Asean’s southern grouping gets active

INCREASING ACTIVITY: Leaders of the Association of Southeast Asian Nations (Asean) pose for a group photo during the 22nd Asean Summit in Bandar Seri Begawan. — Reuters photo

An effective force in Asean has recently been making headlines. As opposed to the their counterpart in the Mekong region (a union defined by squabbling), the Brunei-Indonesia-Malaysia-Philippines East Asean Growth Area (BIMP-EAGA) has made large strides to push forward four major projects to work towards integration while promoting sustainable growth.

With Brunei chairing Asean this year, the southern Asean grouping has displayed signs of heeding a positive demonstrative effect, announcing in unison that food security should be atop developmental agendas, a kind of string that ties together the integration projects.

“Achieving food security is one of BIMP-EAGA’s top priorities,” Mindanao Development Authority (MinDA) chair and Philippine-EAGA signing minister Luwalhati Antonino recently said.

“A food and logistics corridor development programme is also being developed to propel BIMP-EAGA’s growing agribusiness industries,” said Antonino.

Indeed, Sarawak and Brunei have been targeted for their potential to become export hubs under the envisioned order, manning logistics for agricultural projects on Borneo, which will be further supported by rail, road and airway integration.

Led through an MoU signed between a large Bruneian cooperative, Koperasi Bumiputera Bersatu Bhd (KBBB), with the Brunei Darussalam BIMP-EAGA Business Council, at the end of June, Borneo’s businesses need to open their eyes to the transformations that are afoot.

The over US$33 billion, 4,440-kilometreTrans-Borneo Railway project, the largest of the four proposed initiatives, aims to circumnavigate the island of Borneo, bridging Sarawak, Brunei, Sabah and Indonesia’s Kalimantan.

Perhaps its largest value, the railway is being designed to cut through portions of Borneo’s hinterlands, providing a new pathway for timber, coal and other resources to find their way to a port for global export.

Sarawak and Brunei can vastly benefit from such a project because they already have active port industries that are being upgraded and added to in efforts to reach some of the fastest growing consumer markets in the world.

Complementing the Trans-Borneo Railway is the Trans-Borneo Bus Services, a project that is being drawn out more as a means to move cargo than passengers on the lightly populated island.

The over US$1 billion bus service will, however, also lay down tracks to move labour across the BIMP region, connecting with ferries in Sabah to connect passengers to the Philippines’ island of Mindanao.

An intra-regional bus service will mark an era of greater mobility for human capital and cargo that take advance of the cheap transport of choice.

But perhaps the most headline worthy news to come out of the BIMP-EAGA meetings was the official announcement of the launch of Brunei’s new low-cost airline in 2014.

With an initial investment of about US$2 billion, Darussalam Air will focus on promoting Umrah pilgrimage trips, in a hope to tap into the majority Muslim populations that make up the selected swathes of the BIMP countries. In the Philippines, where the majority of the country’s approximate nine million Muslims reside, this service is likely to be received with gusto.

Considering regional integration, the low-cost airline will open competitive priced airway linkages the lucrative markets of Japan, South Korea, Taiwan and China, as well as those in the Middle East.

For goods and services being provided in BIMP, the airline routes could be a game changes, especially for Brunei, which will become positioned to be Borneo’s business
gateway.

The airline linkages matches perfectly with the fourth project that has been proposed: the development of 1,000 Asean halal factories. Ideally, these new factories will be able to funnel their goods and services through the new bus, rail and airway pathways that have been designed.

The factories will also create more competition. Sarawak’s Tanjung Manis Halal Hub will have to be managed with these new industry players in mind, strategising just how to work themselves into an island with rapidly developing ambitions to began an export-led economic force.

Malaysia, Thailand, Singapore, the Philippines and Indonesia have already raised their hands to participate in the new halal hubs.

If you were asleep to the ambitions of Borneo before, then it seems certain there are some influential minds at work looking to wake up the world with their show.

Justin Calderon is a research analyst at www.investvine.com, a news portal owned by Inside Investor focusing on Southeast Asian economic topics as well as trade and investment relations between Asian and the Guld Cooperation Council. The views expressed are his own.

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