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Linking Nations Coast to Coast
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The concept of the economic corridor, with its focus on combining economic activities with geographic space, is a key means of facilitating subregional cooperation in the Greater Mekong Subregion - GMS .
The concept was first discussed at the Eighth GMS Ministerial Meeting in Manila in late 1998, when the assembled ministers chose the East-West Economic Corridor as the first corridor to be implemented in the GMS.
The East-West Economic Corridor land route stretches for nearly 1,500 kilometers (km) across Myanmar, Thailand, Lao People’s Democratic Republic (Lao PDR), and Viet Nam, between Mawlamyine on the Andaman Sea in Myanmar and Da Nang on the South China Sea in Viet Nam.
It is the only land route that traverses mainland Southeast Asia on an east-west axis. When combined with ongoing improvements in transport systems on more orthodox north-south alignments, the Corridor provides the potential for bringing major changes to the subregion.
“When completed in 2006, the Corridor will forever change the way many Southeast Asians think about each other and interact with each other,” says Myo Thant, Principal Economist, in ADB’s GMS Unit.
Major beneficiaries of this improved access to neighboring countries are secondary urban centers such as Khon Kaen, Phitsanulok, and Savannakhet, which lie along the Corridor.
The benefits expected from the Corridor are impressive: better access to raw materials, regional development of remote border areas, and growth of secondary towns, poverty reduction, greater cross-border trade, and more efficient use of economic space, including improved access to sea ports for people living in country interiors.
The Corridor will also help spark investments in agro-industry, industrial zones, and tourism.
Thanks to assistance from multilateral and bilateral funding agencies, such as Japan Bank for International Cooperation, Japan International Cooperation Agency, and World Bank, key infrastructure is being improved along the Corridor—particularly the eastern part.
Efforts include constructing and rehabilitating 130 km of Highway 9 in the Lao PDR, building a second international bridge across the Mekong River at Mukdahan-Savannakhet, and constructing the Hai Van Tunnel between Hue and Da Nang.
Investments in physical infrastructure are complemented by policy initiatives.
A landmark accord was signed in 1999 to facilitate the movement of people and goods between Lao PDR, Thailand, and Viet Nam.
Cambodia acceded to this agreement in November 2001 and the People’s Republic of China in November 2002. Aimed at slashing the bureaucratic red tape that restricts cross-border traffic flows, the agreement is expected to boost trade among the countries as well as between the subregion and the rest of the world.
Travel time along the Corridor will also be reduced through the adoption of single-stop customs procedures that will be pilot-tested at the Thai-Lao and Lao-Viet Nam border crossings of the Corridor in 2003
The six-volume Preinvestment Study for the GMS East-West Economic Corridor, completed in early 2001 under ADB regional technical assistance, provides the framework for cooperation on the Corridor.
The preinvest- ment study analyzes five major sectors and identifies more than 70 key projects, policies, and initiatives needed to develop the Corridor. The governments of the four countries have endorsed these initiatives, which were formulated after several rounds of intensive fact-finding trips and workshops.
The study notes that when the major transport infrastructure projects currently being implemented are largely completed by 2006, the Corridor will play a major role in integrating the GMS countries economically and physically.
The Corridor will enable the exploitation of economic complementarities that exist between neighboring countries. In addition to differences in access to natural resources and land, countries have different labor costs, structures, and access to capital and technology—all of which create the basis for cooperation.
Cooperation in agriculture and agroindustry, from which most people in the subregion derive their employment, will increase through new and enlarged markets and trade, as well as cultivation of new crops and varieties.
The study notes that the potential for developing agro-industry is extremely high in Myanmar. Increasing industrial activity has good potential at estates in border areas, such as Mukdahan and Savannakhet, where a new bridge over the Mekong River will be completed in 5 years.
Citing a Chinese proverb, “Build roads if you want to be rich,” Lao Vice Minister for Communications, Transport, Post, and Construction Sommad Pholsena says the Corridor will provide tremendous economic opportunity for the Lao PDR through enhanced trade and cross-border activities.
“Ten years ago, we were not able to imagine participating in a project of this magnitude and benefiting from the advantages it will bring to the Lao PDR,” he says.
The tourism industry is also likely to play a key role in developing the Corridor.
Many of the major tourism sites along the Corridor have yet to be exploited, particularly in the Mawlamyine and Da Nang areas, which have been continuously settled for many centuries and have rich culture and history. The Corridor’s relative proximity to major tourism destinations—such as Bangkok—and the promotion of the GMS as a common destination will also boost tourism.
Through the Corridor, landlocked countries and regions will finally have more convenient access to ocean ports.
The Lao PDR and Northeastern Thailand will benefit by gaining access to ports in Viet Nam, such as Da Nang and Vinh. Over the long term, ports on the western end of the Corridor will offer Thai manufacturers easier access to South Asian markets.
The Corridor’s development is a long-term endeavor that will require actions from the participating governments, individually and collectively.
Increased economic activity can take place only through adopting policies and programs that will reduce the administrative costs of doing business, and reduce risk and uncertainty for private investors.
The preinvestment study advocates improving collection and dissemination of trade statistics, as well as promoting investment opportunities and closer linkages with the private sector, particularly through the GMS Business Forum.
Equitable distribution of costs and benefits, critical to the Corridor’s long-term development, will be attained by involving local people, developing appropriate institutions, and constructing feeder roads to connect rural communities to the main transport artery.
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