Regions and Countries

	Table of Contents
p. 10 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 A. Transport B. Energy C. Telecommunications D. Tourism E. Environment F. Human Resource Development G. Trade H. Investment VII. ADB's Operational Program VIII. Coordination with Donor Agencies and Regional Institutions IX. Cofinancing and Catalyzing External Resources

GMS Assistance Plan : VI. Sector Properties and Proposed Program for 2001-2003

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A. Transport

61. Subregional cooperation in the transport sector is the basic means for promoting economic linkages among the GMS countries. It facilitates cross-border movements of goods and people, thus increasing trade and investment, labor and social mobility, and access to markets and other economic opportunities. To maximize investments in subregional transport infrastructure, economic corridors are also being developed to link major transport routes with specific production and trade opportunities within a given geographic space that could extend to rural areas. This holistic approach is expected to further stimulate demand, increase production efficiency, create jobs, and enhance the competitiveness of the GMS countries. Subregional cooperation in transport thus constitutes an important fundamental step in an economic growth strategy that supports the poverty reduction objective of the GMS countries.

62. The six countries have accorded the highest priority to the development of the subregional road infrastructure since the GMS Program started in 1992. The subregional road projects that have been identified and prioritized under the GMS Program involve the rehabilitation and improvement of existing alignments, instead of the construction of new ones. Likewise, to facilitate project implementation and provide immediate benefits, transport projects are being implemented in sections or stretches. Among the 10 priority subregional road projects, two projects are under way and two projects are being prepared for implementation.

63. The two high-priority or "first-tier" subregional road projects currently being implemented are the following: R1: Bangkok-Phnom Penh-Ho Chi Minh City-Vung Tau Road Project, and R2: Thailand-Lao PDR-Viet Nam East-West Transport Corridor. Civil works commenced last year for the ADB-financed Phnom Penh to Ho Chi Minh City Highway Improvement Project, which forms part of R1. ADB approved loans of $40 million to Cambodia and $100 million to Viet Nam from the Bank's ADF resources for this project. Total cost of the project is estimated at $195.5 million. Civil works is expected to take three years to complete. Improvement of the 85-kilometer section from Ho Chi Minh City to Vung Tau along Route No. 51 is being undertaken by the Government of Viet Nam, with possible private sector provision of a parallel expressway. The section of R1 in Cambodia east of Phnom Penh is being repaired under an ongoing ADB loan project⁶ , while grant financing may be secured by the Government of Cambodia for the section from Sisophon to Poipet near the Cambodian/Thai border. The portion of R1 in Thailand is extensive and in good condition, with future improvements planned by the Government of Thailand where warranted.

64. For the period 2001-2003, subregional cooperation in the transport sector will continue to support the establishment of both physical and nonphysical linkages between and among the GMS countries. In line with the agreements reached at the Ninth GMS Ministerial Conference held in Manila in January 2000, the strategic thrusts in the transport sector for the period 2001-2003 consist of three main elements, namely: (i) ensuring timely implementation of priority projects, focusing on the "first-tier" subregional road projects; (ii) assisting in the finalization and implementation of cross-border agreements among GMS countries; and (iii) facilitating the transformation of subregional transport corridors into economic corridors.

65. As agreed by the GMS countries, the next two high priority subregional projects for immediate implementation or "first-tier" subregional road projects are as follows: (i) R3: Chiang Rai-Kunming Road Improvement Project (also called the "North-South Economic Corridor") and (ii) the Kunming-Hanoi-Haiphong Transport Corridor Project⁷ . For the Chiang Rai-Kunming Road Improvement Project, the sections of the project road in Thailand and Yunnan Province, People's Republic of China (PRC) are being improved by the respective governments. Upon satisfactory resolution of outstanding issues relating to concession agreement between the Government of Lao PDR and a private company⁸ , ADB and other sources are expected to finance the rehabilitation of the Lao section of R3⁹ . For this purpose, ADB's CAP for Lao PDR for 2002 includes a $20 million loan¹⁰ from the ADF resources. For the Kunming-Hanoi-Haiphong Transport Corridor Project, a technical assistance to PRC and Viet Nam for project preparation is planned by ADB for 2001. The lending pipeline for Viet Nam for 2002 includes a $60 million loan¹¹ from the ADF resources to partly finance the section of the Corridor in Viet Nam.

66. Significant progress has been achieved in addressing nonphysical barriers to the movement of goods and people within the GMS. A landmark trilateral agreement was signed by the Governments of Lao PDR, Thailand, and Viet Nam in Vientiane, Lao PDR on 26 November 1999 to facilitate the cross-border movement of goods and people between and among the three countries. Furthermore, the six countries adopted a timetable for the subregion-wide application of the Framework Agreement for the Facilitation of the Cross-Border Movement of Goods and People at the GMS Ninth Ministerial Conference held in Manila in January 2000. Specifically, the GMS countries agreed on the following:

67. At the request of the Ninth GMS Ministerial Conference, ADB will consider providing technical assistance in 2001 to the PRC, Lao PDR, Myanmar, and Thailand to implement the quadripartite commercial navigation agreement among the four countries signed in April 2000. The technical assistance will identify and assess necessary investment projects, such as river port facilities and navigation aids, to help realize the potential benefits of commercial navigation in the upper reach of the Mekong River. A $25 million loan to the four upper riparian countries is included in the proposed loan program for GMS countries for the year 2003 to help finance these investment projects.

68. The concept of "economic corridors" was first introduced at the Eighth GMS Ministerial Conference held in Manila in October 1998 as a strategic initiative under the GMS Program to help in the process of recovery from the Asian economic crisis. An economic corridor is a holistic approach where infrastructure improvements are linked directly to production, trade, and other development opportunities.

69. The first transport corridor in the GMS that has been considered for economic corridor development is the East-West Corridor, which covers the ongoing priority subregional road project, R2: Thailand-Lao PDR-Viet Nam East-West Transport Corridor and areas to the west of this project all the way to Mawlamyine in Myanmar. Specifically, the East-West Economic Corridor encompasses the area between the following provinces: Mawlamyine and Myawaddy in Myanmar; Mae Sot, Tak, Phitsanulok, Khon Kaen, Kalasin, Kuchinarai, and Mukdahan in Thailand; Savannakhet in Lao PDR; and Quang Tri, Thua Thien Hue, and Da Nang in Viet Nam. The preinvestment study for the East-West Economic Corridor¹² indicates that there is considerable potential for development. Despite broad similarities between the provinces, complementarities also exist, especially in terms of trade and the processing of agricultural and other primary products. Reducing trade barriers would lead to gradually formalizing and accelerating cross-border trade, and, eventually, to intraindustry and intrafirm trade. There is, moreover, scope for light manufacturing and other nonagriculture activities, as well as scope for joint tourism development.

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