Special Border Economic Zone in IMT-GT and BIMP-EAGA Subregions

Transcription

1 Special Border Economic Zone in IMT-GT and BIMP-EAGA Subregions Session 4: Developing CBEZ and Economic Corridors Alfredo Perdiguero, Director (SERD) 27 November 2017

2 Outline 2 I. Background: SBEZ Model, Rationale II. IMT-GT SBEZ (Thailand- Malaysia) III.BIMP-EAGA SBEZ (Indonesia- Malaysia)

3 SBEZ Model 3 SEZ Near gateways to international markets; lower production and logistics costs of companies Objective commercial (profit maximization) SBEZ Attract investors in productive activities to promote subregional value chains Stimulate cross-border trade and investment Catalyst to commerce along economic corridors Improve social and economic welfare of population

4 4 attract investment; transfer know how and technology employment and develop skills cross-border trade and investment (along economic corridors) social and economic development in border areas reduce agglomeration around megacities; balanced growth demonstration area complementarity of resources across borders (land, capital, labor) utilize resources along borders expand markets and economies of scale

5 5 Level 1 SBEZ facilities on either or both sides of the border Level 2 Informal SBEZ collaboration cross-border VCs and infrastructures Level 3 Joint SBEZ facilities and supporting activities

6 6 Corridor System 5 1 Thai-Malaysia Border LEGEND: 1 - Extended Songkhla-Penang-Medan Corridor 2 - Straits of Malacca Corridor 3 - Banda Aceh-Medan-Pekanbaru-Palembang Corridor 4 - Melaka-Dumai Corridor 5 - Ranong-Phuklet Ace Corridor 3 Thai-Malaysian Railway Systems

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8 Scoping Study for the Special Border Economic Zone in the Indonesia-Malaysia-Thailand (IMT-GT) Growth Triangle 8

9 Country 1 Country 2 9

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11 11 Commercial Focus Welfare Focus Su Ngai Kolok - Rantau Panjang Ban Prakob - Durian Burung Sadao - Bukit Kayu Hitam Padang Besar (Songkhla & Perlis) Betong - Pengkalan Hulu Wang Prachan - Wang Kelian Takbai - Pengkalan Kubur Ban Buketa - Bukit Bunga Ban Prakob - Durian Burung Su Ngai Kolok - Rantau Panjang Sadao - Bukit Kayu Hitam Padang Besar (Songkhla & Perlis) Wang Prachan - Wang Kelian Betong - Pengkalan Hulu Takbai - Pengkalan Kubur Ban Buketa - Bukit Bunga

12 BIMP-EAGA CORRIDORS STUDY Industries with Potential for Corridor Value Chains 12 GREATER SULU SULAWESI ECONOMIC CORRIDOR (GSSC) Food & Beverage Fisheries Tourism High value fruits CORRIDOR and vegetables (WBEC) WEST BORNEO ECONOMIC Food & Beverage Education Tourism Rubber ICT Fisheries Organic and Halal Foods

13 BIMP-EAGA Border Area Development and Value Chains Project Context To address the problems that have prevented a robust expansion of intraregional trade in BIMP-EAGA. Cross-Border Trade & Investments Foreign investments concentrated in large companies with vested interests in extracting raw materials or profiting from low-cost factors of production. Border areas lack integrated hard and soft infrastructure. SMEs lack knowledge about how to participate in value chains. Project feasibility studies are proprietary to large investors (company or individual investment groups). Non-monetarized investment goals are government driven, rather than balanced with other stakeholder groups (SMEs, local households, NGOs) Driver IIntra-Regional Trade Intra-BIMP-EAGA trade in the last 10 years has remained stagnant. Between 2000 and 2007, intraregional trade relative total trade rose from 4.5% to 6.7% Since 2007, however, intraregional trade shares have remained virtually unchanged. BIMP-EAGA Intra-Regional Trade as Percent of Total Trade Indicator Connectivity Air, road and sea connectivity between BIMP-EAGA member country areas is often limited. Road connectivity between Borneo s Malaysian states and the Kalimantan provinces is rudimentary or nonexistent. The Sulu Sea area has been subject to terrorist threats, insurgent activities, and kidnappings. Air connectivity between BIMP-EAGA territories are often limited or require long, indirect routings. Precondition

14 North Kalimantan and Sabah 14 Source: Adopted from Google Maps

15 BIMP-EAGA Border Area Development and Value Chains Example of Possible Project Approach based on Pilot Project

16 BIMP-EAGA Border Area Development and Value Chains Project Components for Pre-Feasibility Study Economic Profiles 8 Overall Program Appraisal & Execution Strategy Government Objectives. 7 Non-Monetarized Project Appraisal Economic Analysis of Traded Goods 6 Cost-Benefit Analysis Economic Analysis of Traded Services 5 Program Design

17 BIMP-EAGA Border Area Development and Value Chains Example from Sabah-North Kalimantan Pre-Feasibility Study Example Components of Sabah-North Kalimantan Pre-Feasibility Study: Fieldwork: SWOT analysis, nongovernment stakeholder consultations, industry site visits Monetarized project appraisal, infrastructure requirements, cost and benefits estimates, and gap analysis Overall program appraisal, including program EIRR and other matrices, non-monetarized project rankings, and implementation strategy Step One Step Three Step Five Step Two Step Four Step Six Consultations with Governments of Indonesia and Malaysia Economic analysis, cross-border supply and value chain designs Non-monetarized project goals, stakeholder ratings, and project rankings 1 Month 1 Month 2 Months 2 Months 1 Month 1 Month 8 Months to Completion

18 BIMP-EAGA Border Area Development and Value Chains Results: Monetarized Project Benefits Sabah-North Kalimantan Sabah: Overall program Economic Internal Rate of Return (EIRR) = 22.6% Medical Tourism 22% Wood Products 3.7% Palm Oil 18% Fisheries TVET 18% Fisheries 20.5% 20% 25.5% Wood Products Palm Oil 16.5% North Kalimantan: Overall program Economic Internal Rate of Return (EIRR) = 22.1% Note: Percentage figures in boxes refer to Economic Internal Rate of 18Return (EIRR)

19 BIMP-EAGA Border Area Development and Value Chains Connectivity Impact Analysis for Sabah-North Kalimantan Sabah Impact of Cross-Border Road Construction on Program's Economic Net Present Value of Trade in Goods (US$ million) North Kalimantan Impact of Cross- Border Road Construction on Program's Economic Net Present Value (US$ million) $318 $62 Difference With Road Without Road -$256 19

20 BIMP-EAGA Border Area Development and Value Chains Beyond Inward Looking Strategies will Require Deeper Changes Export-driven strategy Development strategy Scope of non-monetarized program goals Mobilization approach Business as usual Primarily extra-regional Provincial or state-wide Broad-based and self-contained Independent of intra-regional trade expansion strategies Mostly passive Governments and development institutions count on private-sectordriven trade and investment strategy...or a bolder approach? Expanded to intra-regional value chains Value added to newly emerging products Infrastructure supporting cross-border connectivity Regulstory facilitating mechanisms Focus on collaboration with cross-border networks of productive activities, buidingon interrelated sets of activities within a cluster framework Fully integrated into project selection processes Stakeholder groups from local populations and SMEs engaged in identification and selection of projects Engaged and active Governments and development institutions take accountability of support to cross-border value chains through soft-hard infrastructure commitments Export multiplier goal 2x 6x 20

21 BIMP-EAGA Border Area Development and Value Chains 21