SSRG International Journal of Humanities and Social Science Volume 7 Issue 5, 88-97, Sep-Oct 2020 ISSN: 2394 – 2703 /doi:10.14445/23942703/IJHSS-V7I5P111 © 2020 Seventh Sense Research Group® "Economic Developments in the Sub-regional Growth Zones in ASEAN: A Case Study of SIJORI-Growth Triangle" Dr. Meena Singh Associate Professor, Department of Commerce, Motilal Nehru College (University of Delhi), New Delhi, India Abstract - The Asia-Pacific region has emerged as a very Indonesia. Its name was changed to The Indonesia- vibrant region globally in modern times. This region has Malaysia-Singapore Growth Triangle (IMS-GT) in 1994. been making sincere attempts at enhancing regional This growth triangle can be cited as a popular example of economic cooperation and integration. For achieving this, sub-regional growth linkages in the modern globalized it has always remained ahead in setting up some sub- world. Liberalization and deregulations of domestic regional initiatives, which came up more prominently in markets and innovations in information and the Southeast Asian and the East Asian regions. Several communication technology (ICT) have accelerated the trans-border sub-regional growth initiatives were launched growth triangle zone's overall economic development in these regions, and they were popularly called the activity. 'Growth Triangles.' Amongst these, the Singapore-Johor- Riau Growth Triangle or the 'SIJORI-Growth triangle' is II. SIJORI-Growth Triangle – The Historical ASEAN's first sub-regional growth zone linking Singapore Perspective with the southern Malaysian state of Johor and the Singapore, Johor and Riau formed the Johor-Riau Empire Indonesian provinces of Riau, when it was set up initially. (1511-1824 A.D), but the region got divided into three This sub-regional growth initiative came up in 1989, and parts with the growing European strength in the region. later, in 1994, it was renamed the Indonesia-Malaysia- Riau got separated from Singapore and Johor due to the Singapore Growth Triangle (IMS-GT). Anglo-Dutch Treaty in 1824. In 1819, Singapore was ceded to the British after Sir Stamford Raffles from the This Growth Triangle has been cited as a very appropriate British East India Company arrived. In 1826, the states of example of the so-called 'borderless' economy. It is Singapore, Penang and Malacca were merged into the recognized as one of the most successful classic cases of Straits Settlements. In 1959, Singapore first got self- sub-regional economic cooperation in ASEAN. This growth initiative has portrayed itself as an example of a governance. After that, it joined the Federation of Malaya, mutually beneficial cooperative arrangement for Sabah and Sarawak and formed Malaysia in 1963. However, soon after this, Singapore got separated from enhancing growth amongst all its member participants. Malaysia on August 9, 1965, due to some Indonesian The present article throws light on setting up the IMS-GT, government confrontation. The 1960s saw Singapore its historical background and the driving factors that led to transforming into a hi-tech city-state. Historical ties among its formation. The article looks thoroughly into various economic developments across the SIJORI-GT during its the three countries ensured free mobility of goods and factors within them even after they became separate journey after 1989. entities. The business also grew because of their Keywords: SIJORI-Growth Triangle, IMS-Growth geographical proximity, strong social, ethnic, linguistic Triangle, Regional and Sub-regional Cooperation, and cultural ties. Around 1965, Singapore's GDP per capita Economic Development was only around $500, and it suffered from severe resource shortages. Hence, it became important for the I. Introduction Singapore national leaders to take some very strict The emergence of the Asia-Pacific region as an important measures for embarking on development, which required region globally has enhanced its efforts to promote disciplined and focused efforts about its future development process. regional cooperation and integration through its various regional and sub-regional initiatives. The latter could be III. What drove the formation of the SIJORI-Growth seen prominently in East and South East Asia, which Triangle? witnessed the launching of several cross-border sub- regional growth initiatives during the early 1990s, under The evolution of the SIJORI Growth Triangle was very the motto of 'Growth Triangles.' These sub-regional much linked to the growth of the Singapore economy growth zones were instrumental in strengthening its trade itself. Due to severe land shortage, it decided to focus on and investment linkages and growing regional integration developing its hi-technology industrial and infrastructural amongst the Southeast Asian economies for the ASEAN projects. It must be noted that Singapore has always been region. ASEAN witnessed its first such Growth Triangle, linked to Malaysia's Johor state and Indonesia's Riau the SIJORI-Growth Triangle in 1989, which involved Archipelago. Because of this geographical closeness, the Singapore, the Johor state of Malaysia and Riau islands of three governments decided to formalize these pre-existing This is an open access article under the CC BY-NC-ND license (http://creativecommons.org/licenses/by-nc-nd/4.0/) Dr. Meena Singh et al. / IJHSS, 7(5), 88-97, 2020 linkages. Singapore could share its capital, technology and II. TABLE entrepreneurial skills with Johor and Riau's extensive land, SELECTED INDICATORS OF THE IMS-GT IN 2010 semi-skilled and unskilled labor and water resources. Riau Indicators Singapore Johor Total The main driving force behind the setting up of SIJORI- Islands GT was Singapore itself. After it got independence in Area (sq. km.) 712 19,210 5,829 25,751 1965, it started moving ahead with the strategy of Population 9.8 5.1 3.2 1.5 (I) promoting exports. It liberalized its policies, which (million) (approx.) resulted in increased FDI flows and higher GDP growth Per Capita GDP 45,640 6,631 4,692(ii) rates. Singapore is now a highly developed country, with (US$) its 2016 GDP Per Capita at the U.S. $ 52, 960.71, which GDP at current 261,900 1 231,700 45,640 7,900(ii) further increased to USD 57,714.30 (World Bank, 2018) . price (Million $) (approx.) The per capita income of Singapore more than double between 1975 and 1980. In 1995 also it was Per capita Source: As given by Sugimoto Yoshihide (2014) in "The GDP more than doubled from 11,864 US$ to 24,936 US$. Indonesia-Malaysia-Singapore Growth Triangle (IMS-GT) And Its Impact on The Ferry Transportation in The Riau Other factors, such as rising costs and appreciating Islands." Singapore dollar, led to the reduced cost competitiveness This growth arrangement was expected to help Singapore of its labor-intensive industries. This necessitated the to tackle its water shortage problems also. The later relocation of its labor-intensive industries to some nearby inclusion of other provinces, namely, Bintan, allowed it to geographic locations, such as Johor and Riau, which could reduce its dependence on Johor alone for its water needs provide cheap labor (unskilled and semi-skilled) as well as and ensure another water contract for Singapore for the extra land that Singapore required. Hence, HIA Chen next 50 years. Indonesian government wanted to join this (2009) says that Singapore was the most enthusiastic initiative because of its policy to see fast growth in Riau leader in this growth arrangement. Mcleod & McGee and other underdeveloped provinces. On the Malaysian (1996) also maintain that the SIJORI growth triangle side, the `twinning' policy of Johor state government with represented an arrangement in which Singapore's fast that of `Singapore' helped it to grow as an industrially growth process could easily be felt in its neighbors' developed state due to massive investments that started territories. flowing from Singapore and other developed ASEAN economies and Japan. Hence, the formation of this growth It can be cleared from the tables below that there are triangle resulted from strong political will and a conscious noticeable differences in terms of the levels of per capita decision- making to modify their policies to promote income levels among the growth triangle members. It is economic development and all the nodes of the growth very clear that Singapore figures at the top of the Gross triangle: namely, Singapore, Johor and Riau Islands. Domestic Product per capita chart. This is followed by the One of the major driving factors for setting up of the IMS- per capita levels of GDP in Johor. The Riau Province can Growth Triangle has been the economic reasons that were be seen at the bottom. This situation was present in the arising out of differences in per-unit costs of factors of year 1989 when it was formed. Similar situations could be production, namely land and labor as argued by Sparke et witnessed in 1994 and then in 2010 also. See tables 1 & 2. al. (2004), which have had significant implications for the Singaporean economy. The presence of economic I. TABLE complementarities is one of the major rational for the KEY INDICATORS FOR THE IMS-GT: 1994 emergence of the SIJORI-GT, as Yue (2000: 378). Indicators Singapore Johor Riau Total Area (Sq. 614 18,914 94,562 119,893 III TABLE Km.) FACTOR COSTS DIFFERENTIALS IN SIJORI GROWTH TRIANGLE: 1991 Population 2.9 2.3 3.7 8.9 (million) Singapore Johor Batam GDP (US$ 70,200 4,338 3,320 77,858 Land Price (US$ per 4.25 4.08 2.30 million) sq. mt.) GNP Per 24,425 2,192 897 a 27.514 Capita (US$) Labor Cost (US$ per month) Source: Chia Siow Yue & Lee Tsao Yuan (1992) a. Refers to GDP Per Capita Unskilled 350 150 90 Semi-skilled 420 220 140 Skilled 600 400 200 Source: Sparke et al.