7:47 AM Feb 1, 1996


Today, relations in that so-called "last frontier" of South-east Asia are being revived, and according to a new study conducted for the Asian Development Bank (AsDB), once the conditions are right, the relatively under-developed region has the "vast potential" to become a natural growth area.

The study, conducted by consultants working on an AsDB-funded technical project in the region, says the right physical infrastructure and climate for private business are crucial "to kick-start development and the wealth creation process".

Proposed by the Philippines some four years ago, the growth hub project seeks to revive traditional relations by encouraging economic ties, the pooling of resources, and the freer movement of people, goods and capital.

Located in the eastern part of the Association of South-east Asian Nations (ASEAN), the region comprises Mindanao island in the Philippines, Brunei, eastern Indonesia and eastern Malaysia.

The draft report by the Hong Kong based GHK Ltd., recently submitted to the Manila-based bank and to be finalised in the next few months, says the East ASEAN Growth Area (EAGA) is "perhaps the last frontier of South-east Asia.. Like many frontier areas, whilst its people may not have fully participated in the development process characterising the reach of the rest of South-east Asia, the potential is vast," the report said.

The overall approach to EAGA must be the "regionalisation of production to generate positive economies of scale and enhance the competitiveness of EAGA in regional and global markets".

The four governments in EAGA thus need to work on increasing the efficiency, level and growth of new forms of cross border joint ventures and regional economic activities, the report adds.

Efforts toward integration would be aided by having governments focus on facilitating the needed infrastructure, such as roads, telecommunications and banking services and easier travel within the region.

The consultants say the role of governments is to act as enablers that give the right signals to business, adding that the governments are expected to be heavily involved in the EAGA initiative in its early years.

But the realisation of commercial opportunities can be done only with the private sector, which the report says will be the one to "drive the development...and create wealth for EAGA".

Filipino officials report a perceptible increase in trading and investments in the region since the idea was first floated in 1992. Businessmen say the idea generated its own momentum, adding they are not waiting for the government to take the lead.

The report proposes that projects under the EAGA action plan be divided into short-term ones that can be accomplished in less than three years, and longer-term ones of up to 10 years.

The report lists some 100 proposed fast-track initiatives, over a third of which are in transportation and communications, which highlights the need for substantial infrastructure in the region. Human resources also need to be addressed early, because of the need to facilitate the training and movement of labour.

Among the report's proposals are the establishment of a Filipino labour bureau in Kota Kinabalu and a sub-office in Sandakan as well as the regularisation of undocumented workers in Sabah and Labuan, both in eastern Malaysia. Other proposals are the introduction of "smart cards" of restricted passports for use within the EAGA region. But these recommendations, intended to free the movement of people, may tread on sensitive areas because of the touchy issue of labour mobility between long-time porous borders between southern Philippines and eastern Malaysia.

For the long term, the report lists projects it believes will push regional integration, ranging from rubber investments, paper production, creation of a venture capital fund for cross-border investments, cargo terminals, airport improvements, fiber-optic cable link and a gas pipeline project.

Nearly 70 per cent of all initiatives listed in the report are multi-country proposals involving two or more of EAGA members, and about 60 per cent potentially involve all four partners.

The EAGA study's aim is draw up a strategy for increasing the level of economic cooperation among members and spur the east ASEAN region's overall development, the report said. It also holds out a vision for a region that will do more than trade in and develop its rich resources. Eventually, the economy should branch out from one based on high value-added processing and manufacturing activities needed to 'maintain' a growing sub-regional EAGA economy, to non-resource based activities.

"As the capacity of EAGA develops and a critical mass of economic activity is created, it is expected that industrialisation will proceed apace," the report said.