GROWTH TRIANGLE

 

WEEK 8: GROWTH TRIANGLE

INTRODUCTION.

            Growth triangle is the one initiative or program to ASEAN develop their economy among members. It is two or more countries that cooperate each other to create new economic dynamo to rival anything in Southeast Asia especially the countries that share the boundaries. This program also will help to achieve the objective trade liberalization that outlined by AFTA. Actually, it was the establishment of a regional development model in which the focus is placed on private sector-led growth rather than the traditional government-led development drive. According to Dent (1998), it is important to note that this Sub-Regional Economic Zone (SREZ) is a contagious border region made up of several nation states that have engaged into a symbiotic growth partnership. Examples of current economic cooperation among growth triangles include the Indonesia, Malaysia, Thailand - Growth Triangles (IMT-GT), Indonesia, Malaysia, Singapore - Growth Triangles (IMS-GT), Mekong River Regional Triangle, and the Brunei, Indonesia, Malaysia, Philippines - East Asian Growth Area (BINDA) (BIMP-EAGA). In the heady days of Southeast Asia prior to 1997, Fidel Ramos, former Philippine President, came up with the idea for the (BIMP- EAGA) project.

DEVELOPMENT IN THE INDONESIA-MALAYSIA-SINGAPORE GROWTH TRIANGLE

“WHAT”

IMS-GT which is the Indonesia-Malaysia-Singapore Growth Triangle is the sub-regional economic cooperation and integration. It is the two nearest neighbors of Singapore which is the natural choice to start a triangular arrangement as there were two existing bilateral arrangements. It can be referring towards the one connecting Singapore with Riau and the other linking Singapore with Johor. It has been developed because it seen to have potential in term of capital, technology, and expertise. It is the partnership agreement to strengthen economic links in the region among these three countries. The promotion and trade investment are the economic development among them. The countries involved get mutually benefit in the context of capital flows, technology sharing, and manpower. Those distribution are more freely, fairly, and transparently. Then, the increased trade activity at the level of INTRA-ASEAN. The countries have their own function in term of the growth triangle. But the development of the IMS-GT much depends on Singapore. There are a few factors why it depends on Singapore. First, the private sector in the country has enough entrepreneurs that willing to expand their economy activities other than in Singapore. Second, Singapore firms have the capital, technology, and expertise capacity to invest in other countries. Third, the good and developed infrastructure facilities especially shipping facilities and the best port in this region. Fourth, Singapore earns a higher cost of profit than other countries.

 

 

“WHY”

Growth Triangle (IMS-GT) is one of action taken by Southeast Asia country which is Indonesia, Singapore, and Malaysia to develop their country by regional cooperation. It is because these countries have common interest and strategies in increasing production globally. Moreover, these countries intended to have more globalizing production processes by develop strategies of attracting foreign capital as well as expanding exports to lift the economic performance. By form Growth Triangle, these countries believe that this strategy can stimulate and synergize existing local economies. This strategy was form geographically which these countries are near to one another which aim to develop economic through promotion of trade and investment. Meaning that, it can help to reduce cost because the markets are near between these countries.

            In 1989, four growth triangles were established involved 11 countries which is Japan, Republic of Korea, Brunei, Indonesia, Malaysia, Philippines. Besides that, there is East ASEAN Growth Area which is involved Cambodia, Laos, Myanmar, Thailand, Vietnam, and China. However, IMS-GT is new strategy or evolution made by three countries which their territories is nearby to develop economy. Furthermore, when these countries has near region can increase job opportunities in order to increase production globally as well as develop their economy. Besides that, when these countries are cooperated together which means that they are stable together that can lead to other investor from other country.

As result, economy of Singapore grows rapidly for over forty years. Singapore is focus on high technology manufacturing, advanced research and development. Meanwhile, Malaysia which a country that run through intermediate stage of development are focus on level of high technology as well as research and development. For Indonesia, this country is focus on industrialization. Even though, these three countries have different methods to develop economies of their countries, but they have common interest. Meaning to say, although these countries going through different stages of development but with Growth Triangle, they are confident that their objectives can be achieved.

 

CHALLENGES OF GROWTH TRIANGLE

1.    The area must offer economic complementarity.

The border areas that involved should provide some resources to help Growth Triangle economy, which need fully investigated. Differences in factor endowments, such as land, natural resources, labour, technology, and capital, lead to complementarity. The IMS-GT formation GT is a great illustration of how this area provides these characteristics to other nations who are deficient.  The countries involved such as Singapore, Indonesia and Malaysia need to provide sufficient resources to ensure that the GT project can be implemented efficiently. These three collaborations of countries can share their resources in order to fully complete the establishment of the project GT.  This is because the countries that are less of resources are needed help from those countries that are advance in natural resources. It shows that when the country are less of economic complementarity, it will make the country too dependent on develop country. For example, Indonesia is having unskilled labor and basic of technology while Singapore has skilled labor and advance skilled.

 

2.    Supportive facilities and infrastructure

People's mobility and the movement of products require a comprehensive network of high-quality facilities and infrastructure, such as telecommunications and transportation services. The present infrastructure for intra-border goods trade has to be reviewed. This needs a significant investment in development, which is tough to manage and control. This supportive facilities and infrastructure are needed as to ensure that the establishment of the project under growth triangle are able to be made. Each of the countries needs to provide an advance of infrastructure in order to run it smoothly. Without advance and supportive of facilities and infrastructure it will jeopardize the progress of GT. Some of the countries are unable to provide facilities and infrastructure as it will incur cost of money and slow development of the progress. This will be challenges of the country to implement it that need to be managed.

 

3.    Market access

As we know, Growth Triangle is another collective of collaboration between ASEAN members in term of economic development. Countries that sharing close borders among them such as Singapore and Malaysia are encouraged to embark this program because can give benefits for their region. In term of market access, ASEAN regions should take action so that they people can give good contribution in economic sector. The important factor that need to monitor is, the distribution centre of goods and services must be surely easy for the people to access. In another word, the market access must be in a good geographical and demographic area along with the getting attention from the publics. To make sure that it is a good market access, the people in that area are people with high of the wages to ensure they can contribute well in the economics of their own regions. However, in Growth Triangle between Indonesia, Malaysia and Singapore are, their people mostly are low income people. This can be one of the challenges for the growth economic in their region. The population of people live close with the border also come from small size. Because of that, the power of buying, demand for the good and services are also limited. This can make that ASEAN region cannot achieve their targeted economic. 

 

 

4.    Internal political issue

The political issue also becomes the constraint to the successful of Growth Triangle and to ensure that their economic can be develop through the Growth Triangle, all the leaders in ASEAN region especially Indonesia, Malaysia and Singapore need to make sure their region free from political issue such as the territorial dispute likes Pulau Batu Puteh between Singapore and Malaysia. This political issue will force and making the others country especially the big investors feel reluctant and afraid to invest in that country. The investors are making that decision to avoid any circumstances that might happen in the future. Apart from that, safety issue for example like the threats from the pirates also become the challenge to develop the economic growth in Indonesia, Malaysia and Singapore. Lahad Datu, Malaysia for example are one of the states in Malaysia that always face the threat from the pirates.  The impact from that incident is, can make the others people are afraid to do selling activities because can give threat to them. Internal political issue such as the dispute, threat from pirates and et cetera need to solve quickly to ensure the successful of Growth Triangle.

 

CONCLUSION

As conclusion, The Growth Triangle (IMS-GT) is a regional development initiative by Indonesia, Singapore, and Malaysia. This approach was formed geographically close countries that strive to develop economic through trade and investment. Furthermore, these countries may create jobs and strengthen their economies by expanding their regional reach. Also, when these countries work together, they become stable, which attracts foreign investors. Malaysia, a country in an intermediate stage of development, focuses on high technology and research and development. Although these three countries have distinct approaches to economic growth, they share a common goal. Singapore, Indonesia, and Malaysia must give sufficient resources to guarantee the GT project runs smoothly. Because countries with less natural resources require aid from those with more natural resources. It illustrates that lack of economic complementarity makes a country excessively dependent on developed countries. Some governments are unable to provide facilities and infrastructure due to high costs and delayed progress.

 

References

Asmawi, Abdullah. (2017, March 3). Kerjasama Serantau - Segi Tiga Pertumbuhan. Retrieved from slideshare.net: https://www.slideshare.net/asmawi1975/kerjasama-serantau-segitiga-pertumbuhan