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.