East ASEAN moves for free trade zone

East ASEAN moves for free trade zone

By Mynardo Macaraig

DAVAO, Philippines (AFP): After years out in the economic
cold, the less developed regions of the Philippines, Indonesia
and Malaysia along with wealthy Brunei, have laid the groundwork
for what could become a mini free trade area.

But the conference for the creation of the East ASEAN Growth
Area (EAGA), held this weekend in this southern Philippine city,
also highlighted the difficulties faced in harmonizing these
areas into a trade zone.

Representatives from Brunei, the Philippine region of
Mindanao, the Indonesian provinces of Kalimantan and Sulawesi,
Malaysia's Maluku, Sabah, Sarawak and Labuan, showed off their
products and pinpointed areas for potential investment.

The conference ended with a plan to create a private EAGA
business council, which would work towards regional tie-ups in
such areas as tourism, fisheries and forestry.

The council would also strive to secure commitments from all
concerned parties to work towards the creation of an EAGA free
trade area.

Philippine President Fidel Ramos, who addressed the
conference, endorsed the creation of "a borderless economic
region, a zone of free trade," free of distinctions between
domestic and foreign investments and free movement of people,
goods and services.

Vicente Paterno, head of the convention's steering committee,
said such a free trade area could come about in three years, and
may even serve as a pilot area for the ASEAN Free Trade Area
(AFTA) which is due to take effect in 2003.

ASEAN, the Association of Southeast Asian Nations, composed of
Brunei, Indonesia, Malaysia, the Philippines, Singapore and
Thailand, is one of the fastest-growing regions in the world, but
most less developed areas have complained of being left out of
the boom.

Ramos first proposed the creation of EAGA at a 1992 meeting of
the leaders of Brunei, Indonesia and Malaysia, envisioning it as
a "growth polygon," similar to the Singapore-Johor-Batam growth
triangle, or the one between Hong Kong, Taiwan and China.

But Min Tang, an Asian Development Bank (ADB) economist who
has studied such growth triangles, warns that "economic
complementarity in (EAGA) is not as strong as in the Singapore
and Hong Kong growth triangles."

While in existing growth triangles, Singapore and Hong Kong
are able to transfer investment and technology to the less
developed partners, most EAGA areas included are at similar
stages of development, he said.

However, many of the 1,000 delegates to the conference eagerly
sought out areas in which EAGA regions could complement each
other.

The Brunei delegation saw itself as a potential 'hub' of the
EAGA, serving as a transhipment point and a source of financing
in a partnership with Labuan.

Mindanao envisioned itself sourcing fuel, wood and raw
materials from the Indonesian and Malaysian parts of the EAGA,
while it in turn supplied skilled manpower, financial services
and trading links with nations like South Korea and Hong Kong.

The other EAGA areas mostly saw themselves as suppliers of
fuel, timber, fish, cattle as well as other agro-industrial
products.

The biggest problem facing the EAGA is the lack of air and sea
links among its members, who are often geographically isolated.

Shipments and travelers within the EAGA have to take indirect
routes -- usually through respective national capitals -- to go
from say, Sarawak to Davao. Many delegates admitted they traded
more with developed nations.

The EAGA business council plans to ask the governments
involved for wider shipping and air links, with harmonization of
travel and shipping procedures to facilitate greater interaction
within the polygon.

Ramos has endorsed the plans and senior ASEAN officials will
reportedly discuss the issue during a meeting at the end of the
month, Philippine Trade Secretary Rizalino Navarro said.