Ladies and Gentlemen,

The economies of East and Southeast Asia are in the midst of a crisis that threatens to spill over to other regions and precipitate global recession. It is therefore to the interest of the international community as a whole and not only the affected economies that this crisis be speedily overcome. If we in the international community work in concert with one another and with the international financial institutions, I am confident that the crisis can be overcome. After all, the economic fundamentals that brought about phenomenal growth among the regional economies are still in place,

In our endeavours to regain the economic dynamism of the ASEAN region, we are determined to sustain the innovative spirit unleashed by the Fourth ASEAN Summit, which mandated the establishment and promotion of subregional economic arrangements among ASEAN members and between ASEAN members and non- ASEAN economies. Such arrangements, a new phenomenon among developing countries, are designed to complement overall ASEAN economic cooperation.

They involve areas that may be at a considerable distance from their respective capitals but happen to be near one another. The economic development of these areas is stimulated through promotion of trade and investment. The proximity of markets helps reduce costs. Foreign direct investments that are export-oriented should therefore find these growth areas attractive. Existing infrastructures will be improved to support the expansion of economic activities.

ASEAN first tried such an arrangement with the Growth Triangle involving Singapore, Johor of Malaysia and the Riau islands of Indonesia. This triangular arrangement actually evolved from two bilateral arrangements, one linking Singapore with Riau and the other connecting Singapore with Johor. Subsequently, the Governments of Singapore, Malaysia and Indonesia agreed to establish a sub-regional cooperative framework originally known as the SIJORI Growth Triangle, combining politically motivated and market-driven factors. When contiguous provinces joined the Growth Triangle, the arrangement became known as the Indonesia- Malaysia-Singapore Growth Triangle (IMS-GT). The amount of investments generated in the IMS-GT has been very significant, going mostly into the machinery, basic metals, chemical and electronic industries, trade and services, and agribusiness.

The pioneering experience of IMS-GT has led to the development of other growth areas. The Indonesia-Malaysia- Thailand Growth Triangle (IMT-GT) represents the second major ASEAN effort at linking three complementary areas that belong to different participating countries, in the northern part of ASEAN. The natural resources of the IMT-GT represent a vast economic potential that could be realized through sub-regional cooperation. As in the IMS-GT, multinational corporations may be interested in expanding their resource-based investments by opting to relocate their industries to the sub-region, thereby increasing their competitiveness.

The next growth area developed within the framework of ASEAN economic cooperation is the East ASEAN Growth Area comprising Brunei Darussalam, and parts of Indonesia, Malaysia and the Philippines, better known as BIMP-EAGA. The economic potential of this area is attested by the fact that from ancient times until today, substantial trade among the peoples of the involved regions has been carried out without interruption. With adequate infrastructures and policy coordination among the participating governments, this growth area should easily attract substantial foreign direct investments.

In all the growth areas, the resources of the participating regions complement one another, enabling manufacturing firms to achieve vertical integration in their operations as well as economies of scale. The creation of a wider manufacturing base with resources that are similarly complementary has induced multinational corporations (MNCs) to consider the ASEAN region as a whole in expanding their business activities.

Although the ASEAN growth areas already boast considerable achievements and tremendous promise, they represent such a new concept that they are still saddled with a number of political, economic and social constraints. The concept needs to be better understood, complex decision-making structures have to be simplified, border formalities have to be established and the inadequacy of infrastructures has to be remedied. Addressing these concerns requires time, expertise and financial resources. Organizational adjustments are necessary to make the growth areas contribute more to ASEAN economic cooperation as a whole. The private sectors of non-ASEAN countries are therefore encouraged to tap the potential of the various ASEAN growth areas, which are integral components of overall ASEAN economic cooperation.

Another idea that ASEAN has tried out is economic linkage between the ASEAN growth areas and parts of other interested regional groupings, While this idea has to be further studied, Indonesia and Australia have embarked on a sub-regional cooperation arrangement involving some provinces of Indonesia and parts of Australia. The Australia-Indonesia Development Area (AIDA) has been created and has succeeded in marshalling the Participation of the private sectors of both sides.

Ladies and Gentlemen

Yet another form of subregional economic cooperation that ASEAN has adopted is one involving the new members of ASEAN, the riparian states of the Mekong Basin and the other ASEAN Member Countries. It is also open to participation by ASEAN Dialogue Partners.

The Leaders of ASEAN decided to launch this form of subregional economic cooperation during their Fifth Summit in Bangkok in December 1995. While they agreed that ASEAN would take the major initiative, China, South Korea and Japan would also be engaged in the massive development venture, initially involving roads and railway development and the construction of gas pipelines to further stimulate growth in the region.

A Ministerial Meeting on the ASEAN Mekong Basin Development Cooperation (AMDC) in Kuala Lumpur in June 1997 adopted a Basic Framework that aims to support and complement national development plans of the Mekong Basin countries and mobilize the participation of the private sector in the projects and activities of the Cooperation. An AMDC Steering Committee and two Working Groups -one on rail links, the other on finance- have been established. Seven proposals have been identified for cooperation projects in the fields of human resources development, sustainable forest management, agricultural mechanization, animal quarantine network, groundwater resource management, and fisheries resources development. Once implemented, these will help improve the standard of living of the Mekong Basin peoples. For these projects to take off, there would have to be financial participation by all countries interested in the development of the subregion.

Ladies and Gentlemen,

We are exploring all possible avenues for the development of ASEAN through subregional economic cooperation arrangements.

We hope that our Dialogue Partners could participate in one way or another in fleshing out the framework laid down for that purpose. These endeavours may represent audacious innovations with an eye to the challenges and opportunities of a new millennium, but they are aimed at a long established goal of ASEAN: the achievement of social and economic progress that will sustain the long term stability and equitable prosperity of the peoples of our region.