***Economic experts believe that the momentum towards forging multi-layered links in South east Asia region could very well lead to greater integration of the region's economies. Surya Gangadharan of IPS writes from Singapore.
Economic dynamism, rather than political Initiative, may yet bring about the long dreamed of integration of South-east Asia s economies.
As trade alliances come up elsewhere in the world, there is an Increasing trend toward forging links within the region and creating economic growth triangles' In South-east Asia.
South Korea has been designated a dialogue partner' of the six-member Association of South-east Asian Nations (ASEAN). And the countries of Indochina and Burma may Join as ASEAN members.
China may be admitted to the Asia-Pacific Economic Conference (APEC), a Pacific grouping consisting of ASEAN and Australia, New Zealand, Canada, the United States, Japan and South Korea.
The idea of economic growth triangles is acquiring momentum. The linking of the economies of Singapore to that of the Malaysian state of Johor and Indonesia's Rlau islands in a triangle of trade, investment and business has had echoes elsewhere in the region.
A similar triangle Involving the northern Malaysian Island of Penang, southern Thailand and north Sumatra In Indonesia is now being studied. There are prospects of another triangle Including the eastern Malaysian states of Sarawak and Sabah.
In China, southern Guangdong province has been linked with Hong Kong in the Shenzen special economic zone. Similar plans are in the offing for Fujian province in the north and for the Zuhai-Macau area in the south.
Singapore may soon be linked to this newly developing triangle in East Asia if the recent visit to Shenzen of Singapore's Minister for Trade and Industry Lee Hslen Loong is may indication.
The island republic is apparently keen to lend its expertise in helping develop special economic zones and serving as the conduit for transnational capital and investment.
To a growing body of academics and economic analysts,
such frenetic activity adds up to one inescapable conclusion — that these multi-layered, sub-regional groupings will collectively lead to a broader economic integration.
"It was this kind of disorderly formula that proved the key to success in Europe," said political science professor Paul Evans of Canada's York University.
"It could well be so in the making of a new economic order in As la-Pacific," wrote Evans Trends' the journal of the Singapore-based Institute of South-east Asian Studies
(ISEAS).
To be sure, the Malaysian-sponsored East Asian Economic bloc has yet to take off, mainly because of the disinclination of Japan — the dominant economic power in the region — to endorse it
The Asean countries of Singapore, Thailand, the Philippines, Brunei, Malaysia and Indonesia have yet to accept APEC for fear of being swallowed by the big powers of the United States, Canada and Japan.
But Lee Tsao Yuan, deputy director of the Institute of
Policy Studies here, believes there are exciting prospects ahead for South-east Asia as a special economic zone.
"Whether they are achievable depends on how willingly governments transcend narrow self-interest and national prejudice, and how ready they are to accept that there are benefits to accrue from thinking regional," Lee said.
The euphoria of high growth and cooperation, said Lee, tended to obscure questions of national sovereignty, currency domination and foreign polity.
• In currency, for example, Singapore has always discouraged the internationalisation of the Singapore dollar. Similar problems exist With the Malaysian ringgit and the Indonesian rupiah.
Ironically, socialist China is showing the way. In the Shenzen special economic zone and Guangdong province, it is the Hong Kong dollar which has been accepted as the dominant currency.
Sree Kumar, a research fellow at the ISEAS, points to another problem. "Growth could slow down if the differences in comparative advantage among neighbours diminish," he said.
Industry, which is always seeking lower production costs and higher profits, could divert its investments elsewhere. explained Kumar.
This problem is multiplied in South-east Asia where transnational cooperations have led the drive to Industrialise.
Most TnC’s pursue "flexible production strategies", noted Kumar. Thus, they tend to shift production bases when labour costs (usually 15 per cent of total operating costs) go up.
This trend gets accentuated when currency volatility increases.
The practice of locating units close to "brain centres" where research, design and development takes place, also makes South-east Asian triangles very vulnerable, said Kumar.
There is therefore a need to encourage a wider indigenous industrial base in Southeast Asia," said Kumar.