RI, Malaysia, Thailand link up for profit

RI, Malaysia, Thailand link up for profit

By Mynardo Macaraig

MANILA (AFP): A proposed "growth triangle" encompassing economically lagging parts of Indonesia, Malaysia and Thailand is slowly becoming reality, with governments and private firms showing a readiness to sign up.

A report forged by 25 teams of consultants brought together by the Asian Development Bank (ADB) has now listed over 50 policies and schemes needed to create the project, known as the Indonesia- Malaysia-Thailand Growth Triangle (IMT-GT.)

The goal is to integrate the economies of northern Sumatra and Aceh in Indonesia, northern Malaysia and southern Thailand in a bid to emulate the fabled growth of the China-Taiwan-Hong Kong triangle.

By harnessing the regions' respective strengths, gross domestic product (GDP) in the triangle could rise by 7.2 percent annually over 10 years, according to the report.

John Newton, a team leader in the drafting of the document, said trade and investment liberalization was a focus of their recommendations but cautioned that implementation would be difficult and many ideas may not be accepted by the three governments.

"We realize they have political imperatives" that outweigh the potential benefits, he said.

Representatives of the three countries, who studied the 700- page report at a conference at the headquarters of the ADB in Manila last week, also saw the need for certain revisions and corrections before it is formally submitted.

Kosim Gandataruna, the head of the Indonesian delegation, said there was "deep concern over the unbalanced representation (of) development zones in the border area of the three countries," apparently reflecting Jakarta's concerns that it may have been slighted.

However, ADB Vice-President Peter Sullivan said that "IMT-GT has a fair chance of success. Strong economic complementarities are supplemented by close social and cultural ties," adding that political will on the part of the three governments was also present.

The areas covered in the triangle are among the most underdeveloped portions of the three countries and usually suffer lower GDP growth than the rest of their respective countries as a whole.

Industry, energy needs, agriculture, fisheries, trade, investment and labor mobility and tourism were considered in the report.

Different parts of the triangle were earmarked for various industries, ranging from computer peripherals in Malaysia, garments and apparel in Thailand to pig production for export in Sumatra.

The report also calls for joint projects, particularly in the area of marine fisheries and agribusiness research.

Greater cooperation in energy supplies would also be required, with coal and liquefied natural gas from Sumatra being exported to Malaysia and Thailand, and eventually power connections and pipelines between the three countries being set up.

Malaysia is seen as relocating labor-intensive industries in Thailand and Indonesia, with Penang also envisioned as being the financial center of the new growth area.

But numerous constraints to the development of the triangle were pinpointed at the ADB conference, particularly in infrastructure.

Transportation and communications were often cited as an area of concern, especially the difficulty of entering portions of the triangle, such as North Sumatra.

Financing also worried those at the conference. Although no specific figure was cited, it was widely agreed that much of the money would have to come from the private sector, including commercial and investment banks.

The report is due to be submitted to ministers of the three countries at a special conference in Penang in September.