Place-Based Public Policy in Southeast Asia:
Developing, Managing, and Innovating for Sustainability

The effects of the Asia-Pacific economic crisis on industries vary, depending on the national economy and specific organization, but in general small- and medium-sized enterprises have had the most difficult time, many completely collapsing when no safety net existed. Other enterprises describe the crisis in less cataclysmic terms, citing the budgetary changes it has brought: workers laid off, product lines contracted, and projects put on hold. The previous pages provided a brief look at how in a time of economic crisis, some public policymakers have prioritized or clustered their efforts by geography. The examples given come from four types of places: Laguna de Bay, Philippines; industrial estates; growth triangles; and industrial symbiosis relationships. Not all of the Southeast Asian economies were fully represented in the working session that created this document, so more work remains to be done�not only in documenting place-based policies in the short term, but also in developing the policies themselves.

Interestingly, talk of "retooling" one�s process and approach during the crisis has come largely from the public sector. Government officials have stressed the need to supplement traditional regulatory approaches with market-based incentives in much of their policy work. They admit the private sector is far ahead in terms of identifying and adapting to technological challenges for the next century. The role of government, some now say, is to support market-based activities wherever possible, providing flexibility and incentives for production creativity, not just to encourage retrofitting but also sound design in the initial stages. Design is one of the most proactive approaches to reducing environmental impacts, increasing performance and cost savings from the initial stages of the project.

The Southeast Asian economies that participated in US-AEP�s research effort have already established much of the institutional framework to address sustainability issues through a place-based public policy approach. For instance, the Philippines has the Laguna Lake Development Authority, which oversees activity in the country�s largest lake. The Philippine Economic Zone Authority supervises estates and zones throughout the entire country, as does the Industrial Estate Authority of Thailand. These countries are shoring up political will for such programs as well. In Malaysia, both the officials responsible for industrial estates and growth triangles work out of the Prime Minister�s own Economic Planning Unit. Likewise, Thailand�s deputy prime minister for commerce oversees the planning and coordination for growth triangles. The Philippine undersecretary for the Department of Trade and Industry has led the way in industrial clustering and industrial symbiosis initiatives.

Despite this governmental commitment, however, many place-based development projects around the region have stalled because of a need for capital. For example, industrial estates have approved new tenants who have yet to move in, and, although participants in the growth triangles have already identified hundreds of possible projects and linkages, few have begun.

Governments themselves are learning the importance of accessible capital in following through with industrial environmental regulation and policy. During a time when government budgets for all activities�including monitoring and enforcement�are getting slashed, LLDA�s independence from the Philippine national budget allows it to draw on its own monies earned through fees and fines to implement successful environmental programs.

Governments, however, despite their own limited resources, are still trying to encourage companies to make progress on the environmental front. Thailand has an environmental fund specifically designed to help small- and medium-sized enterprises invest in environmental technology and management programs. Thailand�s National Committee on Environment administers the fund; the Ministry of Science, Technology, and Environment serves as committee chair. Malaysia has no specific funds on which companies can draw for environmental technologies or improvements, but the national government does offer tax exemptions and free technical assistance to companies interested in pursuing environmental improvements. The Development Bank of the Philippines has soft loans available for the "environmental enhancement of facilities" and is in the process of accrediting all of its member banks to conduct environmental due diligence as part of the loan process.

Donor agencies and lenders need to examine financing more closely as a tool to encourage waste exchange and cleaner production programs. For example, banks could incorporate an industrial estate�s reduced environmental risk into financial risk evaluations, thus improving loan interest rates. A facility�s use of environmental management systems or plan for ISO 14000 could similarly be translated into improved bond ratings. This approach, although still largely experimental, has the potential to be a powerful market-based tool.

The use of public policy in the previous cases is straightforward, building on traditional command-and-control regulations and executive orders. But everyone knows the difficulty of monitoring and enforcing regulations�particularly in the midst of an economic crisis; it has become apparent that the most effective policy programs have built in market-based incentives from the early planning stages as well. Such incentives include corporate income tax holidays, waivers of duties and tariffs, incentives that reward creativity (e.g., industrial symbiosis waste exchange programs), and the environmental user fee.

There is still room for improvement, however. The Philippine government is using duty-free incentives to encourage companies but not industrial estate developers to invest in environmental technologies such as waste treatment facilities. Some developers are asking the Board of Investment to replace this policy with one that would encourage developers to build centralized waste treatment plants into beginning planning stages.

Another concern that comes from Southeast Asian policymakers themselves is that the award of tax holidays to induce companies to relocate or use particular types of technology will violate international commitments made by members of the World Trade Organization. These commitments were created to encourage fair international trade, but ultimately may have deleterious effects on national environmental goals.

The development and implementation of place-based policies has been driven by a number of factors, including a concern for the environment, jobs, livability, and responsible use of natural resource supplies. In addition, continuous improvement of industrial performance is a constant demand from a variety of stakeholders�from citizens next door through various levels of government to the investor in the industrial facility itself. The policymakers described here have taken different approaches to local planning and development, based on the drivers they face in their own communities.

LLDA�s environmental user fee was created specifically due to a concern for the environment and has the support of local government units as well as the local community. LLDA enjoys strong public participation in many of its programs�in implementation as well as origination. For instance, industrial estate developers and tenants within LLDA�s jurisdiction initiated the development of LLDA�s newest policies in a concerted effort to set down clear and fair environmental guidelines.

The planning and placement of industrial estates at the national level affects the long-term sustainability of the nation at large and the local community too. Theoretically, communities have an opportunity to comment during the environmental impact assessment process conducted before any industrial estate or manufacturing facility is built, although that process sometimes gets glossed over in practice. In Thailand, one of the larger industrial estates holds frequent informational meetings in which local government units and community representatives are allowed to participate. The meetings originally were precipitated by community complaints of nauseous odors and irritated eyes and have since turned into a forum for communicating on many topics.

The present managers of industrial estates around the region that address environmental issues do so primarily at a fundamental level, that is, treating waste at the end of the pipe. Some estates now are beginning to use environmental management systems under the leadership of foreign investors, but this trend is driven only minimally by policy at the national level.

The driving force behind the creation of growth triangles is a concern for market exploitation, job creation, and increased standard of living. Presumably these improvements will come with the advent of joint venture infrastructure, telecommunications, and energy. Environmental concerns have not usually been specifically mentioned in the development of these triangles, except for an environmental committee that meets as part of BIMP-EAGA. Some universities participate as think tanks and market strategists for both policymakers and corporations in the growth triangles.

Industrial symbiosis involves industrial process cooperation to conserve and protect the environment, as well as save on production costs. The concept enjoys support from some NGOs, two of which sit on the PRIME project�s board of directors.

Senior government and industry representatives who helped to write this publication took three days to present, question, and critique the place-based models presented. Several of the cases and policy applications were unfamiliar to the group at large, and provided interesting parts of the discussion. For some programs such as industrial ecology and regional growth triangles, it is just too early to determine whether these particular approaches will result in success or failure. In time, more case studies presented and evaluated in international fora will help determine the effectiveness of these approaches.

Until now, Southeast Asia has largely been absent from international conferences on industrial ecology and has gone without a regional professional association for industrial estate developers and decisionmakers. If such an association were designed with a capacity to focus on positive environmental performance and overall efficiency improvements within the region, such a body could be useful in promoting common standards such as energy-efficient design, third-party certification of environmental management system statements, or higher performance goals. A single firm or industrial estate might not pursue these more rigorous standards without the safety of collective action.

Clearly, several opportunities exist to establish communications and forums for those in the public and private sectors who are eager to see an increase in place-based public policy as one of several methods to prioritize resources in the march toward sustainability.