ABOUT BIMP-EAGA
 
 
  OVERVIEW OF BIMP-EAGA
 
HISTORY
1. In 1992, then President Fidel V. Ramos of the Philippines proposed the expansion of economic cooperation in the border areas with Indonesia and Malaysia and with Brunei Darussalam in a major economic and diplomatic initiative in the ASEAN. The leaders of Brunei, Indonesia, and Malaysia favorably received this Philippine initiative that eventually led to the creation of a subregional growth area named the Brunei Darussalam-Indonesia-Malaysia-Philippines East ASEAN Growth Area or BIMP-EAGA. BIMP-EAGA was formally launched on March 24, 1994 in Davao City in Mindanao, Philippines.

2. The growth area initially comprised the entire sultanate of Brunei Darussalam; the provinces of East and West Kalimantan, and North Sulawesi in Eastern Indonesia; the federal states of Sabah and Sarawak, and the federal territory of Labuan in Eastern Malaysia; and the islands of Mindanao and Palawan in the Philippines. Indonesia later expanded its participation to include all provinces in Kalimantan and Sulawesi, the Maluku island chain and Irian Jaya. EAGA covers a land area of approximately 1.54 million square kilometers and is home to about 55 million people.



3. With the exception of Brunei Darussalam, the component areas of EAGA share common characteristics of considerable geographic distance from their capital states and resource-based economies that are less developed than the capital regions. BIMP-EAGA, thus, was a shared strategy of the four participating governments in addressing the imbalance in economic development. It should be understood that the prevailing economic stability, optimistic forecasts for higher sustained economic and political growth and the growing trend towards regional economic integration in ASEAN prompted and encouraged the four governments to undertake this paradigm shift that focuses on the social and economic development of the less developed and more remote territories.

GOALS AND STRATEGIC OBJECTIVES
4. The vision of BIMP-EAGA is the realization of socially acceptable and sustainable economic development, which leads to the full participation of EAGA in the ASEAN development process. Its immediate goal is to increase trade, investments and tourism in the subregion by facilitating the (i) freer movement of people, goods and services; (ii) development of vital infrastructure in the subregion; and (iii) coordination of the management of ecosystems and common resources to ensure sustainable development. The short to medium term goal is to ensure that EAGA becomes a major location in ASEAN for high value-added agro-industry and natural resource-based manufacturing and high-grade tourism, and in the longer term to ensure that non-resource based manufacturing is established in the subregion.

5. EAGA’s strategic objective is to accelerate economic development, improve export competitiveness and enhance the attractiveness of EAGA to local and foreign investment based on (i) economic complementarities, (ii) shared natural resources, information and technology, (iii) joint action to cater to an increase in demand, (iv) joint action to overcome constraints, and (v) the specialization and regionalization of production. To achieve its goals, the founders of BIMP-EAGA recognized the need for strong public-private sector partnership in development and agreed that growth of the subregion must be market-driven and private sector-led.

6. In 1996, ADB carried out an Investigative Study in the BIMP-EAGA to identify the existing and potential opportunities for economic cooperation in the subregion. The Study shared the optimism for the future of the subregion as it identified a wide range of economic complementation. Efficiently harnessed, these economic complementation opportunities could transform BIMP-EAGA into a major investment destination in ASEAN for agro-industry, natural resource-based manufacturing, and tourism. The result of the Study is the formulation of an EAGA Development Strategy that involves more than 150 policy, program, and project initiatives that would enable EAGA to achieve its full potentials.

PUBLIC SECTOR AND PRIVATE SECTOR: ROLES DEFINED
7. At the outset, the roles of the private sector and public sector were clearly defined. The private sector is BIMP-EAGA’s engine of growth while the public sector is the enabler or facilitator of this growth.

8. The founders of BIMP-EAGA recognized the vital role of the private sector in achieving the development objectives of the growth area. It is after all, the private sector that and eventually decides and actually invests in projects that fuel the engines of development. Thus, the economic development strategy of the subregion is directed at enhancing the ability of the private sector to take advantage and realize EAGA-wide investment opportunities.  

9. As enabler and facilitator of growth, the public sector is expected to carry out two major activities:

a) To create a general environment that is conducive to economic cooperation and to empower the private sector by providing the following:

- A facilitative framework created by coordinating and harmonizing public policy to establish a conducive and unified investment climate.
- Adequate physical infrastructure needed to link the businesses of the subregion and to improve their access to regional and global markets.
- Effective commercial infrastructure by providing finance, information, and skills to improve entrepreneurial capacity and capability.

b) To directly encourage the realization of cross-border trading and investment opportunities through specific policies, programs, and projects that provide for increased investments in the productive sectors (e.g. agriculture, fisheries, forestry, tourism, and industrial development.

ORGANIZATIONAL AND INSTITUTIONAL STRUCTURES
10. To operationalize the BIMP-EAGA initiative, a subregional institutional framework was established. The organizational and institutional structures were intended to effectively support private sector participation in the subregion’s development activities.

11. The principal mechanism for consultations between and among the participating countries is the Senior Officials and Ministers Meeting or the SOMM. The SOMM provides the strategic directions and general policy guidelines in addition to drawing the attention of the central governments to the development requirements of the focal areas. To date, 13 Senior Official Meetings and 10 Ministers Meetings have been held.   


12. Eleven
[1] Working Groups representing the priority sectors of cooperation were established to (i) identify the opportunities and constraints to cooperation development, (ii) formulate the action plans to accelerate growth in the subregion, and (iii) provide the strategic direction in the identified sectors of cooperation. The WG is the core mechanism at the operational level. It is composed of representatives from the appropriate government agencies both at the national and subregional levels and individuals and groups representing the private sector from the focal areas. The WGs provide the flexibility to address a wide range of issues and demands. It is at the level of the WGs where diverse interests, issues, and priorities of the public and private sectors converge and where project priorities are identified. Thirteen WGs were created initially but have subsequently been reduced to eleven as a result of the merger of some WGs. Each Working Group has a designated lead country.

13. Consistent with the decision to adopt a decentralized structure, no central secretariat was initially established in BIMP-EAGA. Instead, each participating country designated a ministry or agency that would act as their respective National Secretariat. The National Secretariat is the focal point for the exchange of information and coordination of programs related to the growth area and is tasked with ensuring that in-country initiatives are maintained. National Secretariats also provide administrative support to the Ministers and Senior Officials.

THE BIMP-EAGA BUSINESS COUNCIL (BEBC)
14. In recognition of the crucial role and participation of the private sector in accelerating the successful implementation of the subregion’s programs and projects, the Ministers, during their inaugural meeting, endorsed the creation of the East ASEAN Business Council (EABC). The establishment of EABC in 1994 was the result of several private sector initiatives around the growth area that started as early as the late 1970s. The creation of BIMP-EAGA prompted the creation of a formal and unified organization for the private sector to oversee their interests and concerns. Thus, EABC was meant to act as the voice of the private sector, raising their concerns during WG meetings and the SOMM, as well as envoy to the EAGA governments. Subsequently, the Minister Meeting accorded EABC the status of official private sector representative in BIMP-EAGA.

15. Membership in the EABC is open, without restrictions to nationality, to individuals, and organizations that play a role in the economic development of EAGA. EABC is led by a Board composed of representatives from private sector organizations from each of the four member countries. In 2003, BEBC successfully carried out its organizational restructuring. With the restructuring, BEBC is now re-focusing its attention and emphasis towards the development of Small and Medium Enterprises (SMEs). It also has a permanent secretariat that manages the day-to-day operations of the organization.   

16. The primary objectives of the BEBC are the following:

- Promote economic development and other business activities in all the participating subregions of BIMP-EAGA in support of the interests of its members and for the greater prosperity and welfare of EAGA citizens;
- Foster closer relationships and economic cooperation among business organizations in the EAGA;
- Deal with issues of common concern and to disseminate information of common interest to its members;
- Make representation on behalf of the EABC’s members with the involved governments and to provide liaison between businesses, other economic entities and relevant government authorities within EAGA; and
- Advocate for policies, plans, projects, and regulatory changes that will enhance the economic development of the subregion.

17. The private sector, through BEBC, actively participates in the deliberation and resolution of economic issues at the Clusters level. BEBC has also been instrumental in facilitating business arrangements among the different private sectors in the BIMP-EAGA. To further enhance interaction in the subregion, EAGA-wide private sector organizations at the Working Group Clusters (WGC) levels were established. These include the BIMP-EAGA Tourism Council under the Joint Tourism Development WG, the BIMP-EAGA Shipping Association under the Sea Links WG, and the EAGA Construction Consortium under the Construction/Construction Materials WG. These sector-based organizations facilitate the exchange of information on subregional trade and investment opportunities within their respective sectors. They also organize trade fairs, investment conferences and business seminars, which strengthen the networking capacity, that in turn help to improve the trade and investment relationships among individuals and groups in the concerned sectors.

18. In 1997, BEBC was given fifth country status, which reinforced the private sector’s standing as equal partner in the development of BIMP-EAGA. The fifth country status also earned for EABC the privilege of organizing an independent private sector delegation during SOMMs and a separate meeting with the Ministers.

WORKING GROUP CLUSTERS
19. As part of the efforts to revitalize cooperation development in the BIMP-EAGA, the 11th SOM and 8th MM held last September 2003 at Davao City, Philippines agreed to implement reforms in the subregion’s institutional structure. Two new mechanisms were created, namely, the Working Group Clusters and the BIMP Facilitation Center. These mechanisms were instituted to strengthen the coordination of strategies and initiatives in the subregion. Strengthening coordination and consolidation mechanisms was anticipated to significantly contribute to accelerating cooperation activities and bringing BIMP-EAGA back on its development track.

20. The Working Group Clusters are composed of related or similar working groups. An objective for the creation of the Clusters is to provide a mechanism to strengthen the coordination and consolidation of BIMP-EAGA’s development initiatives, particularly at the operational level. Since the Working Groups are the core operational mechanism of BIMP-EAGA, improving coordination among the Working Groups is anticipated to enhance the identification and prioritization of strategic and high-impact projects (BIMP-EAGA flagship projects), which in turn is expected to facilitate the formulation of an integrated plan of action that would help accelerate the implementation of these flagship projects. Working Group Clusters, thus, would the mechanism for BIMP-EAGA to regain its cooperation momentum by ensuring that the identification, prioritization and implementation as well as the monitoring of projects are better structured and coordinated. Following is the matrix of the Working Group Clusters:



BIMP FACILITATION CENTER
21. The fully decentralized structure earlier adopted by BIMP-EAGA provided the flexibility that the growth area needed in its formative and organizational stage. However, as BIMP-EAGA grows in breadth and depth and as the subregion identifies and implements more projects, the need for a more central coordinating unit will be increasingly felt. On hindsight and as the experience of BIMP-EAGA with the 1997 financial crisis has shown, the growth momentum in the subregion might have been sustained had there been a unit or mechanism that is centrally coordinating and facilitating the development activities at the subregional level. Recognizing the need for tighter coordination mechanisms, the four countries agreed to modify the decentralized structure and created the BIMP-EAGA Facilitation Center.

22. The BIMP-FC is a concerted effort by the four countries to revive the BIMP EAGA initiative. The objective for the creation of the BIMP-FC is to accelerate regional cooperation in BIMP-EAGA by establishing more structured institutional coordination and project facilitation mechanisms. The objectives and rationale of the establishment of BIMP FC is to: i) strengthen coordination between institutions in the sub region; ii) provide the institutional framework to support private sector activities; iii) improve facilitation and implementation of priority projects; iv) establish monitoring and evaluation of projects and agreements; and iv) enhance information dissemination within and outside the sub region. The overall thrust of the organization is to establish BIMP-FC as the focal point for participating governments, stakeholder agencies, and especially the private sector. It would also provide the window for third countries and other development partners to participate in the economic development of BIMP-EAGA.

23. Under its Terms of Reference, the BIMP-FC shall (i) undertake jointly activities in investment promotion and business networking; (ii) create an information and database; (iii) actively involve and coordinate the promotion of events; (iv) continously undertake monitoring and evaluation activities; and (v) draw the attention of relevant entities to problems raised by the private sectors. The terms of reference also provides BIMP-FC with the mandate to initiate and undertake activities to effectively promote trade, investments, and tourism in the sub region. More importantly, BIMP-FC’s directive is to ensure that the structures and mechanisms in the sub region promote the market-driven and private sector-led strategy of BIMP-EAGA.

24. The BIMP FC is public sector-led and will complement the efforts of the EABC in coordinating trade and investment activities, in facilitating the implementation and monitoring of priority projects. BIMP-FC is the institutional framework established to provide stronger support for private sector activities.

25. BIMP-FC commenced operations on 19 August 2003 and has its headquarters at the Sabah Trade Center in Kota Kinabalu, Sabah. The Federal Government of Malaysia and the State Government of Sabah jointly hosted the BIMP-FC from 1 August, 2003 – 31 December, 2005 while the Asian Development Bank (ADB) provided technical assistance for its institutional and capacity building for the period of 21 months, from July 2003 – April, 2005. Currently, the German Technical Corporation (GTZ) is providing technical assistance of the BIMP-EAGA institutions which included the institutional strengthening of the BIMP-FC.

26. The 12th BIMP-EAGA SOM/9th MM approved the BIMP-FC to serve as the secretariat to the BIMP-EAGA SOM/MM and would play a central coordinating role in BIMP-EAGA. During the 13th BIMP-EAGA SOM/10th MM on 19 – 22 September, 2005, the BIMP-EAGA government committed to provide funding to continue the operation and strengthening of the BIMP-FC.

27. Linking the National Secretariats, Working Groups, Working Group Clusters, BEBC, and other relevant public and private sector organizations has been identified as the core function of the BIMP FC. BIMP FC is expected to provide coordination and facilitation of cooperation activities/programs that are beyond the scope of the National Secretariats, which essentially covers all activities involving two of the four participating countries. The immediate strengthening activities were focused on the implementation of the Working Group Clusters where the BIMP-FC has been doing consultations with the National Secretariats relative to establishing the terms of reference, agenda of meeting, and the detailed mechanics of implementation of the working group clusters. At the same time that internal institutional linkages are being strengthened, activities towards creating networks of external partners and relationships are also being undertaken.

28. A core activity of the BIMP-FC is establishing a capacity to undertake effective communications and information dissemination within the sub region, and ensuring reliable and timely information is delivered to interested development partners and investors from outside the growth area. Collection of basic information and macroeconomic profiles of the EAGA focal areas is currently on-going. As part of the effort to rebuild the image of BIMP EAGA as a viable investment and tourist destination, consultations were made with the journalists and media practitioners in the BIMP region. The consultations and Media Workshop organized by the BIMP FC led to the formation of the BIMP EAGA Media and Communicators Association.

29. BIMP FC priority activities are to improve coordination mechanisms, establish project facilitation mechanisms, promote external trade and improve information gathering and dissemination within and outside the sub region.  

GAINING, LOSING AND REGAINING MOMENTUM

EARLY GAINS

30. The commitment of the four participating governments enabled EAGA to demonstrate results within the first three years. Early gains were made possible because of the strong efforts among the government leaders to immediately identify and address the structural impediments to growth in the EAGA. Between 1994 and 1997, several national policies were modified and cooperative agreements were facilitated to ensure the success of the cooperation initiative.

31. Among others, the four governments agreed to liberalize the transport sector to allow for greater mobility of people, goods, and services. The result is the opening of new and direct commercial air and sea links between major urban areas in the subregion. Several airport and seaport infrastructure facilities throughout EAGA were upgraded to accommodate the expected increase in passenger and cargo traffic. To facilitate intra-subregion trade, Brunei Darussalam, Indonesia and the Philippines agreed to establish uniform port tariffs in selected ports. To support tourism and promote travel within the subregion, policies on travel and exit taxes were likewise modified. Specifically, Indonesia and the Philippines waived travel taxes for travel within EAGA and also streamlined travel procedures and documentary requirements. In recognizing that accelerating the air transport sector integration will have a far greater impact on economic integration in the sub region, the 1st Transport Ministers Meeting of the Brunei, Indonesia, Malaysia and Philippines held in June, 2006 at Brunei Darussalam agreed to work towards innovative and dynamic ways to further liberalize passenger and air cargo services in the services. The most significant outcome of the meeting was the decision to designate fifth freedom traffic right airports in BIMP-EAGA for BIMP-EAGA carriers. It was agreed that each EAGA member country to allow multiple designation of airlines and respectively designate two entry points by end of 2006 and subsequently all EAGA entry points by 2008 with fifth freedom traffic rights for scheduled passenger and cargo services.

32. Another major area of early accomplishments is in telecommunication. Major telecommunication firms operating in the EAGA areas implemented substantial tariff reductions by up to 20 percent on long distance calls within the subregion. The reduced rates enabled greater interaction among businesses within the subregion.

33. In addition to these tangible results, the different clusters/working groups, representing the priority areas of cooperation in EAGA, have identified the constraints affecting their sectors and were already examining measures to eliminate these constraints. At the operating level, discussions about harmonization of trade and investment policies have been ongoing.

34. The private sector was responsive to the early initiatives of the governments, especially in the tourism and transport sectors. Of the productive sectors in EAGA, tourism initially gained the most as evidenced by the significant increase in both domestic and cross-border investments in hotel and tourism-related facilities and activities. The BIMP-EAGA Tourism Council was established by the private sector to undertake joint tourism promotions of EAGA. EAGA-wide cultural events, trade fairs, tour exchanges and sports events were undertaken by the various tourism organizations in the subregion to create awareness not only of the area’s world-class destinations but also of the opportunities for investments.

FACTORS AFFECTING SLOWDOWN
35. By the end of 1996, there was optimism that BIMP-EAGA was on the verge of a take-off. BIMP-EAGA cooperation activities had quickly developed and the prevailing economic stability and the optimistic forecasts for continued and sustained economic growth for the participating countries, in particular, and the ASEAN region, in general, had provided an environment conducive for pursuing development. Implicitly and based on the then prevailing economic situation, it was assumed that adequate public and private sector financial resources would be readily available to undertake and complete priority infrastructure projects. It was further assumed that the infrastructure-related projects would spur greater domestic and foreign private sector investments.

36. The 1997 Asian financial crisis seriously disrupted the growth momentum in EAGA. As the economic environment in Southeast Asia generally weakened, governments refocused their attention to national issues, especially those affecting their traditional financial and industrial centers. In many cases, the decline in government spending on infrastructure effectively slowed down regional development and consequently slowed down implementation of several EAGA initiatives as well.

37. The worst recorded El Niño phenomenon that occurred in 1998 brought severe drought, forest fires, and the haze. All these contributed to sharp declines in the largely agriculture-based economies of many subregional focal areas. Changes in the political leadership in Indonesia and the Philippines also contributed to delaying discussions and agreements on the coordination and harmonization of investment and trade policies in EAGA, particularly the harmonization of customs, immigration, and quarantine rules, regulations and procedures.

38. The BIMP-EAGA private sector made up mostly of small and medium enterprises (SMEs) also refocused their efforts on minimizing the impact of the crisis on their businesses by downsizing and/or postponing expansion programs. With reduced government support, the private sector’s capacity to spur cooperation activities in the subregion weakened.

39. Towards the end of the decade, security concerns emerged because of kidnapping and ethnic violence in some parts of the BIMP-EAGA. The global threat of terrorism compounded the security problems and the entire subregion suffered by perception and association resulting in declines in tourism, further displacement of trade and loss of investor confidence.

40. The most serious challenge for BIMP-EAGA, however, was the perception of waning interest of the four participating governments to pursue the economic cooperation initiative.

REVITALIZING THE BIMP-EAGA COOPERATION INITIATIVE
41. By the end of 2000, it became evident that the BIMP-EAGA countries have significantly recovered from the effects of the economic crises. As economic conditions improved, opportunities opened anew for focusing attention on the less developed areas. The emerging peace and order problems within BIMP-EAGA and its strong links to the widespread poverty in some parts of the subregion further influenced the decision to re-examine the role and potential contribution of the economic cooperation scheme to the resolution of the conflict.

42. Given the urgent need to address the poverty and security issues in the subregion, the leaders of the BIMP-EAGA countries expressed their commitment and support to revitalizing economic cooperation activities in the subregion.

43. Support also came from the leaders of ASEAN during the 7th ASEAN Leaders Summit held in Brunei Darussalam in November 2001. At this Summit, ASEAN leaders called for moves and actions to revitalize cooperation activities in BIMP-EAGA, in particular, and other subregional growth areas, in general as part of the overall initiative to integrate the region’s economies. At the same time, the Asian Development Bank was appointed as the Regional Development Advisor for BIMP-EAGA. On 7 October 2003, the first BIMP-EAGA Leaders Meeting was held in Bali, Indonesia where the leaders reaffirmed the importance of BIMP-EAGA in the context of bridging the development gap in ASEAN. The EAGA Leaders also called for the establishment of more attractive trade and investment regimes in the subregion as well as the accelerated promotion of BIMP-EAGA external trade. Among others, the EAGA Leaders welcomed the support of the ASEAN dialogue partners in realizing the economic development goals of the subregion.

44. Efforts are being carried out to accelerate the realization of the objectives of the BIMP-EAGA cooperation initiative. A reassessment of the current approaches and methodologies to cooperation development was carried out, new strategies formulated, and initial measures are being implemented to enable the subregion to more effectively respond to the emerging internal and external challenges to regional cooperation.

45. Institutional reforms have been initiated and currently being implemented. Institutional linkages and stronger collaboration with development partners, particularly the ASEAN Secretariat and the Asian Development Bank, are being established. Development strategies and directions are also being strengthened. Among the strategies being adopted include improving transport linkages both within and outside of the subregion; consolidating the subregion’s comparative advantages in the agro-industry and tourism sectors; promoting the development of external trade; and instituting more attractive trade and investment regimes. BIMP-EAGA flagship projects are being identified focusing on projects that would create the most impact on the subregion’s economic development in short- and medium-terms. Direct trade and investment relations with ASEAN’s dialogue partners are being explored. SME participation in the development activities in BIMP-EAGA is being strengthened. The harmonization of customs, immigration and quarantine rules, regulations, and procedures is being accelerated. Clearly, BIMP-EAGA is back on the development track.

46. The Leaders during the 2nd BIMP-EAGA Summit held in Kuala Lumpur on 11 December, 2006 adopted the BIMP-EAGA Roadmap to Development 2006 – 2010 which guides the direction of BIMP-EAGA to guide the direction of BIMP-EAGA for the next five (5) years in pursuing its development goal in increasing trade, investments and tourism within and outside EAGA. To achieve the development goals and targets, BIMP-EAGA will pursue the following strategic objectives and sub-regional cooperation measures:

- Promoting intra- and extra-EAGA trade, investments and tourism in selected priority sectors, namely: agro-industry and natural resources; tourism, transport, infrastructure and ICT with particular emphasis on SME development by promoting and facilitating cross border flow of goods and people and improving the flow of trade, investment and tourism information
- Coordinate the management of natural resources for sustainable development of the sub-region
- Coordinate the planning and implementation of infrastructure support to economic integration, with active participation of the private sectors
- Strengthen BIMP-EAGA institutional structures and mechanisms for effective implementation of the EAGA Roadmap and Action Plan.

47. The interest shown by the ASEAN Dialogue among others Japan and China and other International Organizations such as AusAID and German Technical Cooperation created opportunity for BIMP-EAGA to expand its market. BIMP-EAGA will continue to explore mechanism to expand trade, investments and tourism with external partners through establishing a regular dialogue between the BIMP EAGA public and private sectors with the external partners and their private sectors as well as tapping the Development Partners as potential investors in the sub region and their markets for EAGA identified projects, products and services through trade, investment and tourism promotion activities, business matching. Currently, BIMP-EAGA Development Partners are Northern Territory of Australia and The People Republic of China (P.R.C).


[1] BIMP-EAGA originally had 13 Working Groups: Agro-Industry Development, Fisheries Cooperation Development, Joint Tourism Development, Construction and Construction Materials, Air Linkages, Sea Linkages, Telecommunications, Energy, Human Resource Development, People Mobility, Forestry Development, and Environment Management. The number of working groups was reduced to 11 with the merger of the HRD and People Mobility Working Groups and the Forestry and Environment Management Working Groups.

 
   
   
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