workers (or alternatively jobs) to continue to move across borders. They do so in response to that signal and in line with the ASEAN vision of "one community, 10 nations". They, just like their employers, are willing actors and beneficiaries of BIMP-EAGA and ASEAN integration. They should therefore be seen and treated as such and not as "illegal" victims.

The writer is Senior Adviser, ASEAN-UNDP Partnership Facility. The views expressed herein are personal and do not necessarily reflect those of ASEAN, UNDP, and their respective member countries.