ASEAN connectivity

The rationale for the creation of the Association of Southeast Asian Nations (ASEAN) is obvious. Put together, the 10 member states – Indonesia, Malaysia, the Philippines, Singapore, Thailand, Brunei, Myanmar, Cambodia, Lao PDR and Viet Nam - form a global powerhouse.

The statistics to back up this assertion are numerous. Covering a land area of almost 4.5 million kilometres (3 percent of the planet’s total land area) and with a total population of over 600 million (almost 9 percent of the world’s population), the ASEAN nations had a combined

nominal gross domestic product of $2.2 trillion in 2011. As a single entity, ASEAN ranks as the world’s ninth-largest economy.

Since ASEAN was established in 1967, it has come a long way – growing from the five founding members to the 10-member grouping of today. But, if the ASEAN nations are to fulfill their ambition of building a true ASEAN community by 2015, it is vital that the region is as well connected as it possibly can be – and that’s where the Master Plan on ASEAN Connectivity comes in.

Principles

To take a brief step back, one of the purposes of the ASEAN Charter, which was agreed at the 13th ASEAN Summit in November 2007, was to create a single market and production base. It was recognized that better connectivity of transportation networks would help create a more competitive and resilient ASEAN – bringing people, goods, services and capital closer together.

The Master Plan was seen as a key way of making this happen.

The Master Plan gained impetus at the 15th Summit in Thailand in October 2009 when ASEAN leaders drew up a statement on the subject. It said, for example, that “enhancing intra-regional

connectivity within ASEAN and its subregional grouping would benefit all ASEAN member states through enhanced trade, investment, tourism and development”. The statement foresaw that the proposed transport linkages would have to go through the mainland countries of Cambodia, Laos, Viet Nam, Myanmar and Thailand and that these countries would therefore stand to benefit the most through infrastructure development. In opening up remote and less developed regions, it was determined that the development gap within ASEAN would be narrowed.

So what does connectivity involve? Two areas cited in the Master Plan are “institutional” connectivity – such things as trade liberalisation and cross-border procedures – and “people-to-people” connectivity, covering areas such as education, culture and tourism.

But a key third plank – and the one which forms the basis of this report – is “physical” connectivity. In the main, this aspect of connectivity is being applied to transport, information and communications technology (ICT) and energy.

Take a look at a map of Asia and you will quickly see why it’s imperative that the ASEAN nations come together in an optimal way. To the west lies India; to the north-east are China, Japan and the Republic of Korea; to the south, Australia and New Zealand. The potential synergy of such an economically vibrant and growing region is manifestly apparent. In enhancing its connectivity, ASEAN is seeking to rise to the challenge of reducing the cost of investment and international trade in goods and services. Time for a Master Plan? You bet.

Priority areas

ASEAN has put in place numerous programmes and initiatives designed to build and enhance regional connectivity, and good progress has been made. However, by ASEAN’s admission, “substantial work still remains to be done to achieve the goal of a seamless regional connectivity”. Below we reference some of ASEAN’s physical connectivity priorities and progress made to date:

The ASEAN Highway Network (AHN). The AHN is an extension of the Trans-Asian highway network within the ASEAN region. The member states have already made significant progress increasing the length of the highway and upgrading road quality. There remain some “missing links”, mostly located in Myanmar and which have a total length of 227 kilometres.

The Singapore-Kunming Rail Link (SKRL). This was proposed at the fifth ASEAN Summit in December 1995 and is targeted for completion by 2015. It covers several routes connecting Singapore, Malaysia, Thailand, Cambodia, Viet Nam and Kunming in China as well as spur (or branch) lines between Thailand and Myanmar and between Thailand and Laos. There are currently 4,069 kilometres of missing links or links in need of rehabilitation in Cambodia, Laos, Malaysia, Myanmar, Thailand, and Viet Nam.

Inland waterways. The ASEAN region has some 51,000 kilometers of navigable inland waterways which have been identified as having an ability to play an active role in transport development. Such waterways, which currently have low utilisation, are seen to have large potential in reducing freight transport costs. Infrastructure issues that need to be addressed include: the underdeveloped waterways network, poor river ports and facilities, and poor intermodal connectivity.

Maritime transport. The ASEAN nations have designated a total of 47 ports as the main ports within the trans-ASEAN transport network. These ports face a number of challenges in areas such as ship capacity, cargo handling capacity, land transport, logistics capacity, and customs and administrative clearance procedures. Many ASEAN countries rank poorly on shipping connectivity compared with China and Hong Kong. Moreover, most of the gateway ports in ASEAN member states are fairly full and require capacity expansion.

Air transport. While the main airports of ASEAN member states are seen as sufficient in terms of runway lengths to accommodate existing aircraft operation, some of them face problems in terms of providing airport facilities, especially runways and warehouses. Attention is also being given to harmonising ASEAN’s air navigation systems and planning for anticipated growth in air traffic in the region.

Trans-ASEAN Gas Pipeline (TAGP). TAGP aims to develop a regional gas grid by 2020 by interconnecting the existing and planned gas pipelines of member states and enabling gas to be transported across borders. By 2013, there will be a total of 3,020 kilometres of pipelines in place, with the completion of the M9 pipeline linking Myanmar to Thailand. Challenges of the project include obtaining an adequate supply of natural gas, increasing investment costs, synchronising national technical and security regulation requirements, and differences in the supply, distribution, and management for natural gas across the countries.

ICT infrastructure. This is broadly defined as fixed, mobile and satellite communication networks, the internet and the software supporting the development and operation of the communication networks. As well as member states needing to improve the competitiveness of their national ICT sectors, a key challenge is the lack of financing schemes for infrastructure projects that involve the significant participation of private capital.

First published in The Infrastructure Investor April 2013 Report