09 Jul 2018
Remarks by Ambassador Tan Hung Seng Singapore’s Permanent Representative to ASEAN and Chairman of the ASEAN Connectivity Coordinating Committee at the Economic Corridor Development for Competitive and Inclusive Asia Training
Monday, 9 July 2018, Aryaduta Hotel
Mr Wawan Juswanto, Senior Economist and Special Advisor to Dean, Asian Development Bank Institute,
Ms Susanna Chew, Head of the BIMP-EAGA Facilitation Centre,
Mr Alfredo Perdiguero, Director of the Regional Cooperation and Operation Coordination Division of the Southeast Asia Department of the Asian Development Bank
Distinguished Participants,
Ladies and Gentlemen,
1 Firstly, I would like to thank Alfredo from the Asian Development Bank (ABD) for inviting me to deliver the keynote remarks on this occasion. I would also like to extend a very warm welcome to the representatives from the sub-regional cooperation arrangements who are participating in today’s event. I understand that the focus of today’s event is on how the various sub-regional programmes can develop a “highly efficient transport system that allows goods and people to move around the sub-region without excessive cost or delay”. Indeed, a well-developed logistics and transport network is a crucial enabler for economic growth, not just at the sub-regional level, but also for ASEAN at the regional level. This is why the development of seamless logistics is one of the five Strategic Areas of the Master Plan on ASEAN Connectivity 2025 (MPAC 2025). In fact, one of the fundamental objectives of ASEAN Connectivity, which is clearly stated in the Master Plan on ASEAN Connectivity, is to “bring peoples, goods, services and capital closer together”. Hence, under the rubric of the Strategic Area of Seamless Logistics, we have two initiatives. The first initiative is to develop a database on trade routes which involves a stock-take and scoping study to identify and prioritise key trade routes, and key commodities along prioritised routes. The second initiative is to develop a framework to enhance supply chain efficiency that will support the analysis of supply-chain performance and address bottlenecks for the specific trade routes identified, which will, in turn, help to enhance the regulatory environment for the logistics sector.
2 In this context, it is imperative for ASEAN, and the sub-regional programmes, to not only enhance logistics and transport infrastructure, but also strive to achieve greater synergy between sub-regional and regional efforts. Allow me to explain why this is so important. First, logistics inefficiencies can seriously hamper economic development and connectivity. And where ASEAN is concerned, it is a sad fact that logistics costs here are higher than international benchmarks. For example, Indonesia, the largest economy in ASEAN, spends approximately 26% of its Gross Domestic Product (GDP) on logistics, which ranks as one of the highest rates of spending on logistics per capita in the world. Likewise, Thailand spends almost 20% of its Gross Domestic Product on logistics. Therefore, improving ASEAN’s logistics competitiveness is crucial to strengthening the region’s production networks and delivering long term competitive advantages to businesses. Such benefits include better access to industrial production units, decreased transportation costs, improved delivery time, and reduction in inventory cost.
3 Second, quality infrastructure along trade routes is still lacking in many ASEAN Member States. The Asian Development Bank (ADB), in a recent report, estimated that ASEAN would need approximately USD 210 billion in annual infrastructure investment from 2016 to 2030. In this connection, ASEAN is working with the World Bank as part of MPAC 2025 to develop a list of priority infrastructure projects that seeks to address bankability issues in infrastructure development in the region. The intention is to direct private capital to appropriate infrastructure opportunities. Approximately 20 to 30 infrastructure projects across ASEAN are expected to be identified before the end of the year. We look forward to support from the ADB in developing some of these infrastructure projects.
4 Third, while ASEAN has been improving its “hard” infrastructure, there should be complementary efforts to improve “soft” infrastructure as well. In this regard, ASEAN is currently creating transport linkages to connect the main economic nodes of the region to one another. It is also pursuing various trade facilitation initiatives such as transport facilitation agreements and related protocols, as well as roadmaps for the integration of air and maritime transport, and logistics services. This is being done through the Kuala Lumpur Transport Strategic Plan (2016-2025), which will facilitate the movement of people and goods. Mindset and strategies also need to change. Using Indonesia as an example again, trucking accounts for 72% of transport costs, yet these trucks are full only for half of the time. This is unproductive, add to cost inefficiencies, aggravate traffic congestion, and worsen atmospheric pollution. Hence, it is critical that while we seek to expand the economic corridors, ASEAN Member States, at both the sub-regional and regional levels, must redouble our efforts to mitigate the negative effects on society, environmental quality, and other cross-border challenges.
5 The two-week training programme, that includes a site visit to Borneo will make an important contribution to the training organized by the Asian Development Bank because it is the third largest island in the world, the largest in Asia, and more importantly encompasses the territories of three ASEAN Member States – Brunei, Indonesia and Malaysia. The programme will also introduce the concepts of economic corridors, and allow examination and exchange of ideas using existing case studies from ASEAN. I am confident that the training will impart a better understanding of the issues and challenges related to the development of economic corridors, and how we can devise better strategies to overcome them. I would like to express my appreciation to ADB for its support for the Brunei Darussalam-Indonesia-Malaysia-Philippines East ASEAN Growth Area (BIMP-EAGA), Indonesia-Malaysia-Thailand Growth Triangle (IMT-GT), and the Greater Mekong Sub-region (GMS) to transform transport corridors into economic corridors. The efforts of sub-regional arrangements are crucial building-blocks for ASEAN to achieve its goal of a more resilient, competitive, and integrated Community. I wish everyone a productive training and a fantastic learning journey.
Thank you.