BISTEC determined to forge regional powerhouse

BISTEC determined to forge regional powerhouse

By Baladas Goshal

NEW DELHI (JP): In new international economic relations, and
the regionalization of the world order in the post-Cold War
period, formation of regional economic blocs have become the
order of the day.

The most recent one to come into existence is the BISTEC which
comprises Bangladesh, India, Sri Lanka, Thailand, launched on
June 6 at a ministerial meeting in Bangkok with the objective of
boosting economic and social development and cooperation in trade
and investment.

The four countries who have joined the grouping all have a
coastline on the Bay of Bengal and hope to convert it into a
regional power house. The goal is to promote subregional
cooperation in the form of a growth quadrangle patterned on the
growth triangles among the ASEAN and APEC countries, like the
Philippines, Indonesia, Singapore and Malaysia.

The formation of growth triangles or subregional economic
zones has become increasingly important as a strategy for
development not only in the ASEAN region, or the countries in the
Asia Pacific area, but is also catching on in South Asia.

India formed recently a quadrangle with Nepal, Bangladesh and
Bhutan to promote trade between them. With the current trend
toward increasing globalization and liberalization, economies can
no longer act in isolation.

Interdependence, collective self-reliance and mutual
cooperation are essential to the vast potentials of the region
involved and become competitive economic forces. Through this
cooperation process, synergies for development could be created
by taking advantage of the different factor endowments and their
complimentaries among participating geographically contiguous
regions. Basically, growth triangles link adjacent areas to form
a subregion of economic growth.

Subregional cooperation is perceived as a logical way to
enhance socioeconomic development in peripheral and less-
developed areas. This is done by reaping the benefits of
economies of scale, complimentaries in production and an
enlargement in the size of the market. Growth triangles or
quadrangles also enhance the region's attractions as an
investment location and market for global producers.

The BISTEC was a Thai initiative in 1995, to which India
agreed in 1996. Originally, the idea was to cover Thailand, India
and Sri Lanka only, but later Bangladesh Prime Minister Shiekh
Hasina was keen that her country joined it too.

Though in due course the BISTEC, which is likely to have a
secretariat at Bangkok and an annual feature of one ministerial
meeting at least, will be open to other interested countries, its
present name will remain unchanged. At the moment, Myanmar has
been given observer status.

The Bangkok declaration, following the ministerial meeting,
has outlined that the main areas of its cooperation would be in
trade, investment, industry, transportation, infrastructure,
science and technology, human resources development, energy,
fisheries, agriculture, natural resources and tourism.

Thailand and India will be the pillars of the new initiative,
but there is enough scope for Bangladesh and Sri Lanka to become
active partners. Bangladesh is rich in natural gas, and
cooperation in the hydrocarbon sector a key area for possible
cooperation.

Thailand and India as the sub has made a strategic decision of
pitching a long-term economic stake in South Asia. While trade is
of immediate interest, Bangkok has a long-term stake in
developing infrastructure. Investment in the areas of
transportation and telecommunications is also a long-term
objective. Trade between the countries currently totals a meager
US$1 billion, but with a joint population of 1.3 billion people,
development of such growth triangles could lead to an increase of
exports from the country and push up the figure over the next
decade.

Investments too would be easier to find since links between
countries would be closer in cases of subregional groups. The
cooperation agreement, therefore, is expected to impart
additional buoyancy to trade in the region, along with the trade
India will have with the regional trade blocs consisting of these
countries in the region.

The new initiative, according to the members of the grouping,
would not overlap with existing regional groupings. In the words
of A.N. Ram, the secretary of economic relations of the Indian
Ministry of External Affairs, this was an initiative where "for
the first time SAARC is overarching across Andaman Sea to join
hands with the ASEAN".

It is hoped that the new group will act as a link between the
ASEAN, of which Thailand is a key member, and the SAARC, that
includes India, Sri Lanka and Bangladesh. In fact, the BISTEC can
be seen as "progression towards the noble objective of a larger
Asian Economic Community", which India and her founding fathers
have always championed, and the others have found useful and have
been practicing even before India could do so. The new grouping
did not propose to exchange any tariff concessions since all the
members were also members of the Bangkok agreement, and
concession would be exchanged there.

The group has already discussed the possibility of forming a
regional airline, owned by all four governments, to service
smaller destinations in each country. Other projects include
establishing a tourist circuit along religious themes, such as
the Buddhist religious sites in all four countries.

"I said we could have religion with pleasure. New facilities
such as hotels and golf courses could be set up at destinations
on this route," declared the Indian Minister of State for
External Affairs.

An international organization like the Economic and Social
Commission for Asia and the Pacific is likely to get involved in
identifying specific prospects in the areas of tourism, trade,
investment and infrastructure and which the new grouping could
take up.

"Our basic emphasis is on projects that have tangible results
on jobs and standard of living," observed Kobsak Chutjkul,
director of economic affairs at the Thai foreign ministry. The
focus will be on achieving an "early harvest" in terms of one or
two projects becoming operational by 1998. The BISTEC could
consult on and work out the subregional component for Trans-Asia
Railway and Trans-Asian Highway projects being considered at fora
such as ESCAP and ADB.

The member countries have also listed the priorities in terms
of future cooperation: multimodel transformation hub (marine and
land); processing and marketing of marine products through joint
ventures; development of tourism infrastructure and circuits for
marketing; building communication and information technology
webs; research and development collaboration; and
commercialization of technologies, including areas such as
nonconventional energy sources, space and biotechnology and oil
and natural gas exploration, development and marketing.

While the initiative is still at the level of declaration of
intent, and nothing concrete has been worked out at yet, except a
regional airline, the prospect for a such a subregional grouping
looks quite bright. Economic liberalization policies recently
undertaken by South Asian countries are a sign of the group's
economic potential.

Just as India is looking toward the east for improving her
economic prospects, Thailand is looking toward South Asia as well
as the Bay of Bengal for markets and investments to lessen her
dependence on the route through the Strait of Malacca. If the new
initiative succeeds, it will go a long way to establish linkages
with other groupings in the region and eventually create an Asian
economic forum.

The writer is professor of Southeast Asian Studies at
Jawaharlal Nehru University, New Delhi, India.