Connectivity key to Asean growth
Connectivity key to Asean growth
Southeast Asian business and political leaders meeting in Phnom Penh yesterday said multilateral connectivity, both physical and digital, was needed to ensure that Asean’s development and growth was not restricted by national borders.
Delegates attending the second day of the World Economic Forum (WEF) on Asean stressed the importance of a unified vision and cooperation in achieving inclusive development and prosperity. They noted that it has been 50 years since Asean was formed yet the 10-member regional economic bloc still lacks cohesiveness, with large inequalities between member states such as Singapore and Cambodia.
Transportation infrastructure is the most basic form of connectivity, and yet several Asean member states including Cambodia continue to suffer from inadequate linkages in terms of roads, railways and ports.
Addressing a WEF panel session yesterday, Sun Chanthol, Cambodia’s minister of public works and transport, said building physical connections with the country’s immediate neighbours has been a top government priority for increasing economic growth. He said large parts of the Kingdom’s economy, including tourism and exports, relied heavily on access to the rest of the region.
“That is why we need to invest more in linkages on the roads between Cambodia and Thailand, Cambodia and Vietnam, Cambodia in Laos,” he said. “So we invested heavily over the past five years, [with] $5 billion in infrastructure.”
Chanthol noted that the success of infrastructure projects in Cambodia weighed heavily on the quality of the infrastructure that they connected to in neighbouring countries. “It is important to work together. I don’t [want to] build an expressway between Cambodia and the Vietnamese border if there is no connection between the border and Ho Chi Minh,” he said.
He added that good physical linkages only went so far, explaining that they needed to be supplemented with effective common border and trade policies.
“It is not only the physical infrastructure, the institutional connectivity is extremely important,” he said, adding that Asean needed to move towards single-window export procedures with a single inspection mechanism to enable seamless trade flow across borders.
Jin Liqun, president of the Asian Infrastructure Investment Bank (AIIB), echoed the minister’s sentiments during the panel and explained that failing to consider how infrastructure projects linked regionally could lead to poor return on investments.
“Infrastructure investment could be very productive, but if it is not well coordinated, it could be disconnected and a waste of resources,” he said.“Regulatory harmonisation would really help make the investment infrastructure go a long way.”
The AIIB president explained that traditional infrastructure would inevitably lead to greater connectivity in other areas, including financing and regulation, allowing all Asean members to benefit from the economies of scale that region-wide efforts would create.
“Eventually this physical connectivity or policy harmonisation would lead to a higher level of coordination,” he said, expressing hope it would also lead to financial market integration.
Cambodian Prime Minister Hun Sen, speaking during the official opening session of the forum yesterday, said the first priority for Asean is to the push forward the proposed Regional Comprehensive Economic Partnership (RCEP), a multilateral trade agreement seen as China’s answer to the Trans-Pacific Partnership (TPP). He noted that the RCEP was less divisive than the TPP, with all 10 Asean member countries forming the backbone of the negotiations for the agreement, which involves a total of 16 countries.
Hun Sen noted that Asean is currently the third-largest economy in the region and the seventh-biggest in the world, with a combined GDP of $2.6 trillion in 2016. However, he recognised that closer coordination would be needed to fulfill the 10-year development goals set out by the member states in 2015.
“[We] need to improve the connectivity of the Asean region by 2025 in all forms, [including] infrastructure, institutions, people to people, leveraging competitiveness, inclusiveness and sustainability of the region’s economy,” he said.
