BIMP-EAGA Investment Opportunities in Corridor Value Chains
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Munich Personal RePEc Archive BIMP-EAGA Investment Opportunities in Corridor Value Chains Lord, Montague J. and Tangtrongjita, Pawat Asian Development Bank 30 November 2016 Online at https://mpra.ub.uni-muenchen.de/76457/ MPRA Paper No. 76457, posted 28 Jan 2017 22:34 UTC BIMP-EAGA Investment Opportunities in Corridor Value Chains Prepared by Montague Lord and Pawat Tangtrongita May 2016 BIMP-EAGA Investment Opportunities in Corridor Value Chains Contents List of Figures, Tables and Boxes ................................................................................. iv Map of BIMP-EAGA Corridors ....................................................................................... vii Acknowledgements ...................................................................................................... viii Abbreviations .................................................................................................................. ix Summary ......................................................................................................................... xi PART I. BIMP-EAGA ECONOMIC CORRIDORS ............................................................. 1 I. INTRODUCTION TO BIMP-EAGA ECONOMIC CORRIDORS ........................... 2 A. Background ................................................................................................. 2 B. Coverage .................................................................................................... 2 II. CORRIDOR AND LOCAL DEVELOPMENT STRATEGIES ................................ 4 A. Historical Context ........................................................................................ 4 B. Modern Day Corridors ................................................................................. 5 C. Stages of Corridor Development ................................................................. 9 PART II. VALUE CHAIN OPPORTUNITIES ................................................................... 13 III. FINDING VALUE CHAIN OPPORTUNITIES ........................................................ 14 A. Growth of ‘Trade in Tasks’ ........................................................................ 14 B. Domestic Contents of Exports ................................................................... 15 C. Identifying Potential Corridor Value Chains ............................................... 16 IV. RANKING INDUSTRIES FOR POTENTIAL CORRIDOR VALUE CHAINS ......... 18 A. Corridor Value Chain Potential Preferences .............................................. 18 B. West Borneo Economic Corridor ............................................................... 19 C. Greater Sulu Sulawesi Economic Corridor ................................................ 21 PART III. THREE WAYS TO IDENTIFY OPPORTUNITIES ............................................ 25 V. VALUE CHAINS BASED ON LOCAL AND NATIONAL PRIORITIES ................. 26 A. Priorities in West Borneo Economic Corridor ............................................ 26 B. Priorities in Greater Sulu Sulawesi Economic Corridor .............................. 27 C. Corridor-Wide Value Chain Potential......................................................... 28 D. Understanding Priorities within Local Corridor Context ............................. 29 VI. VALUE CHAINS BASED ON BUSINESS PERCEPTION SURVEYS .................. 33 A. Coverage and Overall Findings ................................................................. 33 B. Perceptions about Corridor Value Chains across Industries ...................... 36 C. Perceptions about Industries across States and Provinces ....................... 39 Page ii BIMP-EAGA Investment Opportunities in Corridor Value Chains VII. VALUE CHAINS BASED ON TECHNOLOGICAL INTENSITY ............................ 42 A. Mapping the Technological Sophistication of Industries ............................ 42 B. Technology Intensity of Industries ............................................................. 44 C. Moving Up the Value Chain ...................................................................... 46 PART IV. COMPANY HIGHLIGHTS ............................................................................... 50 VIII. SHOWCASING COMPANIES IN WEST BORNEO CORRIDOR .......................... 51 A. Sabah ....................................................................................................... 51 B. Brunei ....................................................................................................... 52 C. Sarawak .................................................................................................... 54 D. West Kalimantan ....................................................................................... 55 IX. SHOWCASING COMPANIES IN GREATER SULU SULAWESI CORRIDOR ..... 57 A. Mindanao .................................................................................................. 57 B. North Sulawesi .......................................................................................... 61 C. Sabah ....................................................................................................... 61 PART V. INVESTMENT CLIMATE ................................................................................. 63 X. INVESTMENT INCENTIVES, GUARANTEES AND PRIORITIES ........................ 64 A. General Investment Promotion .................................................................. 65 B. Foreign Direct Investment Laws and Regulations ..................................... 74 XI. REALIZING THE POTENTIAL OF CORRIDOR-WIDE INVESTMENTS .............. 78 STATISTICAL APPENDIX............................................................................................... 81 REFERENCES .............................................................................................................. 103 Page iii BIMP-EAGA Investment Opportunities in Corridor Value Chains List of Figures, Tables and Boxes List of Figures Figure 2.1. West Borneo Economic Corridor Figure 2.2. Greater Sulu Sulawesi Economic Corridor Figure 2.3. Two Paths to a Full-Fledged Economic Corridor Figure 3.1. Domestic Value Added in Gross Exports Figure 3.2. Example of Brunei’s Gross Export Components of Fruit Juice Mixtures West Borneo Economic Corridor: Actual or Potential Industry Ratings and Province Figure 4.1. or State Count West Borneo Economic Corridor: Member Participation in Potential Corridor Value Figure 4.2. Chains Greater Sulu Sulawesi Economic Corridor: Actual or Potential Industry Ratings and Figure 4.3. Province Count Greater Sulu Sulawesi Economic Corridor: Member Participation in Potential Figure 4.4. Corridor Value Chains Figure 5.1. Brunei’s Development Areas Figure 5.2. Indonesia’s Kalimantan and Sulawesi Corridors Figure 5.3. Malaysia’s Sabah and Sarawak Corridors Figure 5.4. Mindanao's Development Corridors Percent of Respondents Who ‘Agree’ or ‘Strongly Agree’ about Success of Corridor Figure 6.1. Value Chains, by Industry Figure 6.2. Company Perceptions about Success of Corridor Value Chains, by Industry Grouping Figure 6.3. Respondent Perceptions about Success of Corridor Value Chains, by Corridor State Figure 7.1. Technology Intensity of Leading Industries in BIMP-EAGA Economic Corridors Figure 7.2. Technology Intensity of Leading Industries in Corridor Provinces and States Stages of Value Added Investments by Level of Technological Sophistication in Figure 7.3. WBEC and GSSEC Corridors Figure 7.4. Value Added Profile for Corridor Value Chains Figure 8.1. Sawit Kinabalu Group’s Palm Oil Plantations and Mills Figure 8.2. Sawit Kinabalu Group’s Palm Oil Plantations, Mill and Cattle in Sabah Figure 8.3 Simpor Pharma’s’ Plant at Bandar Seri Begawan in Brunei Figure 8.4. Simpor Pharma’s facility is GMP compliant, with class 100,000 cleanroom standard Figure 8.5. Hana Soy & World Plant at BINA Complex Serambangun Figure 8.6. Hana Suku Suku Soy Drink is First Soy Products ever Produced in Brunei Figure 8.7 SALCRA’s Batang Ai Integrated Fish Cage Project Figure 8.8 Tilapia Cages at Batang Ai in Sarawak Figure 8.9 Palm Oil Production at PT Perkebunan Nusantara XIII in West Kalimantan Figure 8.10 Rubber Production at PT Perkebunan Nusantara XIII in West Kalimantan Figure 9.1. RDEX Food International Phils Inc. Processing Facility in General Santos Figure 9.2. RDEX Food International Phils Inc. Location in General Santos Figure 9.3. Can Filling and Classifying in RDEX Food International Phils Inc Figure 9.4. TADECO Location in Davao Del Norte Page iv BIMP-EAGA Investment Opportunities in Corridor Value Chains Figure 9.5. TADECO Plantation and Building Facility Figure 9.6. TADECO Packing and Laboratory Figure 9.7. PT Dimembe Nyiur Agripro in North Sulawesi Figure 9.8. PT Dimembe Nyiur Agripro Factory in North Sulawesi Figure 9.9. Life Water Industries’ Headquarters at Lahad Datu in Tawau Division of Sabah Figure 9.10. Life Water Industries’ Bottling of K2 17 Stages Purified Drinking Water in Sabah List of Boxes Box 6.1. Structured Questionnaire Box 6.2. Schematics of Questionnaire Survey Coverage by Province/State and by Industry Box 6.3. Distribution of Surveyed Companies across Industries Box 6.4. Industry Groupings Box 6.5. Are there 5 Factors Explaining the Potential Benefits of Corridor Value Chains? Box 10.1. General Investment Incentives in BIMP-EAGA Economic Corridors, 2016 Box 10.2. Laws and Regulations Governing FDI in BIMP-EAGA Economic Corridors, 2016 Box 10.3. Special Economic Zones in Mindanao Box 11.1 Compelling Reasons to invest in BIMP-EAGA