Greater Mekong Subregion

Easing Border Barriers

The GMS Cross-Border Transport Agreement aims to ease the flow of goods and people across borders and help boost local business and foreign investment throughout the region

By Tsukasa Maekawa, (tmaekawa@adb.org)
Principal External Relations Specialist

Cargos unloaded from a truck are carried on hand-pulled wagons to the other side of the Lao PDR-Viet Nam border

Mr. Vinh, a Vietnamese truck driver, has a long wait ahead of him as he sits at the Lao People’s Democratic Republic (Lao PDR) side of the border checkpoint between Dansavanh (Lao PDR) and Lao Bao (Viet Nam).

The Vietnamese truck driver is waiting for his load to be carried on hand-pulled wagons to the Vietnamese side of the border and then loaded back into his Vietnamese-licensed truck before he heads back to his country. The process takes a few hours.

Worse, it may take him an additional 4 hours if many trucks are waiting to go through the checkpoint, where he has to stop at four windows for customs and immigration clearance.

Such are the nonphysical barriers that hinder the flow of people and goods at borders in the Greater Mekong Subregion (GMS). However, these nonphysical barriers may soon be banished to history as the GMS Cross-Border Transport Agreement is implemented.

In addition to developing transport networks in the GMS, reducing the time spent at border checkpoints and harmonizing rules and regulations on border-crossing formalities are integral to fully realizing the subregion’s development potential.

Top

Customs cooperation is to be implemented at a Lao PDR-Viet Nam border

Joint Control at Crossings

The GMS countries are starting to test single-stop customs inspection at borders. This means that the officials of countries with common borders help each other perform their duties by carrying out inspections jointly and simultaneously.

The first testing is taking place at the Dansavanh- Lao Bao border and aims at joint, simultaneous inspection by customs officials of the two countries at the border checkpoint at the country of entry.

Nguyen An Binh, Deputy Director of the Vietnamese Customs Office, says single-stop customs inspection will be fully implemented by mid-2007 at the Dansavanh-Lao Bao border.

“When the single-stop customs inspection is realized and restrictions on cargo loads are removed, I can do my business much easier and business costs will be greatly reduced,” says Mr. Vinh.

Currently, he drives to the Lao PDR side and goes around border villages and towns for 3–4 days buying local products. Because of cargo restrictions, he hires local people to carry the products in wagons to the Vietnamese side and reload them to drive back home.

Mr. Vinh is not the only one eagerly awaiting the streamlining of cross-border procedures.

“When the East-West Economic Corridor is completed, we want to export our products to Thailand through Route 9,” said Phornchai Chiravinijnjandh, Managing Director of Camel Rubber (Viet Nam) Co., a Thai motorcycle tire company.

Top

Business Booms Near Borders

Dansavanh-Lao Bao is one of the three borders on the East-West Economic Corridor being developed under the GMS Economic Cooperation Program.

Camel Rubber is one of 60 small- and mediumsized enterprises—manufacturers and trade and business services companies—operating at the Lao Bao Special Border Zone that the Government of Viet Nam set up in late 1998.

The establishment of the commercial center has led to water, electricity, and transport services being provided to the place for the first time. In the past few years, more than 1,500 jobs for local people were created.

“With work on the East-West Economic Corridor nearing completion, and the easier flow of people and goods at the border expected, we would like to attract more investors and tourists to this area,” says Nguyen Huy, Deputy Chief of the Special Border Zone.

Currently, 22 Vietnamese and Thai manufacturers operate in the Special Border Zone. “We hope to have about 60 manufacturers by 2020, turning the area into an industrial city,” says Mr. Huy.

He says they are planning to create a better environment for foreign investors and local people by building facilities and providing water, banking, power, education, and health care systems. Companies from the People’s Republic of China have already shown interest in investing in the area.

Some foreign investors are using local raw materials. For example, one enterprise produces cassava flour and another processes coffee. Some are training local people by sending them to Thailand and elsewhere in Viet Nam to improve their skills.

Camel Rubber is the Thai company’s first overseas manufacturing venture. It started producing motorcycle tires in mid-2004, initially mainly for the Vietnamese market. It employs 130 Vietnamese and 20 foreigners, mostly from Thailand. “We want to export our products back to Thailand when transportation through the East-West Economic Corridor becomes economically beneficial for us,” says Mr. Chiravinijnjandh.

Clearly, improved physical infrastructure and expected easier cross-border procedures are already providing incentives for businesspeople and providing jobs for the poor. When nonphysical barriers to trade and investment are removed, trade and investment will inevitably expand, making the subregion more integrated economically.

Go back to brochure