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Regions and Countries Regional Cooperation Greater Mekong Subregion Publications Proceedings of Ministerial, Forum, and Working Group Meetings Third Meeting of the Subregional Investment Working Group
Third Meeting of the Subregional Investment Working GroupIntroductionThe Third Meeting of the Subregional Investment Working Group (SIWG-3) was held on 27-28 February 2001 at the New World Hotel in Ho Chi Minh City, Viet Nam. The objectives of SIWG-3 are to: (i) review investment trends and policy developments affecting the investment climate in the GMS in order to assess current priority thrusts and activities in GMS investment cooperation; (ii) review the status of priority projects and activities, refine their scope, and agree on financing and implementation modalities; (iii) engage the private sector, through the GMS Business Forum (GMS-BF), in a dialogue and solicit their cooperation in supporting SIWG projects and activities; and (iv) present the results of the East West Economic Corridor pre-investment study and discuss the role of the SIWG in EWEC development. The Meeting agenda is in Appendix 1. The Meeting was co-chaired by Dr. Nguyen Van Phuc, Deputy Director, Foreign Economic Relations Department, Ministry of Planning and Investment of the Socialist Republic of Viet Nam and Mr. Myo Thant, Senior Programs Officer, GMS Unit, Programs Department West Division 3, of the Asian Development Bank (ADB). Participants to the Meeting included officials in the GMS countries responsible for investment policy and promotion, representatives from the GMS national chambers of commerce and industry, representatives from international organizations and donor institutions, and ADB staff. Representatives from some foreign chambers of commerce and industry from Ho Chi Minh City also participated as observers. The list of participants is in Appendix 2. Opening SessionDr. Nguyen Van Phuc welcomed the participants to the Meeting on behalf of the Government of Viet Nam. He reviewed the beginnings of the GMS Program in 1992 and cited the many projects that have been achieved so far, with assistance from the ADB and other donors. The demand for investment funds in the GMS however, remains to be a major challenge and it is in this area where the SIWG can play a major role. Viet Nam's growth in recent years has been positive despite the impact of the regional financial crisis and major natural disasters. This growth was partly the result of Government's efforts to overcome structural weaknesses in the economy and to mobilize resources, both from domestic and international sources, to finance development. Global competition for resources however, continue to pose a major challenge to developing countries, including for the GMS. Dr. Phuc reiterated Viet Nam's continuing support for the GMS Program and expressed the hope that investment cooperation under the Program can contribute to resource mobilization efforts for mutual benefit. Mr. John Samy, Resident Representative of the ADB Resident Mission in Viet Nam welcomed the participants on behalf of the ADB. He described how the changing environment of the GMS Program is challenging new roles and modalities for regional cooperation. The GMS Program was intended to establish a "growth zone" in the subregion initially through the promotion of infrastructure linkages. In the wake of the difficulties resulting from the Asian crisis, the ADB placed emphasis on the "software aspects" of cooperation, namely, facilitation of cross-border movement of goods and people, trade and customs cooperation, investment facilitation, and private sector development. This is in recognition of the fact that while the GMS remains to be a potentially attractive investment area, its attractiveness is limited by uncertainties in the environment. Effective cross-border business facilitation will help in stimulating private sector responses to economic opportunities. Mr. Chanpheng Bounnaphol, Chairperson of the GMS-BF, explained the role of the Forum launched in October 2000 under the framework of the GMS Program. As reflected in its terms of reference, the GMS-BF would serve as a forum for pursuing three fundamental objectives, namely; (i) capacity building for private sector associations; (ii) development of a private sector network within and outside the region to promote business opportunities and investments; and (iii) serve as a direct and regular channel of communication with the GMS governments on policy issues, public-private sector partnerships, investment and trade facilitation, and infrastructure investment, among others. Capacity building and networking are equally important dimensions of the Forum. He stressed that that the Forum does not only have the full endorsement of the GMS governments but is fully recognized as a dialogue partner. Through the Forum, the views and suggestions of the private sector are systematically brought to the attention of and discussed with the Governments. In his opening remarks, Mr. Myo Thant, Senior Programs Officer, ADB outlined the objectives of the Meeting. The first objective is to review investment policies and trends in the GMS in order to set the context for discussing the SIWG's priority projects and the direction of future cooperation. He stressed the need for the SIWG to help mobilize resources for other GMS priority sectors---in particular, transport, telecommunications, energy and tourism---which require huge amounts of investment capital, and where private sector financing can play a major role. A second objective of the Meeting is to initiate a process of dialogue with the private sector who are important partners in the development of the GMS. The Meeting provides participants with the opportunity to be acquainted with the objectives and activities of the GMS-BF and to expand the public-private sector network. The third objective is to present the findings of the pre-investment study of the East West Economic Corridor Project (EWEC) and to discuss ways in which the public and private sectors can work together to promote investments in the Corridor. He cited the need for greater collaboration with other development agencies in the GMS towards common goals for the subregion. Review of Recent Developments in Investment Policies and Trends in the GMS CountriesThe GMS countries exchanged information on recent developments in investment policies and trends in their respective countries with the view to determining further opportunities for regional cooperation. The country presentations assessed the post-crisis performance and outlook for foreign direct investments (FDI), changes in investment policies and regulations, and the issues and challenges faced by the GMS countries in the context of regional and international developments. They also shared their plans for enhancing the future attractiveness of FDI. Dr. Hing Thoraxy, Director, Project Monitoring Department of the Cambodia Investment Board explained that Cambodia's investment policy recognizes that peace, stability, freedom, and human rights and crucial elements for promoting the long-term sustainable development of the country. Among the key elements of Cambodia's investment policy are: (i) promotion of good governance, including laws to curb corruption; (ii) budget and fiscal reform to mobilize domestic savings; (iii) prioritization of areas where Cambodia has comparative advantage, namely: agro-industry, labor-intensive industry, processing industry, and tourism; and (iv) building institutional capacity. Investment promotion strategies are specifically directed to the power sector and infrastructure development, establishment of industrial zones, and privatization of key sectors such as water and electric utilities. Efforts to integrate Cambodia into the global economy are expected to increase the country's attractiveness as an investment location, promote higher productivity, and develop further the country's comparative advantage. Ms. Yang Ningning, Project Officer, International Department of the Ministry of Foreign Trade and Economic Cooperation of the People's Republic of China (PRC), explained that while FDI in China declined in 1997 on account of the Asian economic crisis, it has gradually recovered by 2000. Wholly-owned foreign enterprises account for about half of FDI flows, followed by Chinese-foreign joint ventures which account for more than one-third, and Chinese-foreign cooperative ventures, with less than a 20 percent share. Major sources of FDI are Asean countries/regions, USA and EU. Policy thrusts on foreign investments include: (i) promotion of technology innovation of existing FDI enterprises; (ii) intensifying financial support to FDI enterprises; (iii) encouraging investments in the middle and western regions; and (iv) improving administrative services. China continues to face the challenge of overcoming the negative impact of the Asian crisis. In addition, the country continues to face challenges in attracting more technology-intensive FDI and building industrial capacity for further market access. China expects that with its accession to the WTO, further improvements in the legal framework, incentives regime and liberalization policy could take place. Daw Si Si Win, Director, Directorate of Investment and Company Administration, Ministry of National Planning and Economic Development of Myanmar indicated the following objectives of investment policy in the country, namely: (i) promotion and expansion of export; (ii) exploration of capital-intensive natural resources; (iii) acquisition of technology; (iv) support for capital-intensive production and services; (iv) promotion of employment opportunities; (v) rationalizing energy consumption; and (vi) regional development. FDI performance in Myanmar showed positive trends during the post-crisis years primarily because the bulk of FDI come from the ASEAN countries which have started the process of recovery. Despite the Asian crisis, the economy also realized positive growth on account of timely macro-economic policies. Myanmar is basically an agriculture country and priority is given to the development of the sector. Emphasis is also given to the promotion of labor-intensive, capital-saving small and medium enterprises. Dr. Viravan Khamthanh, Director, Investment Promotion and Information Division, Foreign Investment Management Committee of the Lao People's Democratic Republic (Lao PDR), informed the Meeting that FDI in the country is highly concentrated in a few sectors, but it is gradually diversifying. FDI trends are affected by discrepancies between approved and actualized inflows, resulting primarily from inadequate infrastructure and business services. In recent years however, the country has been able to achieve macroeconomic stability and to manage its inflation rate. It is also taking steps to change its land-locked status by linking with neighboring countries through road infrastructure. Post-crisis recovery measures that have implemented by the Government include streamlining investment procedures, improving incentives schemes, and institution and capacity building. Ms. Pannee Chengsuttha, Senior Investment Promotion Officer, Office of the Board of Investment of Thailand cited that FDI levels in 1999-2000 have increased compared to the 1997-1998 levels. Wholly-owned foreign companies comprise the bulk of FDI, although its share to the number of FDI projects have declined. BOI-approved projects in 2000 were concentrated in three sectors: metal products and machinery, electric and electronic products, and light industries including textiles. Thai investment policy has been revised last year. Areas of improvement under the new investment policy include: (i) changes in the BOI promotional zones; (ii) more incentives to firms locating in industrial zones; (iii) conformity with international quality standards to enhance global competitiveness; and (iv) relaxation of restrictions on foreign shareholdings. As regards investment facilitation, Thailand has established a One-Stop Service Center for Visas and Work Permits with a three-hour processing time. Transparency is promoted through numerous publications and provision of up-to-date information on the Internet. In the context of cooperation in the GMS, Thailand has conducted fact-finding missions to the GMS countries, seminars on investment opportunities in GMS countries, development of GMS promotional packages, and training programs for officials of investment promotion agencies in the GMS. Mr. Nguyen Manh Hung, Senior Expert, Legal Department, Ministry of Planning and Investment of Viet Nam explained that the country's investment policy is evolving as part of its transition from a centrally-planned to a market-based economy. Investment policy is aimed at strengthening Viet Nam's ability to compete with other countries in attracting FDI, and ensuring a level playing field for investors. The legal framework is comprehensive and covers banking, taxation, environmental protection, investment protection, and economic contracts. Viet Nam is a member of international organizations such as ASEAN, Asia Pacific Economic Cooperation (APEC) and Asia-Europe Meeting (ASEM), and has applied for membership to the WTO. Investment processing in Viet Nam has been improved, involving 15 to 45 days for approval of investment licenses depending on the project classification, and 3-15 days for evaluation of the project. Investment approval authority is vested in the Prime Minister, the Ministry of Planning and Investment, and the Provincial People's Committees depending on the amount of investment to be approved. Following the country presentations, Mr. Myo Thant presented an overview of the recent developments in the GMS Program and its implications for investment cooperation in the GMS. Major transport infrastructure projects are in various stages of implementation, and agreements to facilitate cross-border movements of goods and people have been initiated among certain countries in the GMS. In the medium-term, the objective is for the GMS countries to adopt a common framework agreement for facilitation of cross-border movements. Cooperation in telecommunications sector is also taking a fast track to help the GMS countries to keep pace with the revolution in information technology. In the energy sector, the GMS countries are preparing for a regional power market over the long-term that would pool resources for greater efficiency and reliability of energy supply. To complement investments in infrastructure, the GMS Program has given increasing attention to trade and investment facilitation in order to enhance the investment attractiveness of the subregion. The development of economic corridors also provides a tangible focus for investment cooperation. A key challenge for the SIWG is to implement cooperation initiatives for enhancing FDI flows to the subregion with the view to making the GMS the "growth zone" that it was envisioned to be. The participants exchanged views on the country presentations, specifically on the following points:
Mr. Hans-Peter W. Brunner, Senior Project Economist, Financial Sector and Industry Division, Infrastructure, Energy, and Financial Sectors Department West, (IWFI), ADB summarized the highlights of Session II through three games matrices. The countries are making strong efforts to improve their investment incentive regimes, but in an uncoordinated way. As an investor, it becomes difficult to locate based on different incentive regimes. Moreover, as Mr. Brunner illustrated with the first game matrix (payoffs), investment incentive competition among GMS countries could lead to a negative sum game. A third matrix illustrated cooperative conditions among GMS countries for a positive sum game. Moving close to one "market" in specific investment sectors would lead to a positive sum game. Review of the Status of Priority ProjectsMr. Somphong Wanapha, Senior Executive Advisor of Board of Investment of Thailand, served as moderator for this session. The GMS countries reviewed the six priority projects endorsed at the Second Meeting of the SIWG (SIWG-2) and agreed to take steps to bring these projects forward. These projects are as follows:
The Meeting noted that some of the projects have made progress (e.g. #1, #3, and #6) while some projects have yet to start. They assessed whether the projects continue to be relevant in the context of the investment environment in individual countries as well as in the subregion. Representatives from international organizations also shared their activities on similar or related projects. Project #4: Strengthening the Regulatory and Incentive Structure in the GMS The GMS countries shared the view that investment incentives would be difficult to harmonize considering the diverse legal framework, and differences in investment promotion strategies. It is possible however to prepare a compendium of investment incentives in the GMS using a common format that is easily understood by investors. The Meeting also agreed that GMS cooperation should focus on investment regulation for specific sectors (e.g. agro-industry, tourism) or geographic areas e.g. (EWEC industrial zones). Regulations on visa requirements, work permits, and labor requirements could be considered as possible starting points since these are the basic entry requirements for investors. In selecting the sectors of focus, duplication with other GMS working groups and forums should be avoided. Cooperation activities should also be realistic and take into account capacity constraints in the GMS countries. Project #2: Improving the Information Architecture for Investment Facilitation Strengthening the Regulatory and Incentive Structure in the GMS The Meeting noted that ASEAN is already doing substantial work in the area of investment information, among them the launching of the ASEAN Investment Portal later in the year, harmonization of investment statistics and various publications on this, and training and institution building especially for Cambodia, Lao PDR, Myanmar, and Viet Nam. Five GMS countries who are ASEAN members are participating in these activities, and special attention is being devoted by ASEAN to assisting the new members. A modality for involving Yunnan Province, which is not an ASEAN member, in these activities, will be explored by ADB. Project #5: Design and Implementation of an Investment Cooperation Mechanism in the GMS The Meeting noted various activities of ESCAP and ASEAN in the field of investment promotion. ESCAP stressed the need for strengthening investment promotion mechanisms at the national level, and to focus on specific products for investment promotion. Near-term investment promotion opportunities which the GMS countries may take advantage of include the Kunming Trade Fair, and the ASEAN Investment Year. The ASEAN Investment Year consists of multi-program activities and events directed at promoting awareness of investment potentials in the region, image building, perception correction, and confidence enhancement. The GMS countries should be taking advantage of these investment promotion events since investment promotion is a continuing activity for the countries. Project #1: Building Institutional Capacity for Investment Promotion and Facilitation in the GMS Mr. Jorg Meyer-Stamer, SIWG Consultant, provided a comprehensive framework for understanding and relating investment promotion and facilitation initiatives at the national, provincial and regional levels. He proposed a focused approach to investment promotion that would target specific sectors (e.g. agriculture, agro-industry, and tourism), and specific potential investors. He argued that a conventional approach seeking to remove policy and regulatory obstacles to investment are not likely to happen in the near future since the costs are more apparent than the benefits; he proposed instead a more practical approach that would involve stakeholders in a learning process. Short-term measures would include speeding up the investment permit process, developing tangible benefits from participation in the GMS-BF (e.g. service discounts available GMS-wide), and organizing a group of government officials to benchmark business transaction costs, including developing measurement tools adapted to conditions in the subregion. Medium- and long-term measures would include capacity building for local officials involved in the EWEC, assessment of unintended and positive effects of the EWEC and organizing initiatives to enhance locational conditions in the area. Mr. Meyer-Stamer's work will provide the basis for designing Project #1. Project #3: Support to the GMS Business Forum Mr. Hans-Peter W. Brunner provided a briefing on the purposes of the GMS-BF, which is composed of GMS national chambers of commerce and industry as core group members and foreign chambers of commerce and industry as associate members. The GMS-BF is being assisted by ADB and ESCAP and will have its Secretariat offices inaugurated in Vientiane around June 2001. Services provided by the GMS-BF to its members include communications and translation services, export promotion (in collaboration with the ITC/UNCTAD/WTO) through business to business contacts; customs information and border point grading and mapping; assisting the private sector to get involved in GMS Program infrastructure development; assistance to visiting trade missions; publications (including the GMS Business Handbook) and other customized services against fees. Governments can benefit from linking with the GMS-BF by having access to legitimate investor needs, and having a communications channel with the business sector. Governments get this service for free, as the private organizations self-finance their activities. Therefore, governments should indirectly encourage activities of the GMS-BF and provide access to information. Elaborating further on the export promotion activity, Mr. A. Chevalier, Project Coordinator, ITC explained the methodology involved. This involves the following steps: (i) quantitative and qualitative inventory of export products with complementarities within the GMS and between the GMS and selected trading partners (trade flow analysis); (ii) field validation of the trade flow analysis among the stakeholders; (iii) prioritization of trade opportunities; (iv) identification of national trade support institutions and agreement on the list of products; training for actual demand and supply surveys; (v) supply and demand service, on a product and country basis, through field research; (vi) buyers and sellers meetings, including the identification of barriers to business; and (vii) drawing up of business plans and other follow up assistance to enterprises and trade support institutions. Activities of International Organizations on Investment Promotion and Facilitation in the GMSRepresentatives from some international and regional organizations shared information on their activities on investment promotion and facilitation in the GMS countries that support the objectives of some of the SIWG priority projects. The activities of these organizations are building blocks for further pursuing the SIWG priority projects and offer opportunities for greater collaboration with ADB and the GMS countries. Mr. Marc Proksch, International Trade and Industry Division of the UN Economic Commision for Asia and the Pacific (UN-ESCAP) explained that his organization has been working to enhance private sector development and FDI in the GMS under the so-called "Hi-Fi Plan". The current focus of ESCAP's activities is in the area of investment promotion and improving investment implementation at the provincial, national and regional levels. The importance of assisting provincial and municipal authorities was emphasized because of their role in the post-approval implementation process that could ultimately affect the profitability of foreign investment projects. Under the Indochina Investment Biennium 2000-2001 Project, ESCAP is organizing a series of national workshops directed among others, at forging stronger cooperation between central and local government and foreign investors, documenting issues of concern to investors and identifying solutions at the national and local levels, and enhancing awareness of national and local government officials of post-approval needs and concerns of foreign investors. Two workshops had already been organized, in Cantho and Ho Chi Minh City in early February. The workshops had revealed inter alia, the urgent need for strengthening coordination between central and local governments in investment implementation and for the design of a targeted and focused investment promotion strategy, both at the national and provincial levels, aimed initially at dispelling lingering negative images abroad of the investment climate in Indo-China countries. Two more workshops in Hanoi and Da Nang were pending in early March, one workshop in Lao PDR in April and in Cambodia in May 2001. A programmatic approach to be jointly implemented by ADB, ESCAP, MPDF/IFC, UNIDO, UNDP and other agencies would be required to ensure the long-term sustainability of assistance in the area of investment promotion and implementation to the three Indochina countries and to the GMS at large. James Crittle, Senior Investment Policy Officer, shared the experiences of the Foreign Investment Advisory Service (FIAS) on investment policy reform in Southeast Asia, and the GMS in particular. In general, investment incentives in the region are ineffective and redundant, complex, selective and discretionary. Among the major findings of FIAS are: (i) incentives is only one of many determinants of FDI; (ii) other significant determinants are macroeconomic stability, market size, input availability and cost and infrastructure adequacy; (iii) profit may not be the determining factor; (iv) incentives vary in their importance and attractiveness depending on industry and market orientation. It was explained that "regional" fiscal incentives can undermine the advantages gained by one country and could push tax rates downwards, thus leading the investor to make location decisions knowing they will pay little tax wherever they go. FIAS concluded that incentives are used in the region to differentiate environments in the market place. This is a negative sum game across the GMS in that costs exceed the benefits. The group should look for principles which would regulate the degree of differentiation in the region and so limit the costs. Reacting to FIAS' presentation, Dr. Wee Kee Hwee from the ASEAN Secretariat commented that to date, the conclusion on the use of investment incentives in attracting FDI flows has not been conclusive. While incentives is not the main reason motivating FDI, there is strong empirical evidence suggesting that it is relevant in encouraging FDI flows in relation to supporting national industrial development goals. Despite the evidence supporting the relevance of incentives however, countries should not engage in "incentives granting" competition and should not be allowed to be played off against one another by foreign investors. Dr. Wee Kee Hwee, Assistant Director, ASEAN Secretariat, informed the Meeting on some of the major ASEAN-level investment promotion events undertaken recently. These are: (i) publication of a set of investment literature which aims at enhancing transparency and better understanding of the region's investment environment; and (ii) high-level joint ASEAN investment promotion events to Japan, USA, and Europe in 2000. In addition, he also highlighted two major ongoing investment promotion initiatives, namely: (I) ASEAN Investment Portal which is a project under the purview of the ASEAN Investment Area Ministerial Council; and (ii) ASEAN Investment Year 2002 with year-long multi-programs of events and activities on ASEAN. The year-long investment year campaign will comprise events such as high-level investment forums, trade marts, seminars, symposiums, workshops, capacity building, and private sector networking activities. The East West Economic Corridor Pre-Investment StudyHighlights of the Pre-Investment Study on the East West Economic Corridor (EWEC) In his introduction, Dr. George Abonyi, ADB GMS Unit Senior Advisor and moderator for the Session, provided the background for the introduction of the economic corridor concept within the GMS Program framework. The economic corridor approach represents an attempt to package the hardware and software aspects of GMS cooperation into a geographic space, and to focus public-sector cooperation through concrete business opportunities. The highlights of the pre-investment study was presented by Mr. Myo Thant, ADB. The rationale for the economic corridor approach is to facilitate transnational movement of goods, services, finance, people and information within a well-defined geographic space, linking production and trade potentials. The EWEC area spans about 1,600 km cutting across border provinces in Lao PDR, Myanmar, Thailand, and Viet Nam and features a road transport route that would connect the Pacific Ocean with the Andaman Sea. The benefits of the corridor include access to raw materials, regional economic development, increase in trade and investment, and changes in economic space (gateway access, and new economic opportunities). Opportunities for subregional cooperation in the EWEC are in agriculture and agro-processing, resource-based light manufacturing, cross-border trade and investment, tourism, establishment of border zones and marketing of existing industrial estates, and shared development of transportation routes, power grids, and telecommunications services. To realize these opportunities, the report outlined high, medium and low priority tasks in seven strategic components, namely: (i) spatial planning; (ii) physical infrastructure development; (iii) policy and procedural reform; (iv) supporting programs (e.g. e-commerce mechanisms for SMEs, trade and investment information system, etc.); (v) skills development; (vi) capital and financing; and (vii) institutional development. In the area of trade and investment, the study made the following recommendations: (i) the establishment of an EWEC Group within the GMS Business Forum; (ii) implementation of AICO schemes (e.g. for agro-industry); (iii) accelerated implementation of the AIA for the EWEC: (iv) establishment of trade and information systems; and (v) systematic procedures for EWEC investment approval. The findings and recommendations of the study will be presented to a workshop involving the four EWEC countries to be held in Bangkok on 13-14 March 2001. The workshop will further deliberate on the Study's recommendations and modalities for implementation. Thailand suggested that tourism may be a key area of focus for EWEC cooperation. In addition, facilitation measures could also be addressed, with initial application to visa requirements and work permits. Myanmar emphasized the importance of developing special economic zones. As to the studies of other economic corridors, the ADB indicated that priority has been given to the East West Economic Corridor, but that it would be willing to consider studies of other economic corridors in due time if requested by the countries. Viet Nam stressed the importance of institution building especially for customs facilities at the border. This is an area that is presently being addressed by the Trade Facilitation Working Group. Project #6: Fast Tracking Investment Approval Procedure in the EWEC The participants discussed the project on Fast Tracking Investment Approval Procedures in the EWEC, one of the SIWG priority projects. The ADB indicated that that it will further refine the project as part of the follow-on work to the pre-investment study of EWEC. Private Sector Panel: Investment Opportunities in the EWEC Four representatives from the national chambers of commerce in Lao PDR, Myanmar, Thailand and Viet Nam shared their views on the opportunities and constraints in investing in EWEC. Mr. Chittichone Volasay, Deputy Director of the Lao National Chamber of Commerce and Industry (Lao NCCI) raised the issue of cooperation between the SIWG and the GMS Business Forum to realize the investment potential of the East West Economic Corridor. Private business continues to face several difficulties, among them, insufficient capital, and access to credit. For Lao PDR, infrastructure development will play a major role in transforming the country from landlocked to landlinked. Road transport will contribute to reduction in transport costs, and facilitate regional and international traffic. The ongoing study of the special economic zone in Savannakkhet province around the location of the Second Mekong Friendship Bridge will likewise facilitate trade and investment promotion. U Wai Phyo Central Executive Member, Myanmar Federation of the Chamber of Commerce provided a situationer on agro-industry, tourism, and industrial estate sectors in Myanmar. He presented the private sector perspective on investment incentives, and importance of information, the difficulties experienced by enterprises at the micro-level. He stressed the need to consider local capacities of business in developing and promoting opportunities in the EWEC. Mr. Phairush Burapachaisri, Deputy Secretary General of the Thai Chamber of Commerce indicated that the Thai business sector has continued to seek business investment opportunities in the GMS (e.g. power in Lao PDR, tourist hotels and airline services in Cambodia, etc.). Thai investors are involved in industrial parks, feedmills and agricultural products. He stressed the importance of looking for a local business partner and in this regard, the GMS Business Forum will play an important role. The TCC is also providing training to neighboring countries in collaboration with the TCC University. Ms. Nguyen Thi Phan Chung, Manager of the ASEAN Department, Viet Nam Chamber of Commerce agreed that the business community will benefit from the EWEC. Agriculture, in particular will benefit from the EWEC. For example, Viet Nam's requirements for technology and raw materials from Thailand can be facilitated once the EWEC is implemented. Financing and technical assistance for SMEs in Viet Nam is an important challenge if SME's are to benefit from the development in the EWEC. The proposal to set up a cross-border entity led by the private sector is not appropriate. Details (including the proposed EWEC Commission) will be discussed at the 13-14 March 2001 meeting in Bangkok. The national chambers could play and important role in disseminating information on EWEC to the business sector in their respective countries. Mr. Thant summarized important points raised by the panelists. Tourism is an important area of opportunity but facilities are still inadequate. There is a need to spread the good news about the EWEC, through websites and seminars. It is significant to note that Thailand is collaborating with the local universities to provide training for local enterprises in the neighboring countries. The need to provide financial and technical assistance to SMEs should also be given priority. Financing Investments in the East West Corridor Mr. Anil Sinha, Regional Manager, shared the experiences of the Mekong Project Development Fund (MPDF) in financing private investment in Viet Nam and Lao PDR. MPDF provides intensive, firm-level assistance to selected companies in raising finance, business planning and technical assistance. It also provides support services to small and medium enterprises (SME) through management training, bank training, institutional development, and SME analysis. He described the alternative sources of finance for the private sector in Lao PDR and Viet Nam. Issues in financing experienced in Lao PDR include a fragile macroeconomic environment, need for improvements in the implementation of the foreign investment law, and lack of confidence in law enforcement. Closing SessionThe SIWG Work ProgramMr. Jiro Tsunoda, Capital Markets Specialist, ADB, outlined the next steps for the six priority projects of SIWG. In general, the Meeting agreed that the six priority projects or areas of cooperation continue to be relevant to the participating countries; however, there was a need to refine the scope of activities and to link up with the work of international and regional institutions who are engaged in similar or related activities. ADB indicated that it will provide financing support for Project #1 (Capacity Building) and will work with UNIDO to implement it. For Project # 2 (Information Architecture) ADB, in cooperation with the ASEAN Secretariat, will consider the possibility of providing assistance to Cambodia, Lao PDR, Myanmar, and Viet Nam for setting up their investment promotion websites. ADB will also explore modalities for linking Yunnan Province to the ASEAN Investment Portal and other FDI-related initiatives in ASEAN. Project #3 (Support to the GMS Business Forum) is well underway and will continue with its planned activities with the support of ADB and ESCAP. The implementation approach for Project #4 (Strengthening the Regulatory and Incentives Structure) and Project #5 (Investment Cooperation Mechanism) will have to be discussed further in view of national level pre-requisites. The implementing and funding agencies for these two projects will also need to be identified. Project # 6 (Fast-Tracking Approvals for the East West Economic Corridor) will be studied further by the ADB as part of the follow-up work for the pre-investment study on EWEC. The SIWG Work Program reflecting the status and details of future action for the six priority projects is in Appendix 3. Closing RemarksMr. Hans-Peter Brunner thanked the participants for their active participation and contribution to the Meeting which made possible the accomplishment of the Meeting's objectives. The agreement to move the priority projects forward was noteworthy as this signified the continuing commitment of the GMS countries to pursue investment cooperation under the GMS Program framework. Carrying out the detailed future activities outlined in the work plan would be a major challenge, and in this regard, the participants were encouraged to continue regular contact and utilize the network that has been established by the Meeting. He expressed the hope that cooperation between the SIWG and the GMS Business Forum could be strengthened in the future, especially after the Forum secretariat would have been fully operational. Finally, he thanked the Government of Viet Nam for the excellent preparations made in hosting the Meeting, including the organization of a field visit to Tan Thuan Indsutrial Park which would provide a useful learning experience for the participants. Mr. Phairush Burapachaisri, Deputy Secretary-General of the Thailand Chamber of Commerce noted that the two-day meeting has been very productive and has covered a comprehensive range of topics. He stressed the importance of the GMS Business Forum as a mechanism for private sector involvement in the GMS Program. He called on the SIWG to contribute to the implementation of the EWEC through various support programs and expressed the hope that the investment opportunities in the Corridor could be realized. He expressed appreciation to the ADB and the Government of Viet Nam for their leading role in the Meeting. Dr. Nguyen Van Phuc thanked the participants for their active participation in the Meeting. He expressed appreciation to the efforts of the ADB staff in organizing the Meeting and for contributing to its success. He also cited the valuable contributions of the participants from the GMS government, the national chambers of commerce and industry, and representatives from international and regional organizations, and expressed optimism on future collaboration for GMS activities. He said that the Meeting's success will pave the way for stronger investment cooperation in the GMS.
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