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.