East ASEAN Growth Area plan feasible
East ASEAN Growth Area plan feasible
MANILA (AFP): A project to link oil-rich Brunei with backward areas in Indonesia, Malaysia and the Philippines to form a growth area is feasible, but many obstacles need to be overcome, a report said.
The East ASEAN Growth Area (EAGA) will not soon duplicate the success of other Asian growth zones, according to the report prepared for the Asian Development Bank (ADB).
"EAGA does not have the obvious major resource complimentarities which characterized the earlier growth triangles" of Taiwan, Hong Kong and southern China, or the "Sijori" triangle, made up of Singapore, the Malaysian state of Johore and the Riau province of Indonesia, it said.
Part of the problem is that EAGA, conceived by regional leaders in 1994, is largely made up of the poorer, less developed portions of three Association of Southeast Asian Nations (ASEAN) members.
The growth area is made up of oil-rich Brunei, the southern Philippine islands of Mindanao and Palawan, West and East Kalimantan in Indonesia and Sabah, Sarawak and Labuan in Malaysia.
Singapore, Thailand and Vietnam round out the ASEAN membership.
The report said that internal trade in the area, which covers a million square kilometers (400,000 square miles) and has a combined population of 31 million, is low and that there is almost no cross-border investment.
Moreover, the sub-regions in EAGA generally suffer from poor infrastructure, transport conditions and financial services that make such link-ups difficult.
The ADB study also said that the sub-regions "share a similar product mix" in the agriculture, fishery and forestry sectors, which would tend to make them competitors rather than partners.
The study said that aside from trying to duplicate the success of other growth areas, EAGA would have to "develop new sources of growth through innovative strategic policy formulation."
However the ADB did identify dozens of areas of potential cooperation ranging from marine fishing joint ventures, forestry conservation, tourism, expanded free trade zones, a venture capital fund for cross-border investments and even an EAGA finance corporation.
The study also suggested that oil, coal and gas found in EAGA sub-regions such as Sarawak and East Kalimantan could be traded in the region, perhaps under discounts covered by government-to- government agreements.
Some of these "fast-track projects" could be carried out by the private sector while others could be implemented by the respective governments to "build up the confidence of the private sector" in the zone.
Freddie Cho, director of the Economic Planning Unit under the Malaysian prime minister, said he did not have firm estimates on the cost of these projects but added that they all had "modest" financial requirements and could yield results in two years.
Former Philippine senator Vicente Paterno, head of the East ASEAN Business Council, has said "freer travel with ease and ... freer trade" would further encourage business in the area.