Regions and Countries

	Table of Contents
p. 2 of 20 BACK | NEXT I. Introduction II. Background and Rationale III. Economic and Social Trends IV. Program Review - Lessons Learned V. Strategic Directions of the GMS Program for 2001-2003 VI. Sector Properties and Proposed Program for 2001-2003 VII. ADB's Operational Program VIII. Coordination with Donor Agencies and Regional Institutions IX. Cofinancing and Catalyzing External Resources

GMS Assistance Plan

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II. Background and Rationale

2. With the assistance of the ADB, the six countries that share the Mekong River—Cambodia, Lao People’s Democratic Republic (Lao PDR), Myanmar, Thailand, Viet Nam, and Yunnan Province of the People’s Republic of China (PRC)—launched the GMS Program in 1992. The onset of peace in the 1990s afforded an unprecedented opportunity for economic and social development and today, the peoples of the Mekong subregion are experiencing rapid changes and improvements in their living standards and conditions.

3. The objective of economic cooperation in the GMS is to promote social and economic development in the six participating countries by strengthening economic links among them. Through the joint development of public goods, (e.g., transportation, energy resources, telecommunications) subregional cooperation can help overcome domestic constraints in individual economies resulting from limited resources and markets. Joint investments in infrastructure and accompanying policies that permit the more efficient flow of goods, services, and people, can promote access of individual countries to key inputs, including capital and human resources, as well as expand their markets. The resulting increase in trade and investment flows will contribute to the participating countries’ ability to integrate faster with the regional and global economy.

4. The steady progress in the transition toward more market-oriented regimes was an important factor contributing to the viability of economic cooperation in the GMS. While centrally-planned regimes resulted in limited commerce among the GMS countries, economic reforms that began in the 1990s helped create a conducive environment for increased trade and investment and other forms of economic cooperation. Economies of scale and specialization resulting from subregional cooperation facilitate investments to the GMS countries as a group beyond their individual abilities to attract investments. By generating economic synergy and dynamism, subregional cooperation can contribute to the goal of sustained economic growth of individual countries that can also help improve the living conditions of the poor and improve the quality of life of the people.

5. As borders are opened, however, social and environmental implications require more careful attention. Forest wetlands, coastal waters, and other ecosystems that are adversely affected by the development of new transport routes, tourism sites, and projects will require careful planning that takes potential environmental and social impacts into account during the early planning stage to ensure the appropriate design and implementation of mitigation measures. This is particularly important in the context of ADB’s overaching goal of poverty reduction because environmental degradation tends to disproportionately affect the poor. Changes in the environment and unequal opportunities resulting from economic growth and interaction can also affect mobile populations, communities located near infrastructure projects, and ethnic minorities living in border areas. A common framework and set of priorities are thus essential to effectively address the special needs of these groups and to provide them with better opportunities. Subregional cooperation also provides the GMS countries with a unique opportunity to address environmental issues of a transboundary nature and the management and equitable use of common resources, such as watersheds, reservoirs and wetlands.

6. During the initial years, the GMS Program focused on identifying opportunities for regional cooperation and establishing the mechanisms for countries to dialogue on the priorities and modalities for cooperation. These early initiatives contributed to building mutual trust and goodwill among the countries. Progress in developing priority projects was achieved by early regional technical assistance activities (e.g. identification of priority projects, training and capacity building activities). This made the countries more confident in working with each other.

7. As the GMS Program entered the implementation stage, countries have become increasingly committed to the success of priority projects. Two major infrastructure projects—the Phnom Penh-Ho Chi Minh City Highway Project and the East West Corridor Project—have been supported by initiatives to resolve policy, regulatory and other nonphysical barriers to cross-border traffic. Trade facilitation measures, focusing on customs procedures, will further complement these initiatives. Energy cooperation focused on the development of the region’s hydropower potential and energy trade on a bilateral and multilateral basis. A synchronized and comprehensive approach to telecommunications planning and investment in the region was developed and has provided the basis for more detailed studies involving both the technical and policy aspects. During the latter half of the 1990s, greater emphasis was given to cooperation in environment and human resource development, reflecting the need to address social and environmental cross-border concerns and transboundary issues arising from greater economic interaction among the GMS countries.

8. A key challenge for sustaining subregional cooperation in the GMS hinges on the internal reform process, especially in the transition economies of Cambodia, Lao PDR, Myanmar, Viet Nam and the PRC. ADB’s support for subregional cooperation in the GMS will have to complement national programs that promote continuing policy and institutional reforms and good governance, notably in the fiscal, finance and trade sectors, and state-owned enterprises.

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