Bali, Indonesia, 8-9 November 2011
H.E. Prof. Armida S. Alisjahbana, Minister of National Development Planning of the Republic of Indonesia;
Ambassador Ngurah Swajaya, Chairman of the ASEAN Connectivity Coordinating Committee (ACCC);
Members of the ACCC;
Mr. Hidetoshi Nishimura, Executive Director of Economic Research Institute for ASEAN and East Asia (ERIA);
Good morning and let me first welcome all of you to this beautiful island of Bali. I would also like to express my sincere thanks to Indonesia, as current Chair of the ASEAN Connectivity Coordinating Committee(ACCC) and the Economic Research Institute for ASEAN and East Asia (ERIA) for co-organising the ASEAN Connectivity Symposium with the ASEAN Secretariat.
The Master Plan on ASEAN Connectivity has been generating a lot of buzz – both regionally and globally – since its adoption in October 2010 at the 17th ASEAN Summit. The Master Plan calls for efforts to enhance the region’s connectivity in the three dimensions of physical, institutional, and people-to-people connectivity.All three dimensions are integral in their own way and complement one another.
By improving physical connectivity among countries, cities and townsthroughout ASEAN by putting in place the transport networks, we will be able to open up or improve access to places that are once inaccessible and this will translate into business opportunities, lower transport costs, and contribute to an improvement in the lives of the people in the region.
By instituting the necessary institutional frameworks and mechanisms to facilitate intra-ASEAN trade and investment such as enhancing customs procedures and removing non-tariff barriers, we can make it easier for businesses to operate in the ASEAN region and encourage more investment as a result.
In addition to putting in place the physical infrastructure and enabling conditions for conducive business environment, we need to foster closer people-to-people ties. This can be achieved through education, culture and tourism to bridge not just the physical distance between peoples in the region, but their hearts and minds too. Such a human connectivity will help to bind us as one community and work in unison to achieve the ASEAN Community. Collectively, all these three dimensionsof physical, institutional and people-to-people connectivity will enhance the overall competitiveness, prosperityand unityof ASEAN as a region.
In order to achieve enhanced connectivity in the region, political will, inclusiveness and resource mobilisationare important. ASEAN Connectivity has become one of the core topics in the minds of ASEAN Leaders and Ministers. In their various meetings with ASEAN Dialogue Partners and international organisations and in the various statements issued, ASEAN Connectivity is always featured prominently. ASEAN Leaders have also urgedexternal partners, multilateral development banks, regional and global funds, and especially, the private sector to participate actively and directly in the implementation of the Master Plan to support the huge resource requirementfor the realisationof the ASEAN Connectivity initiative.
Now, we need to be inclusive in our approach and bring ASEAN Connectivity to the stakeholders. Who are they? Our stakeholders are everyone from the peoples of ASEAN to friends of ASEAN. I think ASEAN Connectivity should become a common phrase in every home, school, company, community centre,embassy, etc.
In this context, the ASEAN Leaders have tasked the ACCC to coordinate and oversee the effective implementation of the Master Plan. The ACCC is working hard on a modality to communicate and coordinate with the various stakeholders comprising the National Coordinators (who are appointed by the respective government to be the national focal point on ASEAN Connectivity), various ASEAN sectoral bodies, sub-regional arrangements that are operating in the region, the business community, ASEAN Dialogue Partners, and other external parties.
Resource mobilisation isanother important part of the Connectivity equation. According to a study by ADB, it is estimated that ASEAN countries will require infrastructure investment of US$596 billion during 2006-2015 which works out to about $60 billion a year.
In this regard, ASEAN has shown that its resolvetoinvest in its own future through the ASEAN Infrastructure Fund (AIF). The AIF is an innovative financial architecture, unique, and appropriate for ASEAN, timely for the region as it explores various financing mechanisms to support the ASEAN Economic Community by 2015.
TheAIFis being set up with an initial equity contribution of US$485.2 million, of which US$335.2 million is from ASEAN while the remaining US$150 million is from the ADB. About six projects each year are expected to be carried out starting next year. The Fund’stotal lending commitment through 2020 will be roughly US$3.6 billion. It will provide financing for selected public-private partnership (“PPP”) projects. It is hoped that this will attract even greater foreign capital flows to the region. FDI flows in the region doubled to US$75.8 billion last year from US$37.8 billion in 2009, and for the first time more than US$12 billion of those flows were sourced within ASEAN.
Besides the AIF, many of ASEAN’s Dialogue Partners and other external parties have come forward with their commitment and proposals to support the implementation of the Master Plan. In the case of Japan, it has specially set up a Task Force on Connectivity, and I understand that several Dialogue Partners are looking into this possibility too.
Apart from the steadfast support from our Dialogue Partners, the private sector funding and expertise are pivotal in the longterm. Approximately 20 per cent of infrastructure projects are currently funded by the private sector in the region. Private sector involvement is key to the implementation of the Master Plan, and this was recognised by the High Level Task Force whichdrafted the Master Plan. Hopefully the private sector in the ASEAN and non-ASEAN countries will be motivated to contribute to this initiative.
Businesses which bank on ASEAN as a well-connected region will stand to benefit, and there are many telling reasons why this is so.First, ASEAN isa growing infrastructure development market.The Master Plan has identified a number of transport, ICT, and energy infrastructure projects, and this means plenty of opportunities for investment.Second, ASEAN is positioning itselfas a single production base. The Master Plan addresses various aspects of trade, investment and transport facilitation measures through agreements like ASEAN Trade in Goods Agreement, etc. The private sector can gain from the improved physical infrastructure and institutional mechanisms by taking advantage of enhanced regional supply chains in the region.Third, ASEAN is fast becominga single consumer market.According to ERIA, “middle-income group (a per capita annual income of US$3,000-12,000)” in ASEAN grew from 140 million (32.7%) in the mid-1990s to 250 million (49.5%) in the mid-2000s. By 2015, our market could expand to more than 300 million. This makes ASEAN a very attractive market for investors.
Recognising the importance of the business com
munity, the ACCC and the ASEAN Member States, have been reaching out to and engaging them through various activities. A number of events has been organised, the most recent being the “ASEAN-Japan Workshop on Engaging with the ASEAN Connectivity Master Plan” that was organised by Singapore and Japan for both ASEAN and Japanese business communities.
For ASEAN Connectivity to happen, we cannot work in isolation but will need to connect with and work with our stakeholders. That is one of the key aims of holding the ASEAN Connectivity Symposium today.
For this two-day Symposium, besides hearing from a line-up of speakers who will speak on topics ranging from narrowing the digital divide, facilitating intra- and extra-ASEAN trade, connecting mainland and archipelagic Southeast Asia,to building a people-centered ASEAN, I hope you will participate fully in the discussions and the breakout sessions.
Your presence says a lot of your support for ASEAN Connectivity.I wish you a fruitful meeting.