Triangular diplomacy writ small: the political economy of the Indonesia–Malaysia–Singapore growth triangle

In an increasingly integrated international economy, nation-states are, of themselves, no longer the prime containers or coordinators of political–economic activity. The extra-territoriality of states and the blurring of the boundaries between states and firms, for example, have been captured in analytical concepts such as 'triangular diplomacy' the 'web of global interdependencies' and 'cosmopolitan democracy'. Such trends have become visible in what have been termed mega-urban regions or zones of economic integration or of graduated sovereignty. Moreover, such zones are held to illustrate non-traditional or cooperative inter-state relations. This paper utilizes CitationStopford and Strange's (1991) notion of 'triangular diplomacy' to interpret the development of one such zone – the Indonesia–Malaysia–Singapore growth triangle (IMS-GT). The paper argues that whilst embodying elements of cooperative inter-state relations the development of the IMS-GT also highlights the persistence of the 'traditional' concerns of inter-state relations. It also uses the notion of triangular diplomacy to draw attention to different models of social order sought by multinational enterprises (MNEs). Keywords: Triangular diplomacyIMS-GTmultinational corporations Acknowledgements I am grateful to the British Academy (Committee for Southeast Asian Studies) for funding the research upon which this paper is based. I would like to thank the Departments of Geography at the National University of Singapore, University Sains Malaysia and PT Harvest International for hosting me while conducting research on location in Singapore, Malaysia and Indonesia. Thanks too to Sharifah Dawood at USM, and Tim Bunnell, Carole Faucher, Vedi Hadiz, Natasha Hamilton-Hart, Victor Savage, Henry Yeung and James Sidaway among others at NUS for providing invaluable intellectual and social support. Notes 1 Interviews covered managers of MNE affiliates and various private and quasi-public sector organizations and government departments. Here I refer to a subset of a total of forty-six interviews conducted in September–October 2002 and March–April 2003 as part of British Academy-funded research. 2 See, for example, the notions of 'triangular diplomacy' (CitationStopford and Strange 1991), the 'web of global interdependencies' (CitationMcGrew 1992) and 'cosmopolitan democracy' (CitationHeld 1995). 3 One problem here is that a 'market oriented perspective misleads us by portraying markets as determinants of outcomes rather than as stimuli to which governments respond in distinct ways' (CitationVogel 1996: 262). There have been important elements of re-regulation apparent among Western states, including those such as the UK and US, held to epitomise the competition state model (Vogel 1990). Here Vogel contrasts the negative regulatory 'disengagement' of states in the UK and the US with the more creative process of regulatory 'reinforcement' that has taken place in France and Germany. 4 One interviewee made mention of unpublished comparative evidence from AmCham and JETRO (Japanese External Trade Organization) surveys of investors which suggested that US investors were more disposed to transferring technology than their Japanese counterparts [Interview 11]. 5 The renegotiation of the price of potable water supplied from Malaysia governed under 1961 and 1962 agreements as part of Singapore's separation from Malaysia has been an ongoing source of tension (CitationHow 2002; CitationPereira 2002b; CitationStraits Times 2003a), as have issues over Malaysia's ownership of railway land running into Singapore and Singapore's reclamation of land (CitationPereira 2002a; CitationStraits Times 2002). 6 In 1991, for example, the Mentri Besar of Johor was raising the need for an additional port in the state (CitationStraits Times 1991). 7 The completion of the port at Tanjung Pelepas has been aimed partly to gather a leakage of transshipment business to Singapore through an existing port at Pasir Gudang and has resulted in the poaching of shipping companies Evergreen and Maersk from Singapore (CitationToh and Loh 2002). Though the recent loss of 800 jobs at the Port of Singapore Authority (PSA) was not directly attributable to this, it nevertheless reflected the increasing regional competition faced by PSA (CitationFang 2003). The chairman of Port Tanjung Pelepas was quoted recently as saying that, 'We really want to be a trans-shipment hub to compete with Singapore. I repeat … to compete with Singapore' (CitationAhmad 2002). 8 Not least the numerical non-correspondence between AT&T's nine 'shared values' and the five elements of Pancasila. 9 By late 2002, Batam Industrial Development Authority (BIDA) had signed agreements with twelve other regional authorities to assist with investment promotion and spatial planning activities [Interview 7]. 10 A notable feature of the Indonesian economy within the Southeast Asian context has been the lack of manufacturing FDI (CitationHill 1988). More specifically, and in comparison to other partner states in the IMS-GT, there has been a lack of manufacturing and other FDI from Western nations, and as a result a marked reliance on FDI from within the Asia-Pacific region (notably investments from the ethnic Chinese diaspora) with resulting constraints on policy latitude (CitationBowie and Unger 1997). Additional informationNotes on contributorsN. A. Phelps Nicholas Phelps is Reader inHumanGeography at the University of Southampton. His interests lie in examining geographical aspects of the organization of multinational companies and their economic impacts. He is author of Multinationals and European Integration (Jessica Kingsley) and co-editor with Phil Raines of The New Competition for Inward Investment (Edward Elgar).