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OP 23 East Sea Rim Economic Growth Area

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OP 23 East Sea Rim Economic Growth Area
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    East-Sea Rim Economic Growth Area: Lessons from the Brunei Darussalam-Indonesia-Malaysia-The Philippines East  ASEAN Growth Area  Tereso S .  Tullao  ,  Jr ., Ph.D and Kurt Gerrard T. See  Yuchengco Center 2 East-Sea Rim Economic Growth Area: Lessons from the Brunei Darussalam-Indonesia-Malaysia-The Philippines East ASEAN Growth  Area 1   Tereso S .  Tullao  ,  Jr ., Ph.D. 2  and Kurt Gerrard T. See 3  1. Introduction  The establishment of geographically-based economic growth areas has been proven to be an effective tool to accelerate development. Often, these initiatives involve the creation of a sub-region comprised of strategically-located cities and provinces within different countries. In recognition of the fact that key sectors of the economy are highly dependent on proximity and accessibility, e.g., trade, transportation, tourism, and investment, growth areas intend to strengthen collaboration and cooperation between concerned countries in order to capitalize on topological advantages.  The East-Sea Rim Economic Growth Area (ESR-EGA)  –   a sub-region that links selected cities and provinces in China, Japan, and South Korea  –   is among the most recent initiatives to have been formed. The extent of its efficacy will depend on the design and execution of policy-coordination and capacity-building plans among participating countries. Given that the creation of growth areas is no longer an unchartered endeavor, it will be insightful to peer into the experiences of sub regions that preceded the ESR-EGA.  This study aims to analyze the growth experience of the Brunei Darussalam-Indonesia-Malaysia-The Philippines East ASEAN Growth Area (BIMP-EAGA). Special focus will be given to (1) different modes of cooperation, (2) collaborative/coordinated policies implemented, and (3) responses to past and present challenges. Key findings will assist the seamless and successful integration of member economies of the ESR-EGA. 1   Paper     presented at the 2012 International Conference for East Sea Rim Regional Studies. Kyung Hee University, Yongin City, South Korea, April 26-27, 2012. 2   Full Professor, School of Economics, De La Salle University 3  Assistant Lecturer, School of Economics, De La Salle University      East-Sea Rim Economic Growth Area: Lessons from the Brunei Darussalam-Indonesia-  Malaysia-The Philippines East ASEAN Growth Area    3 2. The BIMP-EAGA During its inception in 1994, the BIMP-EAGA initially comprised of the entire sultanate of Brunei Darussalam; the provinces of East and West Kalimantan, and North Sulawesi in Eastern Indonesia; the states of Sabah and Sarawak and federal territory of Labuan in Malaysia; and the region of Mindanao and the province of Palawan in the Philippines (Dominguez, 1998). After a few years, Indonesia expanded its participation by including the entire provinces of Kalimantan and Sulawesi. Today, the BIMP-EAGA covers more than 1.6 million square kilometers of land area inhabited by more than 57 million people (ADB, n.d.).  The primary objective of the BIMP-EAGA is to increase trade, tourism, and investment activity by means of (1) decreasing barriers to the free movement of people, goods, and services across participating regions, (2) ensuring the sustainable and optimal use of common resources and infrastructure, and (3) taking advantage of economic complementation within the sub-region. Like many other growth areas, the BIMP-EAGA is market driven.  This suggests the absence of single authority that governs the sub-region; instead, the four participating governments and the private sector oversee its operations.  To ensure proper design and effective implementation of projects and policies, a number of organizational bodies and fora for inter-country dialogue were institutionalized. Besides the annual BIMP-EAGA Summit  where leaders assessed past performance and formulated new objectives (and associated action plans) that responded to various changes in the economic landscape, the biannual Senior Officials Meeting and the annual Ministers Meeting (SOMM) are held to ensure consultation and strategic planning among member countries. Intended to complement planning initiatives, the BIMP-EAGA Facilitation Center was formed to create more systematic institutional coordination and project facilitation mechanisms. Moreover, each country designates a government agency to function as a national secretariat whose mandate is to oversee in-country projects and provide   technical or administrative support. The participation of the private sector is also accommodated by the presence of the BIMP-EAGA Business Council  where industry players are able to align their interests with the sub-region.  Yuchengco Center 4  All in all, the efficiency of establishing a growth area will rely on the:     Availability of forums for assessment, dialogue, and planning among member countries.    Establishment of an organizational body that will coordinate and implement projects/policies.    Creation of a domestic body that will oversee and manage in-country issues and coordinate with sub-regional offices.    Presence of a facility that will allow input and participation from the private sector.    Provision of sufficient flexibility and autonomy over member countries. 3. Developmental Initiatives In its most recent initiatives, the BIMP-EAGA focused on four key areas of growth, namely: (1) Small and Medium Enterprises (SME) development, (2) sustainable development and environmental management, (3) tourism development, and (4) transport, infrastructure, and ICT development. 3.1 SME Development  The economy of the BIMP-EAGA is reliant on micro, small, and medium enterprise (MSMEs). Table 1 shows the businesses defined by size of employment while Table 2 shows the distribution of enterprises by size of employment within the EAGA. As can be seen, more than 90 percent of all businesses in the sub-region consist of micro, small, and medium enterprises.  Table 1. Businesses defined by size of employment in BIMP-EAGA, 2009 Size of Enterprise Brunei Indonesia Malaysia Philippines Micro - 1-4 - 1-9 Small 1-50 5-19 50 and below 10-99 Medium 51-100 20-99 51-150 100-199 Large Over 100 100 and above Over 150 200 and above Source: Vega, 2009   East-Sea Rim Economic Growth Area: Lessons from the Brunei Darussalam-Indonesia-  Malaysia-The Philippines East ASEAN Growth Area    5  Table 2. Distribution of firms by size of employment in BIMP-EAGA, 2009 Size of Enterprise Brunei Indonesia Malaysia Philippines Micro - 92.5 - 99.0 Small 94.3 7.3 93.8 Medium 3.4 0.5 Large 2.3 0.2 6.2 0.5 Source: Vega, 2009  With the interests of nascent businesses in mind, the sub-region has implemented programs to increase foreign direct investment and capitalize on the creation of backward and forward linkages within the domestic economy. In addition, BIMP-EAGA conducts regular private sector selling and buying missions, business matching sessions, and events/conferences to enable economic agents to capitalize on business opportunities which would otherwise have not been found. Several free trade zones were also established in order to attract firms that seek to capitalize on preferential tax and investment policies. Beyond the creation of an investment hub, the sub-region has enhanced the free movement of goods and services across participating countries by harmonizing customs policies in each location. These include streamlining documentary processes, refining sanitary and phytosanitary standards (SPS), establishing rules of srcin, and eliminating other non-tariff barriers. Such steps reinforce efforts to liberalize trade via the gradual reduction and eventual removal of quantitative restrictions. Last, cross-border trade is enhanced by the creation of one-stop licensing and registration of trade activity.  Alongside policy reforms and incentive-creation, the promotion of regional and domestic trade requires sufficient information. Not only will information aid firms’ decision -making and profitability, it will explore possible opportunities within the region. These include compiling and consolidating trade and investment policies, rules, regulations, and procedures, developing and maintaining a web-based trade and investment database, disseminating labor market information and, publishing industry profiles.  To guarantee the sustainability of businesses, BIMP-EAGA conducts SME project facilitation initiatives through business development services

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Oct 7, 2019
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