Malaysia, Thailand eye border business zone

Malaysia, Thailand eye border business zone

Reuters,Langkawi, Malaysia

Malaysia and Thailand pledged on Sunday to deepen business and government ties in an effort to boost trade and set a benchmark for other Southeast Asian states considering the next stage of regional integration.

Drawing parallels with the European Union, Malaysian Prime Minister Mahathir Mohamad said Bangkok and Kuala Lumpur should show the eight other ASEAN Free Trade Agreement (AFTA) countries what could lie ahead for their alliance.

"While we work towards AFTA, we should also experiment with greater integration between neighbouring countries on a bilateral scale," he said in speech to a business forum attended by several hundred delegates from Malaysia and Thailand.

"The cooperation between Thailand and Malaysia in the border areas should show the way," he told the meeting, on Malaysia's west coast resort island of Langkawi.

Mahathir said the border zone could incorporate Peninsular Malaysia's three northern states of Kedah, Perlis and Kelantan and Thailand's five southern states.

"In the designated border areas, the two countries' comparative advantages should be identified and offered to investors from both countries and to foreigners."

Malaysians, with a per capita gross domestic product of around US$4,000, had more money to spend than their Thai neighbours but at the cost of higher wages, said Mahathir.

He suggested cooperation could see Thailand help Malaysia cut its costs while the latter contributed to Thai economic growth and income. Malaysian exports to Thailand in 2002 were worth 15.1 billion ringgit ($3.98 billion), a surplus of 3.1 billion ringgit over its imports.

Mahathir's Thai counterpart, Thaksin Shinawatra, suggested alliances between businesses could include shared product testing and standardisation, cost pooling, staff exchanges, co-funding and joint supply chain and marketing deals.

"One plus one will equal more than two," he said in a speech to the two-day meeting. Neither man gave practical details of how the proposed zone might take shape.

Businessman-turned-politician Thaksin, who has enjoyed close ties with ASEAN's elder statesman Mahathir since coming to power in 1999, cited bilateral successes in boosting rubber prices as an example of government-to-government contacts that helped both sides.

However, the two neighbouring countries had been engaged in a public row over Malaysia's decision to delay tariff cuts on car imports as protection for local carmakers like Proton

The other members in the Association of South East Asian Nations (ASEAN) are Brunei, Cambodia, Indonesia, Laos, Myanmar, the Philippines, Singapore and Vietnam.