Growth triangle project expected to fortify ASEAN

Growth triangle project expected to fortify ASEAN

KUALA LUMPUR (AFP): The development of an area of economic cooperation between Indonesia, Malaysia and Singapore is expected to strengthen links within Southeast Asia, officials said yesterday.

The Indonesia-Malaysia-Singapore growth triangle (IMS-GT) will act as a conduit to bolster economic ties in the Association of Southeast Asian Nation (ASEAN), they said.

Singapore Trade and Industry Minister Lee Yock Suan said the IMS-GT hub had strong potential to attract foreign investment but needed to sharpen its competitiveness to ward off challenges from emerging economies such as China.

"As the IMS-GT develops, we must bear in mind that it is not an exclusive and stand-alone entity. It is part of the broader framework of ASEAN cooperation," Lee was reported saying by Bernama news agency.

"Being three close neighbors within ASEAN, we can set the pace for forging economic links within ASEAN," he said in his address at the second IMS-GT ministerial meeting in southern Johore state.

The IMS-GT, which groups four states in Malaysia, Riau and West Sumatera in Indonesia and Singapore, received more than US$8 billion in foreign direct investment last year.

Indonesia has proposed including five new provinces in the triangle, which will double the market size to 34 million people.

Lee said the growth triangle would benefit from the formation of the ASEAN Free Trade Area (AFTA), and would in turn contribute towards enhancing ASEAN integration.

The Association of Southeast Asian Nations (ASEAN) groups Brunei, Indonesia, Malaysia, Philippines, Singapore, Thailand and Vietnam. Burma, Cambodia and Laos are to join the grouping in July.

Current members have set a deadline of 2003 to create a free trade area which will lower tariffs to a maximum five percent. Vietnam has been given an extension to 2006 while the three incoming members have up to 2008 to comply.

Earlier, Malaysia's International Trade and Industry Minister Rafidah Aziz said rising investments from Indonesia and Singapore had fortified the country's manufacturing base.

Between 1990-1996, more than 1,185 projects with investments totaling 13 billion ringgit (US$5.2 billion) were approved from the two countries, with the bulk coming from Singapore, Rafidah said.

Of the total 6.6 billion ringgit Malaysian investments abroad, 400,000 ringgit had been invested in Indonesia and 1.7 billion ringgit in Singapore, she added.