Strengthening Investment from the Border: Cross-Border Trade Agreement for Inclusive Economic Growth

Abstraksi

Border territories have a significant element for a state, wherein these since the border territories will determine the state’s power in the sector of defense, security, and economic. However, the lack of supervision and the distant control from the government, especially the central government, may lead to several problems. Conflicts and potential problems can be seen at the area near the border such as human trafficking, illegal drug smuggling, or illegal logging. Thus, managing the border areas to achieve its fullest potential is needed. Besides to strengthen the nation’s economics, enhancing the welfare of people living in the border is needed to ensure the inclusiveness of the economic growth in Indonesia. Furthermore, in this paper, the authors would like to focus on the land-border of Indonesia-Malaysia in West Kalimantan. We see the potential of the border relations, and there is a significant movement of goods and people due to the proximity of distance between Indonesia’s West Kalimantan and Malaysia’s Sarawak, also with the availability of transportation. Entikong becomes one of the busiest border posts, where there are around 60,000 people/vehicle crossing the border in 2017 (Statistics of Kalimantan Barat Province, 2018). In 2017, the number of people/public vehicle who leave Indonesia to Malaysia was 63,529, while the one who enters Indonesia is 60,690. The mobility of people/public vehicle from/to Brunei Darussalam are 12,522 (enter) and 13,470 (exit). The data showed that there is a high frequency of people crossing the border to Malaysia rather than Brunei Darussalam even though both countries are a close territory with Indonesia. The reasons for the movement in this border mostly related to work and health care access. The mobility of people via Entikong border post also affected the mobility of people and labor between Indonesia-Malaysia in that region. In terms of mobility of goods, Entikong is one of the border posts that steadily contribute to the trade performance of West Kalimantan alongside Pontianak, Ketapang, Kendawangan, Supadio, and Teluk Air. The export-import activities in this post mostly come and/or go to Malaysia. Based on Statistics Indonesia (2010-2018), trade in this border is a surplus and reaches its peak in 2014 (US$ 28 million), although it falls to US$ 7 million in 2017. The growth of export in Entikong was quite fluctuated compare to the growth of export of West Kalimantan. However, it showed a positive value on average. The export share of Entikong to overall export of West Kalimantan is lowest compared to other main port in West Kalimantan. The decreasing of export in this province is due to a change in trade regulation that restricts several types of goods to be traded. Besides, there is still an indication of illegal transactions so the trade in Entikong is not recorded which might as well causing environmental problems. Deriving from the statistical data and the literature studies on the border trade agreement, firstly, this paper would like to argue that the potential of the region can be strengthened through the arrangement of Border Trade Agreement. Indonesia-Malaysia has established an agreement that regulates the border trade in 1970. The agreement can be seen as a form of facilitation to develop trade in the region. However, over thirty years have passed, this agreement was not renewed. Thus, the renewal of the Cross Border Trade Agreement needs to be taken into account. Secondly, we would like to further elaborate and emphasize in this paper that the renewal of the Cross Border Trade Agreement 1970 with Malaysia should not neglect the protection of people and the protection of the environment. Then, with clear and strong regulation, it should be a framework to tackle the illegal trade. Thirdly, we would like to emphasize the urgency of Indonesia’s central government to provide better investment climate between Indonesia-Malaysia in West Kalimantan-Sarawak Border. Creating an international agreement will address the issue in the borders, including the labor’s mobility between these two borders. The existence of stronger cooperation framework should be able to help Indonesia to achieve economic growth and bringing benefit for the people living in the border. Reference Statistics of Kalimantan Barat Province (BPS). (2018). Kalimantan Barat Province in Figures 2018. Pontianak. ISSN 0215-2509/1102001.61