Government to pursue development of EAGA

Bracing against an anticipated slowdown in economies of the country’s primary export markets let by the US, government is taking another look at the development of the so-called East Asia Growth Area (EAGA).

The National Economic and Development Authority (NEDA) said there will be renewed efforts to pursue the development of what is expected to be the largest economic growth area. This area includes Brunei Darussalam, the Indonesian provinces of Kalimantan, Sulawesi, Maluku and Irian Jaya; Malaysia’s Sarawak and the Federal Territory of Labuan and the two major island groups of the Philippines, Mindanao and Palawan.

With the exception of Brunei, these areas have traditionally lagged in economic development when compared to their respective capital regions, despite being rich in natural resources.

NEDA Director General Dante Canlas said that despite the slowdown in the US economy, the Philippines is not without options although its alternative markets will need considerable build-up without coming even close to the size of its traditional export markets.

According to Canlas, exports are expected to grow by 7.4 percent to 7.9 percent in 2001, a much slower growth compared to the 16.4 percent recorded in 2000.

Much of the growth in 2001, Canlas said, would come from the same flagship exports – electronics and garments. But starting next year, there will be a frantic search for alternative export markets, he added.

"Intra-regional trade has always been regarded as somewhat secondary to extra-regional trade and we will have to look at this again specially since the ASEAN will be fully liberalized a lot sooner," Canlas said.

The BIMP-EAGA sub-regional economic growth area under the ASEAN will feature significantly in subsequent efforts to expand the country’s export market, Canlas said, additing that this area will initially take up the slack that would be left by the slowdown in the US economy and ultimately to open new markets over the long-term.

The ASEAN Free Trade Agreement, Canlas said, was designed precisely to promote the free movement of goods between ASEAN nations, creating a comparative advantage for regional sub-groupings that have not been traditionally exploited.

Although Southern Philippines has been trading directly with Malaysia and Indonesia, the so-called Philippine backdoor has not fully explored these markets due mainly to the absence of supporting infrastructure.

The Asian Development Bank had earlier approved a small technical assistance for the Philippines to start its efforts to pursue the BIMP-EAGA project but this has not translated to a marked increase in trade between the participating regions and provinces.

Instead of regarding the scheduled decrease in intra-Asean tariffs as detrimental to industries that would have to face competition, Canlas said the AFTA should be viewed as an opportunity-creating development that would assure local manufacturers better access to the last uncongested markets in the region.