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Indonesia-Malaysia-Thailand Growth Triangle To Offer $20 Billion in Business Opportunities

The creation of a growth triangle consisting of parts of Indonesia, Malaysia and Thailand is expected to generate about $15-20 billion in business opportunities for private investors, according to the latest issue of the Asian Development Bank's bi-monthly publication, ADB Review.

A nine-volume Bank study, prepared by more than 30 experts, has identified nearly 100 projects, programs and policies required to develop this growth triangle in the next ten years. Details will be contained in a Bank publication entitled Indonesia-Malaysia-Thailand Growth Triangle: Theory to Practice, to be published shortly.

The Indonesia-Malaysia-Thailand Growth Triangle is the newest growth triangle in Asia. It includes the geographical areas of North Sumatra and the Special Territory of Aceh in Indonesia; the northern states of Kedah, Perak, Penang and Perlis in peninsular Malaysia; and the southern provinces of Satun, Songkhla, Yala, Narathiwat and Pattani in Thailand. Collectively, these areas cover 200,000 sq km and have a population of 21 million.

A growth triangle, a form of regional economic cooperation that has gained rapid acceptance in Asia in the past decade, brings together the resources of neighboring countries to foster economic development. The most well-established is the Southern China Growth Triangle consisting of South China, Hong Kong and Taipei,China; and the Johor-Singapore-Riau Growth Triangle consisting of the Malaysian state of Johor, the borders of Singapore and the Indonesian province of Riau, which has been operating since 1992. A growth triangle is also being planned in the Tumen River Delta area, which includes the northern provinces of the People's Republic of China, Siberia in Russia and the Democratic People's Republic of Korea.

The Bank study identifies five priority sectors for possible cooperation in the Indonesia-Malaysia-Thailand Growth Triangle: trade, investment and labor mobility; transportation and communications; agriculture and fisheries; industry and energy; and tourism. The study notes that sustainable development of the growth triangle can only take place if policies, programs and institutional initiatives which complement projects are undertaken.

Due to the magnitude of the projects, financing would have to come from various sources. The support of bilateral and multilateral development agencies would be required in many cases. Private sector involvement is also necessary, especially for projects involving physical infrastructure. Private financing may take the form of direct investment, commercial lending, or resources from international and local capital markets, depending on the size of the project.

The Review also presents findings of another Bank study entitled Financing Environmentally Sound Development which estimates the cost of cleaning up Asia's environment. The cost for Asian nations is currently estimated at $13 billion a year, but this could rise to as much as $70 billion by the year 2000. Investments would be required in relation to water supply, sanitation, electric power, transportation, industrial wastes, agriculture, forestry, population, acid rain, bio-diversity and global climate change. Most of the investments would have to be made in the two most populated countries of the region, the People's Republic of China and India. The Bank study is based on a series of commissioned papers which address environmental financing.

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