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Peace, Prosperity, and Poverty ReductionThe Greater Mekong Subregion is experiencing one of the most remarkable turnarounds in recent times, from conflict to peace and growthBy Judy Bryant
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The Greater Mekong Subregion Economic Cooperation Program (GMS Program) has been the driving force in bringing together the six countries that share the Mekong River—Cambodia, People’s Republic of China, Lao People’s Democratic Republic (Lao PDR), Myanmar, Thailand, and Viet Nam—to become one of the world’s fastest growing subregions.
The GMS covers 2.6 million square kilometers (km). Its rich human and natural resources make it a new frontier for economic growth. As a “land bridge” between South and East Asia, it is ideally positioned for trade with its neighbors.
But despite its geographic advantage and resources, about 50 million of the subregion’s 300 million people are still living in poverty on less than the equivalent of one dollar a day.
Established in 1992 with the support of the Asian Development Bank (ADB), the GMS Program promotes closer economic ties and cooperation among the six countries. Its vision is to create a more integrated, prosperous, and equitable Mekong subregion, complementing national efforts to promote economic growth and reduce poverty, and augmenting domestic development opportunities to create subregional opportunities. It seeks to encourage trade and investment among GMS countries, ease the cross-border movement of people and goods, and meet common resource and policy needs.
The GMS Program helps improve the quality of life across the subregion by emphasizing the “three Cs”: Connectivity, increased Competitiveness, and a greater sense of Community.
Based on activities rather than formal rules, the GMS Program is guided by a general set of principles and institutional arrangements. It is results-oriented and pragmatic, with the six countries planning and implementing projects for their mutual benefit.
It is also inclusive, involving all parties that wish to contribute. Increasingly, the program is seeing a wider range of players from, among others, nongovernment organizations, other funding agencies, and the private sector.
The GMS Program promotes subregional cooperation in nine key sectors: transportation, energy, telecommunications, human resource development, tourism, environment, trade, investment, and agriculture.
The program’s activities can be grouped into three main areas: physical infrastructure—transport, power, and telecommunication facilities—to promote overall economic growth and greater trade, investment, and tourism flows; policy and institutional initiatives to maximize the benefits and opportunities from physical infrastructure; and initiatives to address common social development and environmental sustainability concerns.
ADB plays a multifaceted role in the GMS Program—as an “honest broker,” a catalyst for dialogue and cofinancing, provider of advisory and secretariat services, and major financier of projects.
From 1992 to April 2005, ADB approved about $1.4 billion in loans and mobilized another $2.2 billion in cofinancing for subregional development projects, including national projects with significant regional benefits. During the same time frame, ADB, together with cofinanciers and GMS governments, provided $105 million in technical assistance grants for preparing projects and conducting studies to promote effectiveness.
Despite challenges such as the Asian financial crisis, the remarkable progress in the GMS is reflected in an increase in average gross domestic product per capita from about $630 in 1992 to about $900 in 2003.
Moreover, the biggest dividends from the GMS initiative are the prevalence of peace, the increased trust and confidence among the countries, a sense of common purpose, and the inroads being made to reduce poverty.
The possibility of bringing the six GMS countries together became apparent in the early 1990s when, for the first time in decades, peace prevailed between the countries. Through this window of opportunity, the countries began to examine ways of working together for their mutual benefit.
At that time, trade and other economic activities among the GMS countries were limited: opportunities for development were hampered by the subregion’s lack of infrastructure, such as roads and telecommunication linkages between countries, and lack of information about neighboring markets.
Building trust and confidence was a prerequisite for cooperation. By initiating consultations, ADB took up the challenge of bringing the countries together to discuss shared development constraints and opportunities. This led to the establishment of the GMS Program in 1992.
As trust developed, the six countries began to investigate joint projects that would enhance the subregion’s development prospects, with ADB playing the role of catalyst and core supporter of the GMS Program.
The program’s first priority was to lay the foundations for growth in the form of transport and energy infrastructure to create vital links within and between countries, and promote the development of the subregion’s resource base.
These reforms are transforming previously isolated and commandbased economies into an integrated and competitive market-based region
- Rajat M. Nag
Director General
ADB Mekong Department and Special Advisor to the President in charge of Regional Economic Cooperation and Integration
Among the most important of the program’s initiatives are the three economic corridors that link the subregion: the East-West Economic Corridor (EWEC), North-South Economic Corridor, and Southern Economic Corridor.
These corridors are helping “knit” the GMS together and have been planned around major transport infrastructure developments that are expected to generate wide-ranging benefits, such as increased trade, investment, and tourism.
The EWEC is the most advanced of these projects and, when completed, will be a 1,500-km artery from Da Nang Port in Viet Nam to the Andaman Sea in the west. The benefits are already apparent: so far, 60 companies have invested in the special economic zone located on the Lao PDR-Viet Nam border in the EWEC.
Because the GMS Program is a work in progress, regular forums for the six countries and development partners are vital. At the 10th Ministerial Meeting of the GMS Program in 2001, ministers of the six countries endorsed the GMS Strategic Framework to take the program into the next decade. The framework, which articulated a vision of a more integrated, prosperous, and equitable GMS, had five strategic thrusts and 10 flagship programs.
The strategic thrusts focus on
The 10 GMS flagship programs are the North-South Economic Corridor Development; East-West Economic Corridor Development; Southern Economic Corridor Development; Telecommunications Backbone Development; Regional Power Interconnection and Trading Arrangements; Facilitating Cross-Border Trade and Investment; Enhancing Private Sector Participation and Competitiveness; Developing Human Resources and Skills Competencies; Strategic Environment Framework; and Flood Control and Water Resource Management.
At the 11th Ministerial Meeting in 2002, ministers added GMS Tourism Development as the 11th flagship program.
At the first GMS Summit in November 2002 in Phnom Penh, the leaders of the six countries endorsed the flagship programs.
Already the increased connectivity created by the GMS Program is providing opportunities. As Rajat M. Nag, Director General of ADB’s Mekong Department, recently pointed out, intraregional exports have increased more than tenfold since 1992. Interregional trade is also beginning to grow as the GMS becomes more competitive, and a sense of community is clearly discernible.
“While connectivity is key in bringing the subregion closer together, it was quickly recognized that it must be accompanied by investments in easing processes and building capacities,” he told ADB Review in December 2004.
In response to this, ADB helped the GMS countries forge a Cross-Border Transport Agreement that is expected to dramatically boost the flow of people, goods, and investments across borders and spur growth.
In the energy field, the six countries have signed an intergovernmental agreement on regional power interconnection and trade, and are now drafting operational guidelines. These will ensure that power will be bought and sold across borders in ways that benefit all.
“These reforms are transforming previously isolated and command-based economies into an integrated and competitive market-based region,” Mr. Nag said.
Capacity building in the region is vital. At the Summit in Phnom Penh, the leaders recognized the need to develop a pool of highly competent and qualified middle- and senior-level planners and managers to steer economic and social development. And so the Phnom Penh Plan for Development Management, supported by ADB and the New Zealand Agency for International Development, was established.
Already around 400 middle- and senior-level officials from the six countries have undergone specialized learning in key development areas. Since 2003, the program has offered 20 learning programs covering governance, leadership, poverty reduction, private sector participation, environmental management, government and civil society participation, regional cooperation, negotiations, strategic management, health care financing, human resource management, and e-governance.
Despite its progress, many challenges exist in the second decade of the GMS Program. These include seeking sufficient resources to fund the program, harmonizing efforts, mitigating the ill effects of more people and goods crossing borders, and supporting the achievement of the Millennium Development Goals, including substantially reducing poverty in the subregion by 2015.
Seeking the resources to finance the many projects that countries have identified and prioritized—currently estimated to cost at least $10 billion—is challenging. ADB is working to mobilize public and private partners for this purpose.
The GMS Program recognizes the crucial role of the private sector in providing the required financial, technological, and management resources for growth. To help foster an enabling environment for private sector activity, the GMS Business Forum was established in 2000 with the assistance of the United Nations Economic and Social Commission for Asia and the Pacific and ADB. The goal of the Forum is to strengthen business links among member countries and strengthen strategic partnerships among local business chambers and government authorities.
The challenge lies in promoting regional cooperation to accelerate economic growth and integration, and narrow the income gap among countries
- Haruhiko Kuroda
President of Asian Development Bank
In 2004, several meetings—the Mekong Development Forum in Paris in June, the Public-Private Partnership Consultation Meeting in Bangkok in September, and the 13th GMS Ministerial Meeting in Vientiane in December—stimulated the involvement of the private sector in the GMS.
Harmonization of development efforts is also essential. For more effective progress, the GMS Program encourages GMS countries to take a regional perspective by harmonizing their national priorities with regional priorities. As Mr. Nag puts it, to think regionally but invest nationally.”
The most difficult and overriding challenge, however, is to reduce poverty and achieve the Millennium Development Goals by 2015. Spreading the benefits of economic growth to people in the GMS—while mitigating the potential ill effects of development—will require strong collaboration and partnership.
Protecting the environment is therefore another major challenge. For instance, Cambodia’s great lake, the Tonle Sap—a United Nations-designated biosphere reserve—directly supports more than one million people and is the single largest source of protein for Cambodia’s young and growing population. The challenge is to achieve the right balance between development and preservation in these areas.
To address these concerns, the GMS Working Group on Environment was established in 1995 as one of the earliest efforts set up under the GMS Program.
The group’s two most recent meetings laid the groundwork for the Core Environment Program, designed to ensure that environmentally sustainable development takes root in the subregion through strategic environmental assessments, knowledge sharing, and financial mobilization for conservation efforts.
A key component of the Core Environment Program is the Biodiversity Conservation Corridors Initiative, the goal of which is to protect high-value terrestrial biodiversity and protected areas in economic corridors. The GMS environment ministers oversaw the finalization of a strategic framework and 3-year action plan to protect priority biodiversity conservation and other areas during their meeting held in Shanghai in May 2005.
ADB, in conjunction with the United Nations Environment Programme, has also taken the lead by publishing in April 2004 the Greater Mekong Subregion Atlas of the Environment. The atlas provides comprehensive environmental information to improve planning for sustainable development and decision making in the subregion.
For HIV/AIDS, ADB and the Southeast Asian Ministers of Education Organization worked on a GMS information and technology project addressing three major factors contributing to the spread of AIDS in the subregion: high-risk behavior, trafficking in girls and women, and drug abuse among highland minorities.
ADB is also already addressing other diverse challenges presented by greater connectivity in the GMS. Among these is its assistance to the GMS countries to develop a regional cooperation framework on controlling transboundary animal diseases.
The road ahead for the GMS Program will see a groundswell of activity as projects come on line. The GMS Program in its second decade is increasingly results oriented, emphasizing the provision of essential infrastructure in the context of social development and environmental sustainability to create economic growth and reduce poverty. It is showing what is possible when countries possess the will and the commitment to move forward together.
As ADB President Haruhiko Kuroda said in February 2005 as he acknowledged the considerable momentum the GMS has gained in recent years: “The challenge lies in promoting regional cooperation to accelerate economic growth and integration, and narrow the income gap among countries.”
It is a challenge that ADB and the governments of the six GMS countries are ready to meet as part of moving toward a greater Asian economic community.
Judy Bryant is a consultant with the Department of External Relations.
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