Building a ‘Locally Integrated and Globally Connected’ ASEAN

17 November, 2011 | Source: The Jakarta Post

Since the building of the 41.3-kilometer-long Cipularang toll road in 2005, the travel time between Jakarta and Bandung, around 130 kilometers, has come down to just two hours by bus or car from a previous three-four hours.

As a result, Bandung has become a tourist and shopping paradise for millions of Jakartans. It also led to an unprecedented economic boom in Indonesia’s third largest city. This is a small example of how the connectivity improves the well-being of the people.

What will happen if the whole Southeast Asian region is connected regionally as well as globally? It will bring enormous economic and social benefits to its 600 million people. That is why, President Susilo Bambang Yudhoyono called for the development of a “locally integrated and globally connected” ASEAN while opening the 44th ASEAN Foreign Ministers Meeting in July in Bali.

How can we develop this in such a diverse region?

In fact, the 10 leaders of the Association of Southeast Asian Nations (ASEAN) decided in 2003 to form the ASEAN Economic Community (AEC) with four major features. They are: a single market and production base; a highly competitive economic region; a region of equitable of economic development and a region fully integrated into the global economy. All these must be achieved by 2015.

Among the four features, the most important is to create a single market and production base of ASEAN. It has five core elements: free flow of goods, free flow of services, free flow of investment, freer flow of capital and freer flow of skilled human resources.

Though trade facilitation, integration of customs procedures, harmonization of standards and establishing a Single ASEAN Window are important for the AEC, enhancing connectivity is the most important for the whole effort.

“The connectivity … covers two major areas. One is within the grouping itself, and the second complements a broader framework of East Asia and beyond,” ASEAN Secretary General Surin Pitsuwan wrote in an article on connectivity in the Strategic Review journal.

Basically, connectivity is divided into three parts. The first one is physical connectivity, which focuses mainly on land, sea, air and railway transportation, port facilities, power grids, logistics, telecommunications and information communication technology.

The second is institutional connectivity that refers to trade and investment liberalization, legal frameworks and capacity building programs while the third is people-to-people connectivity.

“Greater people-to-people contacts will contribute to promoting greater awareness and deeper ties between ASEAN peoples and foster a stronger sense of shared cultural and historical linkages,” Surin said.

“Cultural diversity can provide the impetus for creativity, innovation, and development when opportunities are created for greater interactions between peoples in ASEAN”.

The connectivity is a concrete effort that would bring about several economic and non-economic benefits like employment, business and tourism opportunities and efficiency.

“In ASEAN, we have several things (like ASEAN Anthem and logo) that are symbolic. Connectivity is a real thing that brings people and regions together,” said Barry Desker, the Dean of S. Rajaratnam School of International Studies of the Nanyang Technological University in Singapore, recently in Jakarta.

To implement this, ASEAN leaders adopted the Master Plan on ASEAN Connectivity (MPAC) in October 2010.

Under the master plan, there are 15 priority projects to enhance ASEAN connectivity. Completion of the ASEAN Highway Network or AHN (23 routes), which will be 38,400 kilometer-long in total, is one of the main tasks among them. In Indonesia, the new routes, which are part of the AHN, cover some 4,143 kilometers.

Meanwhile, Indonesia’s Deputy Minister of Transportation Bambang Susantono said there should be more focus on domestic connectivity.

“Domestic connectivity is important to support regional connectivity. Indonesia wants to narrow the development gap and reduce pockets of poverty through connectivity,” Bambang said in Jakarta recently.

Under its Master Plan for Acceleration and Expansion of Indonesia’s Economic Development (MP3EI), Coordinating Minister for Economy Hatta Rajasa said, Southeast Asia’s largest economy would spend $468 billion on a rapid build up of massive infrastructure in the next four years.

There is also a plan to connect Singapore and Kunming through a rail line. The establishment of the ASEAN Broadband Corridor, Malaka-Pekanbaru and West Kalimantan-Sarawak interconnection energy production lines, implementing a National Single Window system and transportation facilitation are some other priority projects.

In the maritime sector, ASEAN countries want to create an integrated maritime system that is efficient and competitive. Building a safe navigation system and establishing reception facilities at ports are also on the agenda.

The region is also planning to have an ASEAN Single Aviation Market and create an aviation friendly environment. There will be also an Open Sky policy and air links with East Asian countries as well other ASEAN Dialog Partners.

To make ASEAN connectivity a reality, according to the Asian Development Bank (ADB), ASEAN countries have to spend almost $600 billion for building both national and regional infrastructure facilities.

With an initial amount of $485.2 million, ASEAN and ADB have set up an ASEAN Infrastructure Fund (AIF) to attract private sector financing for big infrastructure projects.

Why should ASEAN connect itself to East Asian countries?

For ASEAN’s progress, East Asia, the new hub of global economic and political activities, is an essential element.

“East Asia is becoming more important in ASEAN as about 55 percent of ASEAN’s total trade of US$2 trillion is with that region. Similarly, 55 percent of the tourist arrivals into ASEAN are from East Asia,” ASEAN’s deputy secretary-general for ASEAN Economic Community S. Pushpanathan told the ASEAN Affairs magazine recently.

Last week, a symposium in Bali on ASEAN Connectivity jointly organized by Indonesia’s Foreign Ministry and the Economic Research Institute for ASEAN and East Asia (ERIA) concluded that significant progress has been made in implementing the master plan since last year. But the focus should be now on mobilization of resources.

“It is essential to have sound, attractive and bankable infrastructure projects to attract funding from the private sector for private-public partnerships (PPPs) projects, and this means the need for appropriate infrastructure and resources to support PPPs. In particular, such as: transportation, ICT and the energy sector,” ERIA and the Foreign Ministry said in a press release.

As missing links in road, rail, sea and air connections, poor infrastructure in several countries, problems in ratification of transportation agreements and scarce resources remain tough challenges, ASEAN countries have no other option but to implement the MPAC in total.

“ASEAN Connectivity is indeed a Herculean project, but a necessary element in ASEAN community building and ensuring our competitiveness globally,” Surin said.

 

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