Indonesia can be stronger together with Malaysia and Singapore ...

20 days ago

It is important for Indonesia to remember that its growth targets can only be sustainable when it works hand-in-hand with the likes of Singapore, Malaysia and even Thailand, especially when the latter has begun to emerge from its political problems.

Indonesia - Figure 1
Photo Jakarta Post

Neighborly meeting: Indonesian defense minister and president-elect Prabowo Subianto (right) and Singapore’s next leader Lawrence Wong shake hands after their meeting at the Bogor Presidential Palace in Bogor, West Java, on April 29, 2024. (AFP/Bay Ismoyo)

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n important element of international trade is contiguous geography, whether on land or at sea. This is, however, true only with one proviso that the areas are not hampered by any hindrances such a war, terrorism or the lack of last-mile connectivity.

Naturally, it goes without saying that for regional trade to thrive, the said area has be free from any disruptive elements such as the ramifications of climate change.

As things are, the member states of ASEAN have no incidents of interstate war. Since 1976, the fatalities of interstate conflicts have dropped by a remarkable 97 percent.

Yet, intraregional trade stands at less than 25 percent. This is a figure that has not moved much at all, at least, since 1970; three years after the official formation of ASEAN on Aug. 8, 1967.

Come what may, it was Paul Krugman, together with many Japanese economists, that made the astute observation that growth can come from contiguous geography.

Shorter distance between various countries provides the incentives to trade with more regularity and intensity. In this light, it is important to understand what Indonesia, Malaysia and Singapore would jointly be able to do, and are in fact already predisposed to doing.

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All three littoral states of the Strait of Malacca want the region to grow at a high rate. Malaysia's gross domestic product (GDP) has been projected to grow at 5.2 percent. This is not enough for Prime Minister Anwar Ibrahim. Meanwhile, while Singapore's growth in the first half of 2024 reached 2.6 percent it is expected to hit 3 percent by the end of the year. Meanwhile president-elect Prabowo Subianto has promised to make Indonesia grow beyond 8 percent annually.

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