Greater ASEAN Connectivity to Promote Regional Economic Growth

The Master Plan on ASEAN Connectivity was adopted at the 17 th ASEAN Summit in Hanoi on October 28, 2010. It identifies strategies and specific actions to speed up regional connectivity in three areas: physical connectivity, institutional connectivity and people-to-people connectivity which will be supported by stronger financial mechanisms and institutions.

 

The end result would be that the production and distribution networks in ASEAN deepen (in terms of the value chain), widen (with more commodities and countries or areas in the region engaged in the networks), and become more entrenched in the global and East Asia production and distribution networks. Equally important, enhanced ASEAN connectivity narrows development gaps in the ASEAN region because the ensuing increased connectivity of lagging countries and lagging regions within countries in ASEAN leads to increased opportunities for greater investment, trade and growth in these areas and their revealed comparative advantages flourish. Finally, at the heart of the ASEAN Economic Community are deeper intra-regional economic linkages and networks within ASEAN at the same time, the region becomes more integrated with the rest of the world.

 

In the light of the recent trends in ASEAN-China trade and ASEAN-India trade, intra-ASEAN trade needs to grow at least in step with ASEAN-China trade to reinforce ASEAN’s centrality and its role as the driving force in regional integration. This calls for greater connectivity among ASEAN Member States. Enhanced ASEAN connectivity and the road to an ASEAN Community can help engender greater dynamism into intra-ASEAN linkages at the same time that the ASEAN region becomes more deeply engaged with the rest of the world. Enhanced ASEAN Connectivity will strengthen ASEAN’s role at the centre of East Asian economic integration and the emergence of an East Asian economic community. ASEAN welcomes the commitments of its Dialogue Partners and other external partners to implement the Master Plan on ASEAN Connectivity.

 

Enhanced physical connectivity in the ASEAN region demands, first and foremost, better transport, improved ICT infrastructure and expanded interconnectivity. They are all vital for the seamless movement of goods and tradable services within the region and to the rest of the world. Energy infrastructure, including regional or sub-regional interconnection, which allows for reliable energy at reasonable cost in ASEAN, is important for production efficiency and reliability as well as for energy security in the region.

 

Seven key strategies to enhance physical connectivity include: Complete the ASEAN Highway Network; complete the implementation of the Singapore Kunming Rail Link (SKRL) project; establish an efficient and integrated inland waterways network; Accomplish an integrated, efficient and competitive maritime transport system; Establish integrated and seamless multimodal transport systems to make ASEAN the transport hub in the East Asia region; Accelerate the development of ICT infrastructure and services in each of the ASEAN Member States; Prioritise the processes to resolve institutional issues in ASEAN energy infrastructure projects

 

The Singapore Kunming Rail Link (SKRL) project has been a priority agenda in ASEAN transport cooperation, and the political motivation to complete SKRL is significantly high. SKRL is expected to provide an alternative mode of land transportation, which is more environmentally friendly than road transportation. The SKRL has two lines, an “Eastern line” through Thailand, Cambodia and Vietnam, with a spur line between Lao PDR and Vietnam, and a “Western line” through Thailand and Myanmar. In view of the greater challenges in establishing the Western line, it is preferable to first complete the Eastern line in order to have a fully operational railway link between Singapore and China (via Kunming) as soon as possible.

 

The second critical anchor of ASEAN connectivity, apart from physical connectivity, is institutional connectivity. Enhanced institutional connectivity in the ASEAN region raises the effectiveness of physical connectivity by easing the flow of goods and services (from the elimination of barriers to trade), reducing the cost of moving goods and services (from improved transport and trade facilitation services), and ensuring greater economic and social returns from greater physical connectivity and deeper economic linkages (through higher investments).

 

This would entail much reduced policy and institutional barriers to the movement of goods, services and resources within the region, more harmonised rules, regulations, procedures and standards among ASEAN Member States, as well as improved institutional and infrastructural capability to provide the necessary transport and trade facilitation services (e.g., Transport Facilitation Agreements and National Single Window) for a seamless movement of goods, services and resources in the ASEAN region.

 

Ten key strategies to enhance institutional connectivity include: Fully operationalise the three Framework Agreements on transport facilitation; Implement initiatives to facilitate inter-state passenger land transportation; Develop the ASEAN Single Aviation Market (ASAM); Develop an ASEAN Single Shipping Market; Accelerate the free flow of goods within ASEAN region by eliminating barriers to merchandise trade within the region; Accelerate the development of an efficient and competitive logistics sector, in particular transport, telecommunications and other connectivity-related services in the region; Substantially improve trade facilitation in the region; Enhance border management capabilities; Accelerate further opening up of ASEAN Member States to investments from within and beyond the region under fair investment rules; Strengthen institutional capacity in lagging areas in the region and improve regional-sub- regional coordination of policies, programmes and projects.

 

People-to-people connectivity is the socio-cultural glue that supports and anchors the various initiatives toward greater physical connectivity as well as the regulatory and institutional reforms that are needed to ensure institutional connectivity in the ASEAN region.

 

With an area spanning over 4.43 million km2 and a population of some 591 million, ASEAN hosts one of the richest cultural heritages in the world. At the same time, ASEAN has seen a growing sense of inter-relatedness and community over the years. In light of the Leaders’ decision to establish an ASEAN Community by 20I5, it is imperative that ASEAN as a region continues to draw strength from its unity amidst cultural diversity to address the challenges while reaping the benefits arising from the rapid globalisation process we witness today. There are two key strategies to enhance people-to-people connectivity namely Promote deeper intra-ASEAN social and cultural understanding; and Encourage greater intra-ASEAN people mobility.

 

To achieve the Master Plan goals will require the mobilisation of significant financial resources and technical assistance. A variety of internal and external financing sources will need to be made available to address the different financing and technical assistance needs across the ASEAN membership, both over the short- and the medium- term, to help match the needs for enhanced connectivity with the financing that is available.