BISTEC dreams of being a regional economic power

By Baladas Ghoshal

NEW DELHI (JP): In new international economic relations and regionalization of the world order in the post Cold War period, the formation of regional economic blocs has become the order of the day. The most recent one to come into existence is the Bangladesh, India, Sri Lanka, Thailand Economic Cooperation (BISTEC) 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 all have a coastline on the Bay of Bengal and hope to convert it into a regional powerhouse. The goal is to promote subregional cooperation in the form of a growth quadrangle patterned on the growth triangles among 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, but also for Asia Pacific countries. India recently formed a quadrangle with Nepal, Bangladesh and Bhutan to promote trade between the countries.

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 tap the region's vast potential and competitive economic forces. Through this cooperation, synergies for development can be created by taking advantage of the different endowments and complementarities among participating contiguous regions.

Growth triangles link adjacent areas to form a subregion of economic growth. Subregional cooperation is a logical way to enhance socioeconomic development in the peripheral and less developed areas by reaping the benefits of economies of scale, complementarities in production and an enlargement of the market. Growth triangles or quadrangles also enhance the region's attractions as an investment location and market for global producers.

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 Sheik Hasina was keen that her country also joined the cooperation. In due course, BISTEC is likely to have a secretariat in Bangkok and at least one annual ministerial meeting will be open to other interested countries. At the moment, Myanmar has been given an observer status.

The Bangkok declaration, following the ministerial meeting, 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 cooperation.

Thailand and India have made a strategic decision of pitching a long-term economic stake in South Asia. While trade is an immediate interest, Bangkok has a long-term stake in developing infrastructure. Investment in transportation and telecommunications, is also a long-term objective. Trade between the countries currently totals a meager $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.

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

According to group members, the new initiative would not overlap with existing regional groupings. Secretary of Economic Relations at the Indian Ministry of External Affairs, A.N. Ram said this was an initiative where "for the first time the South Asian Association for Regional Cooperation (SAARC) is overarching across the Andaman Sea to join hands with ASEAN".

It is hoped the new group will be a link between ASEAN of which Thailand is a key member, and SAARC which includes India, Sri Lanka and Bangladesh. In fact, BISTEC can be seen as a "progression toward the noble objective of a larger Asian Economic Community". India and its founding fathers have always championed this, while the others have also found it useful and have been practicing it even before India could do so. The new group does not propose exchanging 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 on religious themes such as 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," said the Indian Minister of State for External Affairs.

The Economic and Social Commission for Asia and the Pacific (ESCAP) was likely to become involved in identifying specific prospects in tourism, trade, investment and infrastructure which the new group could take up. "Our basic emphasis is one project that has tangible results on jobs and the standard of living", said the director of economic affairs at the Thai Foreign Ministry Kobsak Chutikul. It will focus on achieving an "early harvest" in terms of one of two projects which will be operational by 1998. BISTEC could consult on and work out subregional components for the Trans-Asian Railway and Trans- Asian Highway projects being considered at groups such as ESCAP and the Asian Development Bank (ADB).

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

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

As India looks eastward to improve its economic prospects, Thailand is looking toward South Asia and the Bay of Bengal for markets and investment as well as lessening its dependence on the route through the straits of Malacca. If the new initiative succeeds, it will go a long way to establishing ties with other groups in the region and eventually creating an Asian economic forum.

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