Greater Mekong Subregion

	Table of Contents
p. 171 of 176 BACK | NEXT Thirteenth Ministerial Conference on Subregional Economic Cooperation Program Twelfth Ministerial Conference on Subregional Cooperation Eleventh Ministerial Conference on Subregional Economic Cooperation Ninth Ministerial Conference on Subregional Cooperation Eighth Ministerial Conference on Subregional Cooperation Sixth Meeting of the Subregional Transport Forum Seventh Meeting of the Subregional Transport Forum Fifth Meeting of the Subregional Transport Forum Fourth Meeting of the Subregional Transport Forum Eleventh Meeting of the Subregional Electric Power Forum Tenth Meeting of the Subregional Electric Power Forum Ninth Meeting of the Subregional Electric Power Forum Eighth Meeting of the Subregional Electric Power Forum Seventh Meeting of the Subregional Electric Power Forum Sixth Meeting of the Subregional Electric Power Forum Fifth Meeting of the Subregional Electric Power Forum Fourth Meeting of the Regional Power Trade Coordination Committee Second Meeting of the Regional Power Trade Coordination Committee First Focal Group Meeting of Regional Power Trade Coordination Committee Ninth Meeting of the Experts Group on Power Interconnection and Trade Eighth Meeting of the Experts Group on Power Interconnection and Trade Seventh Meeting of the Experts Group on Power Interconnection and Trade Sixth Meeting of the Experts Group on Power Interconnection and Trade Fifth Meeting of the Experts Group on Power Interconnection and Trade Fourth Meeting of the Experts Group on Power Interconnection and Trade Third Meeting of the Experts Group on Power Interconnection and Trade Second Meeting of the Experts Group on Power Interconnection and Trade Sixth Meeting of the Subregional Telecommunications Forum Fifth Meeting of the Subregional Telecommunications Forum Steering Committee Meeting for the Regional Technical Assistance on the Establishment of the Backbone Telecommunications Project for the Greater Mekong Subregion - Phase 1 (RETA 5915) Fourth Meeting of the Subregional Telecommunications Forum Eleventh Meeting of the Working Group on Environment Tenth Meeting of the Subregional Working Group on Environment Ninth Meeting of the Working Group on Environment Seventh Meeting of the Working Group on Environment Sixth Meeting of the Working Group on Environment Fifth Meeting of the Working Group on Environment Fourth Meeting of the Working Group on Environment Workshop on Drug Control Initiatives in the Greater Mekong Subregion Sixth Meeting of the Working Group on Human Resource Development Fourth Meeting of the Working Group on Human Resource Development Third Meeting of the Working Group on Human Resource Development Second Meeting of the Working Group on Human Resource Development 16th Meeting of the Working Group on the Greater Mekong Subregion Tourism Sector 15th Meeting of the Working Group on the Greater Mekong Subregion Tourism Sector 14th Meeting of the Working Group on the Greater Mekong Subregion Tourism Sector Twelfth Meeting of the Subregional Working Group on Tourism Eleventh Meeting of the Subregional Working Group on Tourism Tenth Meeting of the Subregional Working Group on Tourism Ninth Meeting of the Subregional Working Group on Tourism Eighth Meeting of the Subregional Working Group on Tourism Special Meeting of the Trade Facilitation Working Group Fourth Meeting of the Trade Facilitation Working Group Third Meeting of the Trade Facilitation Working Group Second Meeting of the Trade Facilitation Working Group Workshop on Customs Facilitation in the GMS Inception Meeting of Trade Facilitation Working Group Fourth Meeting of the Subregional Investment Working Group Third Meeting of the Subregional Investment Working Group Second Meeting of the Subregional Investment Working Group GMS Mid-Term Review cum Senior Officials Meeting Workshop on the Preinvestment Study for the Greater Mekong Subregion: East-West Economic Corridor Appendix 1 Appendix 2 Quadripartite Meeting on the Chiang Rai-Kunming via Lao PDR Road Improvement Project

Workshop on the Preinvestment Study for the Greater Mekong Subregion: East-West Economic Corridor

Introduction

The Workshop (the "Workshop") on the Preinvestment Study (the "Study") for the Greater Mekong Subregion: East-West Economic Corridor (EWEC) was held in Bangkok, Thailand from 13 to 14 March 2001. The Workshop was hosted by the Royal Thai Government, in cooperation with the Asian Development Bank (the "ADB"). The countries of the Greater Mekong Subregion (the "GMS") and ADB expressed their appreciation to the Royal Thai Government, in particular, the Office of the National Economic and Social Development Board (the "NESDB") for the hospitality, organization, and cooperation provided to the Workshop.

The objectives of the Workshop are to discuss the key findings of the Study, and establish priorities among the various proposed initiatives of the Study. The outcomes of the Workshop will serve as inputs to the planned GMS Midterm Review Meeting as well as the 10th GMS Ministerial Conference to be held sometime in 2001. The agenda of the Workshop is attached as Appendix 1.

The participants of the Workshop included delegations from the People's Republic of China (the "PRC"), Lao People's Democratic Republic (the "Lao PDR"), Union of Myanmar, Kingdom of Thailand, and Socialist Republic of Viet Nam. ADB staff and consultants also attended. The list of participants is attached as Appendix 2.

The Workshop was chaired by Dr. Pornchai Rujiprapa, Deputy Secretary General, NESDB. Mr. Toru Tatara, Head, GMS Unit, ADB co-chaired the Workshop.

Opening Session

Dr. Pornchai Rujiprapra, NESDB, welcomed the Workshop participants. He emphasized the importance of the Workshop to promoting greater regional cooperation in the GMS, and in exploring possibilities to develop the EWEC. He clarified that the GMS Program is not only about developing physical infrastructure, but also involves "software" aspects that entails harmonizing laws and regulations and minimizing nonphysical barriers to the cross-border movement of goods and people. In this context, he informed the participants about the trilateral agreement for the cross-border movement of goods and people signed by Lao PDR, Thailand, and Viet Nam in November 1999. The Royal Government of Cambodia has indicated its willingness to adopt this framework agreement. He invited the PRC and Myanmar to also adopt the cross-border facilitation agreement. Dr. Pornchai emphasized that the success of the development of the EWEC and the North-South Corridor bodes well for the entire GMS, as it would make the Subregion more attractive to investors. He concluded by reiterating Thailand's strong commitment to subregional economic cooperation.

In his Opening Statement, Mr. Toru Tatara, ADB provided an overview of the GMS Program, including a summary of the progress achieved so far as well as the Program's medium-term strategic thrusts. The implementation of several priority subregional projects is either ongoing or completed, with overall investment amounting to some $2 billion. Mr. Tatara noted, however, that project implementation over the past few years has slowed down. This development can be attributed to various factors, which include the decline in foreign direct and portfolio investment to the GMS, the important role being played by intraregional trade and investment, and high risk perception on the GMS countries. As such, economic cooperation has become an important component of the development strategies of the GMS countries. The GMS countries have adopted key strategic thrusts, namely: (i) opening of borders; (ii) economic corridor development; (iii) formulation of strategic environment framework; (iv) refocusing the GMS Program for poverty reduction; and (v) promoting private sector participation. Mr. Tatara highlighted the long-term strategic importance of the East-West Economic Corridor to the region, given its potential to link East and Southeast Asia with South Asia.

Mr. Myo Thant, Senior Regional Cooperation Economist, ADB, and Task Manager of the Study, explained the objectives of the Workshop, which are to: (i) review the final reports of the Study; (ii) agree on a strategy or framework for cooperation; and (iii) agree on follow-up activities, including priority projects, policies, programs, and institutions, that would transform the EWEC concept into reality. Mr. Thant outlined three key ingredients to develop the EWEC, namely: (i) clear and collective vision; (ii) technical credibility; and (iii) legitimacy. He emphasized that the development of the EWEC would have significant implications in the economic geography of East and Southeast Asia.

Sectoral Presentations and Discussions

Mr. Myo Thant, ADB, provided an overview of the key findings of the Study. The Workshop participants have been provided with the Study reports, which included: (i) integrative report; (ii) sector report on agro-industry; (iii) sector report on industry and export processing zones; (iv) sector report on trade and investment; (v) sector report on transport and communications; and (vi) sector report on tourism. Mr. Myo Thant, ADB, presented the integrative report as well as the sector reports on industry and export processing zones, and agriculture and agro-industry. Mr. Montague Lord, Consultant, ADB, presented the sector report on trade and investment. Mr. John Arnold, Consultant, ADB, presented the sector report on transport and communications. Mr. Ronald Antonio Q. Butiong presented the sector report on tourism.

Detailed comments on the report, including factual corrections, information update, and use of appropriate language, were provided to the sector consultants for incorporation in the respective reports.

Integrative Report

A summary of the views, comments, and suggestions on the overall integrative report is as follows:

(i) In developing the EWEC, priority should be given to the "software" aspects of cooperation, e.g., human resource development, finance, small- and medium-sized enterprise development, and cross-border agreements.

(ii) To address poverty reduction, it is important that EWEC development also give focus to the less-developed and remote areas, such as Quang Tri and Thua Thien Hue provinces in Viet Nam, which have good potential for agriculture and tourism development. Likewise, a special economic zone in Lao Bao should be considered.

(iii) The Study should explore possibilities on how to connect the EWEC to the North-South corridor as well as other major subregional transport arteries in the GMS, including Route No. 13 that connects Lao PDR to Cambodia.

(iv) The Study should clarify the relationship between existing institutional arrangements under the GMS Program and institutional arrangements proposed for EWEC development. The possibility of establishing the proposed EWEC Commission through the GMS Subregional Investment Working Group could also be explored.

Trade and Investment

A summary of the views, comments, and suggestions on the sector report on trade and investment is as follows:

(i) The establishment of a new institutional mechanism, such as the proposed EWEC Commission, may not be necessary to facilitate trade and investment in the Corridor. The proposed functions of the EWEC Commission could form part of existing institutional arrangements, such as the recently established GMS Business Forum. Another alternative to the EWEC Commission is the adoption of cross-border agreements among EWEC countries with detailed annexes and protocols to address issues related to cross-border trade and investment. A serious problem associated with an EWEC Commission is the need for inter-ministerial coordination within each country.

(ii) Instead of developing subregional marketing facilities (Project TR2), the Study should consider setting up a "GMS Trading Corporation", shareholders of which could come from the member countries and, possibly, existing investment funds operating in the Mekong region. Besides marketing, this "GMS Trading Corporation" could perform actual trading business, and ensure that benefits accrue proportionately to the various stakeholder countries.

(iii) Trade and investment facilitation schemes, e.g., ASEAN Industrial Cooperation Scheme ("AICO"), ASEAN Free Trade Area ("AFTA"), and Common Effective Preferential Tariff ("CEPT"), should be accelerated and extended to the agriculture sector and SMEs.

(iv) To strengthen customs cooperation, the Study should focus on streamlining trade procedures at border checkpoints, and enhancing capacity of customs officials through training in the areas of systems and procedures that would facilitate the movement of goods across borders. This includes sanitary and phytosanitary, quality control checks, and related matters.

(v) There is need to explain the usefulness of creating "welcome centers" (TR4) as a means to institutionalize and exploit the traditional informal trade flows.

(vi) It is more appropriate to include the project on enhancing mechanisms for SME exporters to secure working capital (TR5) in the Industry sector.

The following responses were given to the views, comments, and suggestions given in the preceding paragraph:

(i) The purpose of the proposed EWEC Commission is to promote or market products at the local/provincial level. It also provides a mechanism by which operations and maintenance activities related to Corridor development could be implemented, and disputes resolved. However, it was agreed that the use of existing institutional mechanisms should be given priority. The concept of establishing an EWEC Commission will still be included in the report, including the associated advantages and disadvantages.

(ii) Financing is a key issue that needs to be resolved in order to successfully establish a "GMS Investment or Trading Corporation."

(iii) Trade and investment facilitation schemes, e.g., AICO, AFTA, and CEPT, are designed to address national level issues. The Study emphasizes local level procedures needed to facilitate trade and investment.

(iv) "Welcome centers" are designed to channel informal trade in a way that it could be monitored. Such centers have been set up in the Philippines.

Infrastructure

A summary of the views, comments, and suggestions on the sector report on infrastructure is as follows:

(i) There is need to have uniform standards in road and telecommunications infrastructure to ensure maximum benefits.

(ii) Corridor infrastructure must be designed for the use for which it is intended, and not the other way around.

(iii) Special telecommunications tariffs should be implemented in border areas, e.g. Mae Sot/Myawaddy, Mukdahan/Savannakhet.

(iv) Other possible routings of the EWEC in Lao PDR should be considered, including Route No. 13 leading to Cambodia, and Route No. 18 leading to another Vietnamese port, and Route 14B in Viet Nam that links Da Nang port and Pakse in Lao PDR.

(v) Da Nang should be highlighted not only as a gateway of the EWEC, but also as a transport, telecommunications, and tourism hub. Mawlamyine in Myanmar should also be developed as a hub similar to Da Nang.

Industry and Special Economic Zones

A summary of the views, comments, and suggestions on the sector report on industry and special economic zones is as follows:

(i) Competition among the EWEC provinces should be avoided in developing the industrial economic zones (IEZs) in the EWEC. In the event that similar industries are being explored in different areas, the Study should ensure that the industries are differentiated in order that competition is avoided.

(ii) Development of IEZs should take into account its impact on agriculture and the environment. This should be emphasized in the Study.

(iii) Given differences in resource endowments among the EWEC areas and the need to carefully consider environmental concerns, a phased approach to developing IEZs should be adopted.

(iv) The Study should include Khon Kaen and Phitsanulok in the development of IEZs in the EWEC given the potential strategic role of these two provinces in the development of the GMS.

(v) Joint development of IEZs between two neighboring EWEC countries, e.g., Thailand and Myanmar, should be explored, particularly in the context of joint use of supporting infrastructure.

Tourism

A summary of the views, comments, and suggestions on the sector report on tourism is as follows:

(i) An additional project to promote agrotourism in the EWEC is proposed to be included. This type of tourism will highlight the agriculture resources in the EWEC, and lifestyle of rural folk.

(ii) The "middle" part of the EWEC should also be given emphasis in the proposed tourism projects. Likewise, the Lao section of the Corridor should be considered in developing the products proposed in the various project profiles, e.g., war memorial tourism.

(iii) The inclusion of Khamouanne province in the scope of proposed tourism initiatives should be considered.

(iv) The fact that Hoi An, Hue, and My Son are UNESCO World Heritage Sites should be emphasized in the report.

(v) Training for tourism officials in the EWEC at the Mekong Institute could be explored. Project TOUR 4, Assessment of Training Needs in Basic Tourism Skills for EWEC, will have to be reformulated since such assessment can easily be undertaken by the concerned Governments. Training courses could then be designed with the assistance of the Mekong Institute.

(vi) Samples of cross-border itineraries involving the various tourism resources of the Corridor countries should be highlighted in the Study. In preparing these pilot products/itineraries, the Study must emphasize those that can be developed over the short-, medium-, and long-term. Project profile, TOUR1, Promoting and Marketing EWEC Tourism, should provide examples of products to be promoted or marketed.

(vii) The Study should differentiate the different tourism markets of, and resources available in, the EWEC. The complementarity of the tourism resources included in cross-border itineraries should be explained in the Study.

Agriculture and Agro-Industry

A summary of the views, comments, and suggestions on the sector report on agro-industry is as follows:

(i) Agriculture, and not only agro-industry, should be included in the sector report.

(ii) The Study must include supportive projects to strengthen the agriculture sector, through improving production efficiency, human resource development, natural resource management, and marketing and information system.

(iii) The Study should consider issues of environmental impact assessment and economic returns to small-scale farmers.

(iv) For Project AGI3: Livestock Processing at Savannakhet, the issue of sanitary and phytosanitary standards should be included in the Study.

(v) Comments on Project AGI9: Aquaculture joint ventures in Viet Nam are as follows: (1) include joint marine/fisheries development in the project; and (2) Quang Tri and Da Nang provinces should be included in the scope of the project.

(vi) Agroindustry development should be prioritized because of its significant impact on poverty reduction. The role of the public sector in supporting farmers as well as livestock development must established. The GMS Subregional Investment Working Group should explore ways to promote investment in the agroindustry sector.

(vii) Other cooperation initiatives that should be considered include cooperation in sanitary and phytosanitary standards, exchange of agricultural inputs and technological transfer.

(viii) It may be timely for the EWEC countries to meet on their own to exchange views and promote closer cooperation among each other.

(ix) It is important to ensure production efficiency in the agriculture sector to enable the countries to better compete in an increasingly global market.

Concluding Session and Next Steps

The vision for the development of the EWEC is to stimulate the growth of participating areas and raise their incomes. This will be achieved through a dynamic process that facilitates the efficient exploitation of underlying complementarities and developing a range of competitive advantages that will enhance overall competitiveness. EWEC development will be facilitated once transport infrastructure improvements are put in place. Developments will occur across the entire Corridor, but will concentrate on the borders and enclaves. While benefits differ from one EWEC country to another, they exist for all.

In the area of physical infrastructure, there is need to expand and further improve existing facilities, many times through an expanded role of the private sector. More importantly, physical infrastructure should be seen as a "total" package that also considers the "new economy" and the impact on the final user, rather than focus on factor costs. This will also lead to the empowerment of small- and medium-sized enterprises. In trade and investment, the emphasis is on improving information systems and improving cooperation in customs in the border areas. In tourism, there was recognition of the tremendous potential of the EWEC. Marketing and packaging of the EWEC's tourism resources provide an opportunity for cooperative action. In the area of industrial estates development, there is a need for careful planning that takes into consideration the impact on the environment and agriculture, as well as rational use of scarce resources. Agriculture is recognized as a key to reducing poverty in the EWEC. The extensive linkages of agro-industry, in terms of geography and with other sectors, need to be highlighted.

Financing is a major constraint to the realization of the EWEC vision both from donor agencies and the private sector. Fiscal constraints in the EWEC countries compound this problem. More than this, however, there are other constraints/issues in the "soft" areas, such as operationalization of cross-border agreements, institutional arrangements, and operations and maintenance of physical infrastructure.

Mr. Myo Thant, ADB, summarized the immediate next steps. Any additional information, comments, and views on the Study are to be submitted to ADB by end-March 2001. The revised reports will be completed by 10 April. The revised Study will be discussed at the GMS Midterm Review Meeting and the 10th GMS Ministerial Conference. The development of a dedicated website for the EWEC will also be explored. It was also suggested to explore the possibility that a declaration on EWEC development be made during the next GMS Ministerial Conference.

Acknowledgements

The GMS countries and the ADB expressed their sincere thanks and appreciation to the Royal Thai Government, in particular, the NESDB, for the wonderful hospitality, excellent arrangements, and tremendous assistance provided to the Workshop.

Back Appendix 2	Next Appendix 1