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

Lord, Montague and Tangtrongjita, Pawat (2014): Scoping Study for the Special Border Economic Zone (SBEZ) in the Indonesia-Malaysia-Thailand Growth Triangle (IMT-GT). Published in:

Abstract

Report Objective: This report provides a review and analysis of the findings from the scoping study on the proposed Malaysian–Thailand Special Border Economic Zone (SBEZ). The coverage of the study is guided by the recommendations of the IMT-GT Special Implementation Task Force on the Establishment of a Special Border Economic Zone (hereafter TF-SBEZ) at its meeting in Penang, Malaysia on 22 November 2013. At that time, the TF-SBEZ determined that that present study should be a stand-alone study, comprehensive in nature and cover in-depth all the SBEZ components for each of the eight border crossing areas in the Thai-Malaysian border, including linkages to Indonesia. Based on those findings, the TF-SBEZ requested that the present study make recommendations to the Task Force on the possible location(s) of the SBEZ. The study is part of a broader project that intends to support the establishment of an SBEZ that will help to attract investors in productive activities that promote subregional value chains in order to stimulate cross-border trade and investment, serve as a catalyst to commerce along the IMT-GT corridors and help to substantially improve the social and economic welfare of the population along the border provinces.

Implementation: The present consultancy has been carried out between 10 February 2014 and the end of April 2014 under technical assistance provided by the Asian Development Bank. The first field visit of the study team to the Thai side of the border took place on 2-7 March 2014. That fieldwork was preceded by a visit to the border area on the part of the National Economic and Social Development Board (NESDB) on 16-24 February 2014 that included two consultant associates from the present team. The second field visit of the study team covered the Malaysian side of the border and took place between 29 March and 4 April 2014.

SBEZ Components and Roadmap: Each border crossing has been being assessed on the basis of the following components, details of which are presented in the main body of this report: (a) special economic zone (SEZ) potential; (b) cross-border value chains; (c) transport and logistics; (d) socio-economic development strategy for the area; (e) SME development and business development services: (f) linkages to Indonesia. The proposed SBEZ is best viewed as incremental levels of collaborative of Malaysia, Thailand and Indonesia. Level 1 would cover the establishment of SBEZ facilities and supporting activities on either or both sides of the border; Level 2 would involve development of cross-border value chains and hard and soft infrastructure supporting the SBEZ; and Level 3 would consist of collaboration in joint SBEZ facilities and supporting activities. This stepwise approach reflects international best practices for the development of cross-border SEZs in Europe, North America and Asia. It ensures that actions on either side of the border move from an informal to formal mechanisms of collaboration, thereby providing an effective mechanisms for achieving long-term goals for the operation of a joint SBEZ.

Opportunities at Each Border Crossing Area: There are considerable differences among the bordering Thai provinces and Malaysian states in terms of geography, demographics, development levels, comparative advantages of industries, infrastructure, and potential sector- or industry-level collaboration. Figure S1 summarizes possible areas of collaboration at each border crossing and it reflects the detailed analysis of Part III in this report, where ratings are presented for each of the eight border crossings.

Ratings: The ratings of the assessment are summarized visually in Figures S2 and S3. The results show that there are two border crossing areas with the highest ratings: The first is the Su-ngai Kolok – Rantau Panjang in Narathiwat Province of Thailand; the second is the Ban Prakob – Durian Burung border crossing area in Kedah State of Malaysia and Songkhla Province of Thailand. However, they reflect considerable differences in the valuation of parameters for each of the components. Ban Prakob – Durian Burung border crossing has new modern customs facility on both sides, a four lane highway that is currently being completed on the Thai side, and an excellent roadways on the Malaysian side of the border. The area around the border on the Thai side has been designated for farmland and natural preserves, and there could therefore be sensitivity on the part of the local population to the establishment of an SEZ in the border area. Development of part of the SBEZ could, however, be located farther inland, which might eliminate those possible drawbacks.

• Item Type: MPRA Paper
• Language: English
• Keywords: Special border economic zones, SBEZ, special economic zones, SEZ, Thailand, Malaysia, Indonesia-Malaysia-Thailand Growth Triangle, IMT-GT, border economic zones, BEZ
• Subjects: F - International Economics > F1 - Trade > F13 - Trade Policy ; International Trade Organizations; F - International Economics > F1 - Trade > F14 - Empirical Studies of Trade; Q - Agricultural and Natural Resource Economics ; Environmental and Ecological Economics > Q0 - General

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