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Regions and Countries Country Assistance Plans Document
GMS Assistance Plan : V. Strategic Directions of the GMS Program for 2001-2003
B. Overall Program Strategy for 2001-200330. For the period 2001-2003, the GMS Program’s strategy will be redirected to focus more attention to the distributional aspects of growth. Poverty in the GMS countries is pervasive especially among the rural population and ethnic minorities. Although rapid economic growth has resulted in a decline in the incidence of poverty, a significant number of people in the GMS continue to live on less than $1 a day. The GMS-AP for 2001-2003 responds to the challenge of reducing poverty through a sharper focus on project beneficiaries among the poor. 31. Consistent with the ADB’s overarching goal to reduce poverty in its DMCs, the GMS-AP, beginning with the period 2001-2003, will reorient its strategy to achieve poverty reduction objectives in the GMS countries. Regional cooperation presents a unique opportunity to complement the pro-poor growth strategy in the GMS countries essentially by: (i) stimulating economic growth in border areas that are often the poorest areas of a country; (ii) facilitating access to markets through infrastructure that could further develop the rural economy; (iii) responding to the health and education needs of ethnic minorities and other vulnerable groups that live or work in border areas; (iv) reducing the cost of providing services, such as telecommunications and electrification, to the rural areas through region-wide transmission networks; and (v) tackling common regional environmental problems that are disproportionately affecting both the rural and urban poor. A pro-poor orientation of the GMS Program strategy can play a critical role because economic growth induced by market forces may not necessarily induce growth in poor or rural areas, especially in border areas. 32. The strategy under the GMS-AP for 2001-2003 will be to support the pro-poor economic growth strategies of the GMS countries embedded in the Country Assistance Plans (CAPs) for 2001-2003 for all six participating countries in the GMS Program. At the same time, the GMS Program provides an opportunity for addressing poverty issues in the border areas involving ethnic minorities. The GMS-AP for 2001-2003 will pursue the following strategic thrusts: (i) Extending benefits of infrastructure development to the rural and border areas; (ii) Addressing the environmental and social implications of pro-poor economic growth; (iii) Broadening the participation of stakeholders and civil society; (iv) Promoting private sector development; and (v) Promoting good governance. The specific approaches for each thrust are described below: (i) Extending the benefits of infrastructure development to the poor and remote border areas. 33. Growth that promotes expansion in production of agriculture and light industry, increases in agricultural productivity and higher returns to farm labor in the remote border areas will be a critical strategy for poverty reduction. Subregional transport infrastructure will thus be developed to strengthen specific linkages between rural areas and growth centers in the GMS countries. In this manner, subregional transport networks could contribute directly to the expansion of markets for rural produce in the GMS countries. Infrastructure development across borders will be accompanied by measures to facilitate movements of goods and people, not only to maximize returns to infrastructure investments, but more importantly, to generate value-added from increased trade production. 34. To more sharply focus the benefits of subregional transport infrastructure projects to the poor, the GMS Program will promote the development of economic corridors that would link transport infrastructure to production and trade potentials within a defined geographic space. The concept of economic corridors will be pilot-tested in the East West Corridor traversing primarily poor regions with significant potentials for agriculture and small- and medium-enterprise development. The development of the Corridor would help generate employment and improve household incomes, thus stimulating demand and improving access to basic social services. A regional initiative will also be undertaken to address the health and education needs of ethnic minorities residing in border areas, taking advantage of increased mobility and opportunities for accessing social services. 35. For regional cooperation in energy, the focus will be on the development of power transmission links that would provide for efficient electricity trade while ensuring adequate attention to environmental issues. The eventual integration of the various GMS national power systems will bring about numerous benefits such as better access to cheaper energy, increased reliability of power supply, and reduced reserve capacity requirements. Efficiency gains in electricity trade could reduce the marginal costs of expanding the electricity networks in the GMS countries, including the rural areas. 36. Subregional cooperation in telecommunications will provide a comprehensive and integrated framework for the expansion and improvement of telecommunications systems and policy in the GMS. The key element of the comprehensive framework is the development of a subregional telecommunications backbone that would serve telecommunications facilities at the national level. A subregional network linking the international gateways in the GMS countries will bring considerable benefits, among them, the lowering of cost and improving the reliability of communications services. Coupled with improvements in the policy and regulatory environments, an efficient and mature telecommunications system is expected to emerge in the subregion by 2005. With well-functioning telecommunications infrastructure and regulatory policies in place, the use of the Internet can be promoted in the GMS countries for electronic commerce, and in providing health, education, and financial services at very low costs. Information technology applications can, in fact, provide an additional and effective delivery mechanism for traditionally high cost social benefits such as health and education. (ii) Addressing the environmental and social implications of pro-poor economic growth 37. The social and environmental consequence of the GMS projects continues to be closely monitored. As borders are opened, increased social and labor mobility, will have a critical impact on the health and social welfare in the region. A priority area of concern for the next three years is the prevention and control of HIV/AIDS focusing on mobile populations (e.g. truck drivers, seafarers, sex workers and construction workers) that traverse subregional transport routes, especially the economic corridors. The focus on mobile populations is based on the fact that the Mekong region is experiencing unprecedented levels of opportunities in response to changing inequalities and opportunities. For the medium-term there will also be an assessment of the social implications of economic corridors, such as illegal drug trafficking, trafficking of women, and labor migration and livelihood displacement. 38. Increased economic activities along the East-West and North-South Economic Corridors and other road transport routes will demand new skills and increased productivity so that these could translate into employment and income activities, especially for the rural population. Low levels of literacy, poor schooling and malnutrition, however, often hamper employment opportunities and increased productivity. These impediments are fully recognized and are being addressed at the national level. At the subregional level, the focus has been on the development of common standards and exchange of labor information. Through an earlier project on Cooperation in Employment Promotion and Training, the GMS countries have agreed on the principal elements of a labor market information system and exchange, as well as common standards for accreditation of skills training institutions. Follow-on activities to this initiative will be important due to increased labor mobility, especially along the economic corridors. 39. For development in the GMS to be socially inclusive, particular attention will be given to the needs of ethnic minorities in the border areas. Subregional cooperation under the GMS Program provides a unique opportunity to address the special situation of ethnic minorities that are dispersed in remote areas along national borders but are bound by traditional lifestyles and common customs and beliefs. Their remote locations have generally isolated them from the social and economic mainstream and the attendant improvements in living standards and conditions. Providing these groups with long-term intangible assets, such as health and education will afford them better opportunities for employment and income, thus integrating marginalized groups into the mainstream of economic activity while remaining sensitive to their cultural identity and practices. 40. The protection and conservation of the Mekong region’s wealth of natural resources, which provide the base for socioeconomic development, is clearly a major challenge facing the GMS countries. Keeping in mind the several national and regional projects concerned with the environment that already exist, the GMS-AP for 2001-2003 will focus on encouraging regional cooperation that will foster earlier integration of social and environmental issues in development planning, and stronger monitoring and evaluation capabilities so that problems are identified early and lessons learned can feed back into future development planning. This will particularly involve three aspects, namely: (i) the development and implementation of a common environmental framework among the GMS countries; (ii) promoting cooperation in the management of shared environmental assets or resources, especially in border watersheds and wetlands; and (iii) institutional strengthening for information sharing and joint environmental monitoring. 41. It is recognized that successful pro-poor sustainable economic growth demands an overarching environmental strategy that is fully integrated with the development process. A project to formulate a strategic environment framework has thus been initiated under the GMS Program to promote the early integration of environmental and social considerations in economic development planning. In part, the strategy will help to identify the environmentally sensitive areas or "hotspots" in the region and weaknesses in the planning, implementation, and monitoring process to help avoid the pitfalls of past programmatic and project decisions, which failed to adequately assess the potential social and environmental impacts of the decisions made, resulting in cost overruns, reduced benefits, and hardship for affected populations. 42. For shared environmental resources, priority attention is being given to the protection and management of watershed areas and wetlands, due to the severity of resource degradation in these areas. Moreover, there is great urgency in establishing sustainable management systems in these areas using multicountry approaches, to reinforce the benefits of other programs in nature conservation, water utilization, and hydropower development. A development framework for environmental action is being developed to promote mutually-consistent policies, strategies and guidelines in the GMS countries in order to halt and reverse trends in deforestation and natural resources degradation in these areas. 43. For major development projects, social and environmental impacts are being closely monitored, and resettlement guidelines are strictly applied. Lessons learned from past projects, however, have underscored the need to improve the collection and maintenance of data on social and environmental conditions in order to contribute to better-informed decision making. At the project level, it will be especially important to obtain benchmark information on beneficiaries to better assess project impact and also to serve as basis for compensation. Projects planned for 2001-2003 will thus be more rigorous on this score. The value of involving stakeholders in all phases of project development has been recognized and will continue to be a key element in social and environmental impact assessments. 44. The GMS Governments’ capacity to implement mitigation measures remains an important challenge. The GMS Program has already helped build environmental management capacity in the GMS countries through database development and training on various aspects of environmental management. For 2001-2003, various technical and institutional issues for enhancing cross-border exchanges will be intensified with the view to addressing cross-border environmental problems. (iii) Broadening the participation of stakeholders and civil society 45. In its development activities under the GMS Program, the ADB further recognizes the importance of public participation. The ADB will work with civil society institutions in the effort to involve all stakeholders in the growth strategy for the region. These include the poor, who because of their social status and inadequate assets, are often excluded from the consultative process. This is seen as critical for the successful implementation of any project, providing as it does, an opportunity for governments and ADB to understand the concerns and desires of the people. Public participation will be promoted even at an early stage of project development, involving the identification of stakeholders and the appropriate mode for consultations. To be sure, special efforts are already being made, and it has been the ADB’s standard procedure, to pursue active participation of local communities and disadvantaged groups in investment projects, especially those that are environmentally and socially sensitive. 46. For subregional projects under the GMS Program, the ADB has been working with NGOs, especially those with considerable experience with grassroots communities. Cooperation between ADB and NGOs has offered an invaluable combination of experiences and perspectives, especially concerning the poor and the vulnerable groups. Since 1997, NGOs have been invited to participate regularly in the meetings of the GMS Working Group on the Environment. However, with the emergence of cross-sectoral concerns for many of the GMS projects, this modality has proven inadequate. Thus within the period 2001-2003, the ADB will explore further improvements in the mechanisms for involving NGOs in the GMS processes. A key initiative will be to propose the establishment of an advisory group for social and environmental concerns, with representation from NGOs and ethnic minorities groups. Although this initiative is being planned on a Bank-wide basis, the plan is to pilot it in the GMS. (iv) Promoting private sector development 47. The GMS Program has recognized the key role of the private sector in the development of the region. In the context of the ADB's private sector development strategy, the thrust of the GMS Program has been to generate business opportunities in ADB-financed public sector projects, as well as to create commercial opportunities arising from market expansion in the GMS. Economic cooperation in the GMS offers the prospects of larger markets, and therefore wider business opportunities for investors that could accelerate development. To the extent that subregional cooperation focuses on "lagging regions", private sector involvement in subregional initiatives can also contribute to poverty reduction. 48. Three broad areas under the GMS Program that have been identified as potentially of interest to the private sector are: (i) projects that can generate a revenue stream; (ii) commercial investments and production and distribution activities related to subregional infrastructure projects; and (iii) commercial and business opportunities in agro-industry, tourism, and related services. A good example of a subregional project in the first category is the Theun Hinboun Hydropower Project in Lao PDR. The second category is being promoted through the development of economic corridors. In the third category, a number of subregional tourism activities have actively involved private tourism organizations. During the initial years of the GMS Program, it was the Program itself that was promoted to potential investors. This strategy has shifted to a project-specific orientation focusing on mobilizing private sector resources for priority subregional projects. 49. The current focus of the GMS Program on the policy and regulatory issues, however, is beginning to change the complexion of its private sector strategy. Increasingly, the GMS Program is beginning to tackle issues of policy, requiring changes in the legal and regulatory framework to create enabling conditions for private sector growth. Transport and trade facilitation, the regulation and pricing of telecommunications services, and the regulation of power interconnections, including generation by independent power producers, cross-border standards and certifications, are creating a completely new dimension in private sector development in the GMS. These new dimensions will require the private sector to interact and cooperate with Governments at a subregional level thus necessitating the establishment of an effective forum for public-private sector policy dialogue. 50. Private sector participation in the GMS processes has been promoted since 1994. Several investment promotion forums and seminars on the GMS have been organized in various major cities in prospective investor countries, such as Belgium, France, Germany, Japan, the Netherlands, the Republic of Korea, Thailand, and the United Kingdom. Following Ministerial endorsement, private sector representatives were invited to working group meetings, particularly in the transport, telecommunications, and energy sectors, for an exchange of views on key issues. A call for a heightened involvement of the private sector in the GMS Program was made at the Seventh GMS Ministerial Conference in 1997, when the GMS Chambers of Commerce and Industry were invited to the meeting and where the establishment of the GMS Business Forum (GMS-BF) was endorsed. The establishment of the GMS-BF however, was temporarily sidetracked by the economic crisis that started in July 1997. With the crisis-affected countries back on a more stable footing, the Ninth GMS Ministerial Conference in January 2000 urged the establishment of the GMS-BF as a matter of priority to give impetus to the momentum for recovery. The GMS-BF, which was launched in October 2000, will be the private sector's official mechanism for interaction and dialogue with the GMS Governments. 51. The ADB, in collaboration with ESCAP, will provide support to the GMS-BF during the initial years until it gradually becomes self-sustaining. The assistance to be provided to the GMS-BF will consist in both strengthening the private sector institutions in the GMS countries, especially those in the transition economies, as well as supporting some of the GMS-BF projects. The ADB will also support activities in investment and trade facilitation (including in the area of customs) to support efforts at the national level in creating the enabling conditions for private sector development. (v) Promoting good governance 52. Good governance cuts across the various strategic thrusts of the GMS Program. It is embedded in macroeconomic policies that seek to empower the poor, promote the efficient delivery of services, develop human capital, and promote broad-based participatory approaches involving stakeholders and civil society. Good governance encourages the growth of the private sector, and helps to level the playing field with a regulatory framework that is transparent, predictable, and accountable. 53. In the GMS-AP for 2001-2003, elements of good governance are pursued at two levels: (i) in the GMS mechanisms and processes; and (ii) in the content of subregional projects. Broadening the base of participation in the GMS Program to include project stakeholders, NGOs, and the private sector are designed to mainstream the good governance principles into the GMS Program and into project priorities. The participatory process recognizes the impact that civil society can have on investment decision, government performance, and the exercise of public accountability for project outcomes. To further promote the participatory process, a social and environment advisory group will be established to expand the dialogue process with NGOs from the project to the policy level. This advisory group is expected to promote awareness and understanding of alternative development views on the social and environmental dimensions of policies, programs, and projects. It will also provide a mechanism for broad based dialogue that is predictable and transparent to policy makers. 54. An important priority is the continuing effort to facilitate the movement of goods and people in the GMS to maximize the benefits of investments in infrastructure. TA projects in the telecommunications and trade sectors are focusing on regulatory reforms to create an enabling environment for private investments. The telecommunications policy study and the telecommunications network study will assist the GMS countries in establishing or enhancing their regulatory frameworks to pave the way for private investments to come in when the backbone has been completed. Projects aimed at better coordination in the administration of investment and customs laws have also been lined up. 55. Institutional strengthening and capacity building of various line agencies or sector ministries are also part of various loan and technical assistance projects. These include building capacities in strategic management, streamlining organizational structures and processes, enhancing performance management and orientation, and strengthening human resources development. The use of information technology will be promoted, not only to facilitate the transfer of information as part of management processes, but also in the conduct of trade (e-commerce), health and education services, financial services, and other economic activities.
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