Special Border Economic Zones as tools for regional development and cooperation: Thai-Malay border (-- Growth Triangle)

Alfredo Perdiguero Asian Development Bank SEZs as Catalysts for Economic Corridors, Value Chains and Production Networks Training Shanghai, People’s Republic of China 18 October 2016 • Are SBEZs different than SEZ?

• Criteria to decide where to establish an SBEZ

• Case study: Malaysia-Thai Border SBEZ SEZ SBEZ • Geographically • Geographic location delimited area nearby international • Single management border and administration • Opportunities from • Special incentives and differences in factors benefits for companies (labor, capital, land) and in zone resource endowments, • Separate customs area between the two countries • Requires collaboration between two countries (legal/institutional) 3

Level 1 Level 2 Level 3

SBEZ SBEZ

National Boundaries Level 1 Level 2 Level 3 SBEZ facilities Informal SBEZ Joint SBEZ on either or collaboration facilities and both sides of cross-border supporting the border VCs and activities infrastructures

Corridor System

Thai-Malaysia 5 1 Border

2 1

4

LEGEND: 3 1 - Extended Songkhla-Penang-Medan Corridor 2 - Straits of Malacca Corridor 3 - Banda Aceh-Medan-Pekanbaru-Palembang Corridor 4 - Melaka- Corridor Thai-Malaysian 5 - Ranong-Phuklet Ace Corridor Railway Systems Malaysia: East Coast Thailand’s Economic Region Southern (ECER) Masterplan Region Development

Plan ECER SEZ: Integrated Logistics & Industrial Hub in Kuantan Port City

Malaysia: Northern Corridor Economic Region (NCER) Border Area

Satun, 296,105 Narathiwat, 789,396

Songkhla, 1,478,618 2 Yala, 1 3 4 494,011 8 7 5 6

Perlis 227,025 Kelantan 1,459,994 1,890,098

Perak 2,258,428 • Attract foreign and domestic investment; transfer know how and technology • Enhance social and economic development in border areas • Generate employment in area and develop skills of local population • Support cross-border trade and investment (along economic corridors) • Serve as “demonstration area” to transition to subregional and regional integration

ASSESSMENT RESULTS

Wang Padang Sadao Ban Ban Su Ngai Prachan Besar - Bukit Prakob - Betong - Buketa Kolok - Takbai - - Wang (Songkhl Kayu Pengkalan - Bukit Rantau Pengkala Kelian a & Perlis) Hitam Burung Hulu Bunga Panjang n Kubur

Special Economic Zone 3.5 2.5 4.0 5.0 3.0 2.5 4.0 3.0 Value Chains 3.0 4.5 4.5 5.0 3.0 2.5 4.5 3.0 Transport & Logistics 2.0 2.5 2.5 4.0 3.0 3.0 3.0 1.5 Socio-Econ Development 4.0 2.0 2.0 3.0 3.5 3.0 4.5 3.0 SME Development & BDS 3.5 3.0 3.0 3.5 3.0 2.5 5.0 3.5 Linkages to Indonesia 2.0 3.5 5.0 4.5 2.5 2.0 4.0 2.5

Mean Average 3.0 3.0 3.5 4.2 3.0 2.6 4.2 2.8 Takbai - Pengkalan Kubur

Su Ngai Kolok -

Ban Buketa -

Betong -

Ban Prakob - Durian Burung

Sadao -

Padang Besar (Songkhla & Perlis)

Wang Prachan -

- 0.5 1.0 1.5 2.0 2.5 3.0 3.5 4.0 4.5 Special Economic Zone Value Chains Transport & Logistics Socio-Econ Development SME Development & BDS Linkages to Indonesia Commercial Focus Welfare Focus

Su Ngai Kolok - Ban Prakob - Durian Rantau Panjang Burung Ban Prakob - Su Ngai Kolok - Rantau Durian Burung Panjang Sadao - Bukit Kayu Sadao - Bukit Kayu Hitam Hitam Padang Besar Padang Besar (Songkhla (Songkhla & Perlis) & Perlis) Betong - Pengkalan - Wang Hulu Kelian

Wang Prachan - Betong - Pengkalan Hulu Wang Kelian Takbai - Pengkalan Takbai - Pengkalan Kubur Kubur Ban Buketa - Bukit Ban Buketa - Bukit Bunga Bunga

0 1 2 3 4 0 1 2 3 4 5