Crime Fighting with SBEZs

As South-East Asian countries gear up for their ASEAN Economic Community, coming into effect by the end of this year, Indonesia should look into setting up special economic zones together with bordering countries.

These special zones are in line using the ASEAN Economic Community’s blueprint to support local businesses and allow people and goods to move freely between states. Having countries collectively set up economic hubs in border areas can minimise territorial disputes, reduce cross-border crimes, and improve the lives of people living in remote outposts.

Special zones in edge areas

Economists call these areas Special Border Economic Zones (SBEZs). It’s a variation of Special Financial Zones (SEZs), a dedicated area exactly where businesses receive tax breaks along with other regulatory incentives to produce as well as distribute goods.

A Special Border Economic Zone is an area set up by bordering countries to support businesses and promote trade and tourism at the border.

Malaysia and Thailand have a handful of these hubs and intend to have at least eight between them. The Greater Mekong Sub-region, which covers Vietnam, Thailand, Laos, Cambodia and Myanmar plus China, will have 60 SBEZs by the end of 2015. Some 54 of these tend to be between the borders of Laos as well as Cambodia.

However, Indonesia, which shares property borders with Malaysia, Papua New Guinea, as well as Timor Leste, has yet to join the crowd.

Most Indonesians living in border areas are poor. Far from the centre of government and business, the roads and schools in these remote areas are in poor condition. Human traffickers and medication smugglers often use unsupervised edges to move their victims and illegal cargo.

Border economic areas may be a solution to these problems. SBEZ isn’t a one-size-fits-all solution to stop these crimes. It is a way to minimise them.

These shared economic zones in border areas increase neighborhood and government presence, which may reduce the areas' vulnerability to illegal activities. By creating work, border economic zones may also reduce welfare problems during these areas.

Success stories

Indonesia can look at different models between Thailand and Malaysia, the countries in the Greater Mekong Sub-region, and the Oresund area between Sweden and Denmark, because case studies.

The Narathiwat-Rantau Panjang zone between Thailand and Malaysia is an incubator for small and medium businesses. It produces traditional snacks and has a shared market that can attract tourists.

The two countries also share Rubberized City, an industrial zone that produces rubber and products from the material, between Thailand’s Ban Prakob and Malaysia’s Durian Burung. It has an inland interface and Thailand and Malaysia are planning to build a border town with colleges, hotels, a convention center, health facilities, and public transportation.

Meanwhile, through a Cross-Border Transport Facilitation Agreement, countries in the Greater Mekong Sub-region agreed to build economic zones around the borders. Countries set up joint facilities to inspect people and items going through the borders. Similar to SBEZs in between Malaysia and Thailand, these border financial zones provide jobs and promote trade and tourism.

The Oresund region between Denmark and Norway is far more advanced. It is an area of more than 2 million hectares – more than two times the size of Melbourne – where Swedes as well as Danes share a space to work, trade, and live.

Developing SBEZs in Indonesia

To develop SBEZs, Indonesia should arrange the relevant regulations and policies with neighbouring countries. These areas will need an intergovernmental body with regard to oversight.

Indonesia may consider doing a more comprehensive study to find out potential areas that could take advantage of SBEZs and start talks with neighbouring countries on this basis.

Indonesia encounters many problems in its edge areas, from human trafficking as well as smuggling to activities of separatist teams. It should not deal with these issues only through a defence and protection approach.

If Indonesia would like to enhance control of its borders as well as retain its sovereignty, it should additionally improve the wellbeing of people residing there.

Ahead of ASEAN Economic Neighborhood, Indonesia should consider economic zones at her borders is republished with permission from The Conversation