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Completion Report

Project Number: 48176-001 Technical Assistance Number: 8814 July 2019

Advancing Regional Cooperation and Integration through Darussalam–Indonesia–– East ASEAN Growth Area and Indonesia–Malaysia– Growth Triangle

This document is being disclosed to the public in accordance with ADB’s Access to Information Policy.

In preparing any program or strategy, financing any project, or by making any designation of or reference to a particular territory or geographic in this document, the does not intend to make any judgments as to the legal or other status of any territory or area. TA Number, Country, and Name: Amount Approved: $500,000

TA 8814-REG: Advancing Regional Cooperation and Integration through the Brunei Darussalam–Indonesia–Malaysia–Philippines East ASEAN Growth Area and Indonesia–Malaysia–Thailand Revised Amount: $1,700,000 Growth Triangle Executing Agency: Source of Funding: Amount Undisbursed: Amount Utilized: Asian Development Bank TASF-others $1,000,000 $27,041 $1,672,959 PRCF 700,000 TA Approval TA Signing Fielding of First TA Completion Date Actual: Date: Date: Consultant: Original: 30 2016 30 2018 16 December 2014 16 December 2014 29 2015 Account Closing Date Original: Actual: 30 June 2016 6 February 2019 Description The TA strengthens ADB’s role as regional advisor and development partner of the Brunei Darussalam–Indonesia– Malaysia–Philippines East ASEAN Growth Area (BIMP-EAGA) and the Indonesia–Malaysia–Thailand Growth Triangle (IMT-GT). It provided strategic and technical support and enhanced capacities of the subregional programs in fulfilling their roles as building blocks of ASEAN and in promoting regional cooperation and integration (RCI). It is funded by ADB TASF-Others and the government of the People’s of .

Expected Impact, Outcome, and Outputs The TA expected impact is for the subregions to be more integrated internally and with ASEAN. The outcome is that projects and initiatives in the two subregions’ Implementation Blueprints (IB) covering the period 2012–2016 are implemented. The TA is strategically aligned with ADB’s RCI priorities and was a direct request from the member ’ ministers to promote subregional cooperation; to continue advancing RCI; and support their national priorities. The outputs are: (i) improved sector coordination between the subregional programs and ASEAN, (ii) regional thematic studies on cooperation and integration developed and implemented, and (iii) managing for development results enhanced. The TA modality which is policy and advisory is appropriate given ADB’s role is focused on providing strategic support and technical guidance to BIMP-EAGA and IMT-GT. The TA assisted the subregions in developing long term strategic plans aligned with their national policies. It also conducted thematic studies in transport, energy, trade facilitation, environment, tourism and economic corridors which identified policy recommendations at both subregion and country levels. The TA was deemed relevant as it helped transform BIMP-EAGA and IMT-GT into more effective subregional cooperation programs with clear strategic plans, pipelines of projects, and stronger institutional and cooperation mechanisms.

Delivery of Inputs and Conduct of Activities The TA was approved on 16 December 2014 in the amount of $500,000, with ADB as the executing agency and initially scheduled for completion on 30 June 2016. The TA had two minor changes in scope to: (i) reallocate funds from Consultants and Surveys and Field Visits to Workshops, Trainings, Seminars and Conferences (23 April 2015); and (ii) additional person-months for a Regional Development Expert (16 June 2015). The TA also received supplementary financing: (i) $500,000 from TASF-Others approved on 16 December 2015; and (ii) $700,000 from People’s Republic of China Poverty Reduction and Regional Cooperation Fund (PRCF) approved on 31 2016. The total TA amount increased to $1,700,000. The additional financing was processed with minor changes in scope and implementation arrangements and extension of TA completion dates. The extension to November 2018 was necessary to (i) implement expanded scope of activities which required longer implementation period; (ii) allow more time to complete analytical and feasibility studies (increased from 9 to 16, as requested by the countries; and (iii) recruit additional consultants (firm and individuals) as requested by the countries to work on specific sectors. Judicious management of TA funds and collaborations with various ADB TAs and sector divisions also led to significant savings which were used to fund additional demand-driven activities.

The overall performance of ADB both as the executing agency and provision of thematic studies is assessed as highly satisfactory. Progress and achievements were discussed at senior officials’ meetings (SOMs) and ministerial meetings (MMs) of BIMP-EAGA and IMT-GT. ADB also participates in the annual strategic planning of the subregions to ensure demand-driven support. Interdepartmental coordination and partnerships with ADB departments such as Sustainable Development and Climate Change Department, Economics Research and Regional Cooperation Department, and Department of Communications were both effective and extensive covering knowledge products, action plans and strategic documents produced, and events organized. ADB sector divisions collaborated and staff supervised studies and participated in various events such as working group meetings, workshops and conferences. The ADB resident missions provided support to TA implementation especially for in-country activities.

Consultants (individuals and firms) and resource persons were hired to implement TA activities especially those requiring specialized expertise and RCI experience. Firms were recruited through consultant’s qualification selection (CQS) method. The consultants’ recruitment procedures were suitable, and performance satisfactory. The TA originally

planned to engage 13.5 person-months of international and 21 person-months of national consulting services for a total of 34.5 person-months. With additional financing, expanded activities, extension, and specialized expertise required, the actual consulting services engaged increased to 120 person-months (53 person-months of international and 67 person-months of national consulting services). The activities were conducted based on the design and monitoring framework (DMF). Activities implemented to achieve outputs were:

For output 1, the TA supported: (i) workshop on ASEAN, BIMP-EAGA, and IMT-GT Land Transport Facilitation which led to common approaches and enhanced coordination in implementing ASEAN land transport facilitation agreements; (ii) Green Conferences in 2017 and in 2018, which helped established an ASEAN cities network and highlighted financing opportunities in sustainable urban development; (iii) preparation of the BIMP-EAGA Vision 2025 (BEV 2025) long term strategy aligned with ASEAN 2025; (iv) preparation of the IMT-GT Tourism Strategic Framework 2017–2036 and Action Plan 2017–2021 guided by the ASEAN tourism strategy; and (v) ASEAN Secretariat, Centre for IMT-GT Subregional Cooperation (CIMT), BIMP-Facilitation Center (BIMP-FC), and GMS Secretariat Consultative Meeting which identified concrete mechanisms for cooperation at strategic, sectoral, and institutional levels.

For output 2, the TA delivered thematic and feasibility studies, reports, and actions plans for BIMP-EAGA on: (i) power enclaves in the of and ; (ii) –Palawan interconnection; (iii) Port in Malaysia as hub; (iv) trade and investment opportunities of corridor value chains; (v) business perceptions on investment climate in the economic corridors; (vi) diagnostics and assessment of customs, immigration, quarantine and security in select points; (vi) land transport facilitation; (vii) climate change vulnerability assessment and risk mitigation; (viii) Sabah–North and – border areas development including pre-feasibility assessment of the land link between Indonesia and Malaysia; (ix) Mantanani as model and marine ecotourism project; and (x) Green Action Plans (GCAPs) for BIMP-EAGA cities namely , Indonesia and Kota Kinabalu, Malaysia.

For IMT-GT, also under output 2, the TA supported CIMT to deliver thematic and feasibility studies, and action plans on: (i) GCAPs for Songkhla and Hat Yai in Thailand, and for Indonesia, and Melaka in Malaysia; and (ii) Special Border Economic Zones along the Thai-Malaysian border and Kedah–Perlis–Songkhla special economic zone. Under output 2, thematic studies are intended to serve as basis for new projects and pilot initiatives. The GCAP in Melaka, led to development of a public- partnerships (PPP) street lighting improvement project, an urban public transport master plan and solar projects. The projects are being considered for financing and have led to green projects being replicated in other IMT-GT areas namely in and in Malaysia, in Krabi and Phuket in Thailand, and in Sabang in Indonesia.

The IMT-GT and BIMP-EAGA Green Cities Initiative brochures and statistical booklets were also printed. All knowledge products were printed and widely disseminated at the BIMP-EAGA and IMT-GT SOMs, MMs, Summits, and other events such as trainings, workshops and conferences. These are also available in the websites.

For Output 3 trainings, workshops and conferences for BIMP-EAGA and IMT-GT government officials, BIMP-FC, and CIMT were conducted on project management, community-based eco-tourism, green cities, integrated green urban transport, trade facilitation, maritime corridors, and food security. A total of 483 government officials attended with 164 participants (34%) women and 169 at the level of Directors and above (35%). The TA supported establishment of BIMP-EAGA and IMT-GT sustainable time-series statistical database and conducted capacity building workshops for national statics agencies. The Statistics Working Groups of both subregions are now managing the statistical databases that was developed with ADB support. In BIMP-EAGA, support was also provided to develop the results- based monitoring and evaluation system at macro, sector and project levels as part of BEV 2025. The TA completed the mid-term review (MTR) for the IMT-GT IB 2012–2016 with key findings and recommendations considered in the preparation of the IMT-GT Vision 2036 and IB 2017–2021. As part of the MTR recommendations and as follow through, CIMT was supported in the preparation of business plans and an operations manual.

Evaluation of Outputs and Achievement of Outcome The TA is efficient in achieving its intended outputs. The activities were delivered within budget and disbursements on schedule. As a policy and advisory TA, it provided timely support to emerging needs of BIMP-EAGA and IMT- GT subregions within its implementation period. The TA was extended for more than 2 years to implement activities in line with the supplementary financing from PRCF and to accommodate additional request for technical support (i.e. feasibility/pre-feasibility studies) of the ministers and senior officials of BIMP-EAGA and IMT-GT subregions during their 2017 ministerial meetings. Both subregions value ADB’s financial, technical, and advisory assistance. ADB, as the regional development advisor of these two subregions, ensured that the request was addressed and reported at the ministerial meetings of IMT-GT in September 2019 and of BIMP-EAGA in November 2019, respectively. The number of TA activities exceeded what was originally planned with outputs and corresponding targets were surpassed. For output 1, common approaches were identified and coordination with ASEAN at strategy, sector, and institution levels improved. For output 2, 16 thematic and feasibility studies, reports, strategic documents, and action plans were produced compared to the target of only 9 studies (56% increase). The member countries are considering recommendations and next steps of the various studies. For output 3, 483 government officials have been trained exceeding the target of 250 officials. Two subregional statistical databases have been developed and are now being managed by the Statistics Working Groups making it institutionalized and sustainable. While no detailed project databases with SMART indicators were developed for both subregions, the TA helped in preparing project pipelines

which included project profiles. Development of project databases with SMART indicators is difficult to achieve at this stage given weak capacities in project design on the part of the subregional secretariats and the member countries. Both subregions also do not have effective and well-functioning results monitoring and evaluation systems in place. The key performance indicators of both BIMP-FC and CIMT are also achieved meeting the 90% target given implementation of the IBs 2012–2016, preparation of new strategic documents, and setting up databases were the subregional secretariats main deliverables. All these were achieved with strategic, advisory and technical support provided by the TA.

The TA is effective in achieving its expected outcome with projects and initiatives set out in the IBs 2012–2016 implemented. For BIMP-EAGA, the outcome target was attained with 8 out of the total 10 Priority Infrastructure Projects (amounting to $1 billion) completed, one project discontinued, and another project on-going with expected completion in 2020. The project completion rate for BIMP-EAGA is 80% exceeding the 70% target. In IMT-GT, 2 of the 11 Priority Connectivity Projects (amounting to $5.2 billion) were completed, 2 projects discontinued, 5 projects on-going, and 2 projects with feasibility studies conducted. Although the 70% project completion target was not achieved for IMT-GT, the on-going projects are large scale infrastructure projects with multiple phases requiring longer completion time. The financing secured for the 5 projects can be considered a achievement given the challenging external economic conditions. There were no issues encountered in delivery and achievement of the TA outputs and outcome.

Overall Assessment and Rating The TA is rated successful in its overall rating. The TA has no major design flaws and it is fully aligned with the ADB and the member countries RCI priorities. The TAs outputs and outcomes were largely achieved with no significant constraints encountered. The extension of TA implementation was achieved with additional funding secured, significant savings and collaboration with other TAs and sector divisions, allowing for an expansion of activities. Member countries expressed continued appreciation for ADB support as captured in the various SOMs, MMs and summits. The MMs and Summit declarations by both subregional programs highlighted ADB’s valuable role in enhancing their effectiveness at strategic, sector, project(s), and institutional levels. The TA significantly provided measurable impact with BIMP-EAGA and IMT-GT projects in the IBs 2012–2016 forming part of the Master Plan on ASEAN Connectivity. The TA also helped strengthen RCI with support provided for stronger institutional mechanisms, development of new strategic documents, and generation of subregional project pipelines. TA is rated likely sustainable given strong country ownership and commitment of the member countries to BIMP-EAGA and IMT-GT. The member countries established these subregions without ADB support in the and has been sustained for more than two decades. Despite capacity constraints, the two subregions have their own subregional and national secretariats which provides institutional sustainability. Unlike GMS, where ADB facilitates as the secretariat, the member countries provide funding for all operational requirements, major projects and initiatives.

Major Lessons Continuous changes in the development landscape, new strategic documents, demand for well-designed subregional projects, and weak institutional capacities require sustained and continuous support. Success factors for both BIMP- EAGA and IMT-GT include strong country ownership and demand and project focus. Major lessons include: (i) need for alignment and coherence with ASEAN’s recent strategic documents; (ii) need for credible subregional project pipelines and more importantly convert these into bankable projects; (iii) systematic approach to results monitoring; (vi) effective institutional mechanisms especially strong subregional secretariats needed to sustain cooperation efforts; (v) government officials need to build capacities for effective implementation of RCI initiatives; and (vi) promote linkages and synergies between and among subregions in ASEAN. On ADB’s side, lessons learned includes the need to have stronger linkages with lending operations and need to provide more proactive support to project development in the two subregions. The TA needs to more concretely identify business opportunities for ADB based on the subregional project pipelines developed by CIMT and BIMP-FC with ADB support.

Recommendations and Follow-Up Actions BIMP-EAGA and IMT-GT recognize significant constraints in performance. Reforms have been slow and continue to be a challenge because of institutional, resources, and capacity weaknesses. Continued and sustained ADB support under a new TA is needed to address weaknesses and gaps in (i) effective implementation of new strategic plans namely BEV 2025, IMT-GT Vision 2036, and IMT-GT IB 2017–2021, (ii) deepening cooperation with ASEAN, (iii) converting project pipelines into bankable projects, (iv) enhancing capacities in project design and implementation, (v) establishing results monitoring systems, (vi) building capacities of government officials, and (vii) promoting links and synergies in ASEAN subregions such as with the GMS. Follow up actions to promote links and synergies between and among BIMP-EAGA, IMT-GT and GMS can include capacity building and information sharing, identification of potential cooperation in sectors with the greatest synergistic potential, developing action plans, and implementing mechanisms for stronger institutional coordination. ASEAN = Association of Southeast Asian Nations; TA = technical assistance; TASF = Technical Assistance Special Fund

Prepared by: ___Gary Krishnan______Designation and Division: _Senior Country Specialist, SERC__