KUALA LUMPUR: The push for greater regional economic integration amid shifting global trade dynamics bodes well for the prospects of Kota Kinabalu International Airport (KKIA), thanks to its proximity to key East Asian markets and the broader Asean region.

These factors position KKIA in a uniquely strategic position, which calls for a long-term development strategy, said Khazanah Research Institute chairman Dr Nungsari Ahmad Radhi.

“I am bullish about KKIA, and I think there has to be more conversations between the federal and state governments on the long-term development strategy of Kota Kinabalu as a transportation hub,” he said.

“KKIA is two hours closer to major East Asian markets such as the Philippines, Korea, China, and Japan than Kuala Lumpur. It is already growing as a passenger destination but has yet to develop as a cargo destination,” he said in an exclusive interview with Bernama.

Nungsari, a former Malaysian Aviation Commission executive chairman, now serves as Malaysia Airports Holdings Bhd’s non-independent non-executive chairman.

“There is also the significant infrastructure development under way in Kalimantan, primarily driven by the relocation of Indonesia’s capital city to Nusantara in East Kalimantan. Borneo is set to become the centre of gravity in the region and the development of KKIA must be carefully crafted, taking into account its potential growth and existing constraints,” he said.

It was reported that the expansion of KKIA is set to begin in the third quarter of this year, following Cabinet approval of the RM442.3 million project in November.

The expansion will increase the airport’s annual passenger handling capacity from nine million to 12 million passengers a year. The upgrades include an expanded main terminal, a new multi-storey car park, seven additional aircraft parking bays and road improvements around the airport.

While Kuching International Airport has similar ambitions, Nungsari acknowledged that it faces greater challenges than KKIA. Nevertheless, he remains confident in both airports’ opportunities to strengthen Malaysia’s aviation sector, triangulating the two ends of Kalimantan and the peninsula.

On the international, front, US-China trade tensions and the many unilateral decisions taken by the US will change global trade in some significant ways.

Regardless of the outcome, Asean has to consolidate further to be able to respond to these changes as a single bloc.

Key to this economic integration is transportation and logistics within the region, as well as connecting it to the outside world. Furthermore, intra-Asean trade growth depends on greater connectivity within the region.

Asean has had various initiatives, namely the Asean Economic Community, Asean FTA, Asean+3, and it is also part of the Regional Comprehensive Economic Partnership encompassing 15 countries in Asean, China, Japan, South Korea, Australia and New Zealand.

The potential of these initiatives has mainly remained unfulfilled, and the time is right to make it all happen.

Nungsari posited that greater flows of people and goods across the borders within Asean will strengthen Asean as an economic bloc.

“The focus now is so much on border controls instead of promoting greater flows of goods. This division does not promote economic growth and integration. There should be more bilateral initiatives, such as the Johor-Singapore Special Economic Zone, and past initiatives such as the IMT-GT and BIMP-Eaga should be rejuvenated,” he said.

Nungsari also said that economic integration is beyond infrastructure, as Asean should move towards becoming a customs union to allow free movement of goods within the region.

He said this would allow small and medium enterprises all over the region to leverage a much larger demand side, beyond their national borders.

“It will also make Asean an attractive market in which to invest. A single market of 600 million people, in fact, is not just in potential (but) a significant leverage against the size of China or India,” he said.

Responding to a question about the ongoing geopolitical tug-of-war between the US and China, Nungsari opined that Asean and Malaysia should act in their own interests.

“We do whatever benefits us. It does not matter whether it is with the US, China, or anyone. We are and should remain non-discriminatory in that sense.

“That should be our posture. But we are aware of the neighbourhood we live in. We are aware of the tensions that exist. And we are aware that the world is undergoing a transition,” he concluded. – Bernama