The Sun Daily [Malaysia]
Friday, September 24, 2010

By Himanshu Bhatt

THERE was an intriguing development this week in the economic and diplomatic dynamics of the small geo-political triangle that covers the northern parts of Indonesia and Malaysia, and southern Thailand.

The Sumatran province of Aceh, emerging from a calamitous tsunami six years ago and a protracted home-grown insurgency against the Indonesian government that ended in 2005, signed its first accord with a foreign government.

Aceh governor Irwandi Yusof led a delegation to Penang to seal a memorandum of understanding for, among other things, bilateral trade and cultural exchange with the northern Malaysian state that boasts the country’s second strongest economy.

The most dramatic outcome of the dialogue between both sides, however, was focused on Aceh’s vast natural reserves. If Penang has little or no natural resources, Aceh teems with an abundance of fossil fuels, minerals and agricultural commodities. If Aceh is in need of development expertise, Penang, which houses one of the largest concentrations of high-tech multinationals in the region and possesses a highly evolved logistics sector, already has an established network to funnel the necessary human talents.

And so Aceh in principle agreed to explore Penang as a landing point for its lucrative oil and gas. The two governments are now set to iron out details of how the province’s vast offshore reserves, in what is said to be among the largest untapped reservoirs in the world, could be channelled to Penang for redistribution and export.

What is absorbing about the whole affair is not just the huge economic potential offered by the landmark agreement, but also the uncanny parallels the two parties share in their political circumstances.

For Irwandi was a leading figure in the Free Aceh Movement (Gerakan Aceh Merdeka or GAM) which struggled for a long time for separation from Indonesia. He was imprisoned by the Indonesian army in Banda Aceh (he survived the 2004 tsunami by clambering to the roof of his jail building), for his role as a senior member of GAM.

Released following the peace accord signed in Helsinki in 2005, he went on to assume the governor’s post two years later after winning the elections in a landslide victory.

In an almost similar vein, Penang Chief Minister Lim Guan Eng was one of the key personalities in the Opposition and was also imprisoned for some time before he assumed office in Penang following a crushing victory in the 2008 general election.

But unknown to most people there is another figure behind this whole deal – a political scientist from Malaysia who played a quiet but significant role in helping to draft and negotiate the peace treaty between the Aceh separatists and the Indonesian central authorities in 2005.

Prof Dr P. Ramasamy was at that time involved in helping to draft a Norwegian-brokered peace deal in the violent Sri Lanka conflict, but which was tragically rejected by the government there, and had been invited to help ease things in rebellion-wracked Mindanao.

And so it must have some as no surprise that as soon as he became deputy chief minister (II) under Lim in the DAP-led Penang government, one of Ramasamy’s earliest diplomatic forays in 2008 was to Aceh, where he was well acquainted with Irwandi and his comrades.

What is important to note is how both Penang and Aceh have each courted ties with regional neighbours in auxiliary attempts to strengthen their economies, under constricting and strenuous relationships with their federal governments.

Tellingly enough, Lim and Irwandi were quick to point out after the signing of the MOU that the extent of the deal’s success, particularly for exploration of the oil and gas business, relied on their central governments.

But interestingly, Aceh seems to have enjoyed far stronger privileges. For example, under the Helsinki peace deal, the province is entitled to 70% of oil and gas revenue within its borders, while some Malaysian states are only given 5%.

The Penang government has been vigorously engaging its neighbours in the region dubbed the Indonesia-Malaysia-Thailand Growth Triangle (IMT-GT). For example, Penang has actively courted the province of Sumatra Utara, which borders Aceh. Residents and businessmen in the province’s capital of Medan, a sister city of Penang, have been increasingly travelling across the Strait of Malacca for investments and private services like health and education.

Authorities and trading communities from the restive southern Thai provinces of Narathiwat, Yala and Pattani, have also looked at Penang to gain investments, and encourage their economies, and thereby quell disturbances in the rebellion-torn areas.

And so for political observers, initiatives such as the one by Aceh and Penang – conceived independently from their central governments – have become intriguing prospects to observe, for how they now impact the transforming dynamics of the potent IMT-GT region in the near future.

Himanshu is theSun’s Penang bureau chief. Comments: letters@thesundaily.com.