Greater Mekong Subregion

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p. 1 of 7 BACK | NEXT History and Background Institutional Arrangements ADB's Role Progress and Achievements 10-Year Strategic Framework The GMS Program - The Way Forward GMS Regional Economic Cooperation Strategy and Program

History and Background

Since 1992, the countries of the Greater Mekong Subregion (GMS) have embarked on a program of economic cooperation (the GMS Program) that aims to promote development through closer economic linkages. The GMS Program, with support from the Asian Development Bank (ADB) and other donors, helps the implementation of high priority subregional projects in transport, energy, telecommunications, environment, human resource development, tourism, trade, private sector investment, and agriculture.

Substantial progress has been achieved in terms of implementing GMS projects over the past 13 years. Priority infrastructure projects worth around US$5.2 billion have either been completed or are being implemented. Among these are the upgrading of the Phnom Penh (Cambodia)-Ho Chi Minh City (Viet Nam) highway and the East-West Economic Corridor that will eventually extend from the Andaman Sea to Da Nang. A significant amount of resources has been mobilized for the GMS Program. For the 19 GMS projects that ADB has assisted, GMS governments have provided about US$1.6 billion. ADB has extended loans amounting to US$1.4 billion. ADB has also generated US$2.2 billion in cofinancing for these investment projects. A total of US$105 million of grant resources have been mobilized, of which US$60 million have been provided by ADB, to finance technical assistance focusing on human resource development, tourism, environment, trade and investment.

Connectivity enhances competitiveness

Transport

Improved transportation links within the GMS are central to increasing trade and economic exchange. Physical infrastructure links, combined with cross-border facilitation measures, promote trade, investment, and tourism; enhance labor and social mobility; and increase access to markets and other economic opportunities.

Economic corridors are being developed along transport routes to link infrastructure with production and trade. Much progress has been made in the three major GMS economic corridors - East-West, North-South and the Southern economic corridors- all of which will be completed by 2012.

The development of a GMS transport network enhances connectivity, increases competitiveness, and promotes a sense of community through strengthening of linkages, reduction of transportation costs, and enabling greater interaction among the people of the GMS.

Energy

Power supply enhances competitiveness

The GMS is well endowed with energy resources that are diverse but unevenly distributed. GMS cooperation in energy promotes complementary use of energy that provides GMS members access to more economically viable energy resources. Power interconnection and trade among GMS countries help reduce investments in power reserves to meet peak demand, achieve more reliable supply, reduce operational costs, and enhance consumer access to cheaper power sources. To promote power trade, the GMS Program helps develop policies/institutions for cross-border power dispatch, through the signing of the Inter-Governmental Agreement on Regional Power Trade and the formulation of the Regional Power Trade Operating Agreement. Grid interconnection infrastructure will be developed through a building block approach based on the Regional Indicative Master Plan on Power Interconnection completed in 2002.

Telecommunications and ICT are bridging the digital divide

Telecommunications

Telecommunications, including the internet, is playing an increasing role as the GMS economies develop. Cooperation in the telecommunications sector seeks to develop a subregional network linked to international gateways. Through cooperation GMS countries can acquire the advanced technologies they need to expand access to e-commerce and low-cost communications services.

Environment and Natural Resources Management

Conserving our natural heritage

In the GMS, which holds some of the most important natural forests and biodiversity in the world, protecting the subregion's wealth of natural resources is a major challenge in the face of efforts of GMS countries to achieve faster economic growth.

At a special meeting of the GMS Ministers on Environment in Shanghai in May 2005, the GMS Core Environment Program (CEP) was launched to ensure stronger coordination in conserving natural systems and maintaining the quality of the environment. Under the CEP a Biodiversity Conservation Corridors Initiative (BCI) is being implemented to protect high-value terrestrial biodiversity and protected areas, by establishing sustainable management practices and restoring habitat connectivity in these areas.

Measures for reducing poverty among communities living in or near the economic corridors, defining appropriate land-use, and restoring connectivity of ecosystems will be undertaken in six BCI pilot sites.

HRD is a prerequisite for economic development.

Human Resource Development

With about 300 million people, many of whom are young, the GMS has a vast potential workforce. Human resources development (HRD) is key to harnessing the subregion's human potential. HRD is crucial for increased productivity and competitiveness and overall economic development and is directly linked to poverty reduction.

GMS cooperation focuses on the cross-border dimensions of HRD --- health and social matters associated with mobile populations, the prevention and control of communicable diseases, and helping the poor to gain better access to education and health services.

At the first Summit in Phnom Penh in 2002, a major initiative to help GMS countries better manage the complex task of development was launched through the Phnom Penh Plan (PPP) for Development Management. Through various learning programs, the PPP is helping to build the capacity of middle and senior level professionals in the GMS.

Tourism

One of the jewels of the Mekong

The tourism potential for GMS is enormous. The Mekong subregion's rich cultural heritage and unique natural geography make it an attractive tourist destination. The GMS countries are promoting the subregion as a single tourist destination through joint marketing efforts and capacity building. Nearly 16 million tourists visited the GMS in 2004, with expenditures valued at $12 billion.

A GMS tourism strategy for 2006-2015 is being developed that supports a holistic and coordinated approach to tourism development, including the implementation of high-priority tourism infrastructure projects, and the promotion of pro-poor and environment-friendly tourism.

Infrastructure development is giving a boost to commerce and trade.

Trade

Connectivity through infrastructure development has given a boost to trade. Total exports of the GMS countries tripled from 1992 to 2003, and intra-regional trade as a proportion of total trade increased from about 6 percent in 1992 to about 15 percent in 2003.

Economic corridors are developing along transport routes-promoting increased production and trade. Commerce is thriving, especially along the borders. Roadside business is booming. And agriculture products are finding new markets. All these are helping to create jobs and increase incomes.

Transport and trade facilitation are promoting smoother cross-border flows of goods and people. By 2003, all GMS countries had ratified the Cross-Border Transport Agreement to reduce the regulatory impediments to cross-border traffic. A Strategic Framework for Action on Trade Facilitation and Investment is being prepared which will further simplify and harmonize customs procedures, streamline inspection and quarantine measures, develop trade logistics, and enhance the mobility of business people.

Investment

Investment opportunities are presented in several meetings.

The investment requirements of the GMS region are very substantial. It is therefore essential that public and private resources are mobilized to meet the financing needs. Rapid economic growth in the GMS has increased its attractiveness for investment. Foreign Direct Investment (FDI) inflows to GMS countries have shown improvements. In addition, the GMS countries have taken measures to enhance the investment climate, including improvements in the legal framework, incentives regime and the streamlining of investment procedures. In 2000, the GMS Business Forum was established to promote investment in the region. The GMS Program also arranged special GMS events to publicize the investment opportunities in the GMS region. These have proven to be quite successful.

Agriculture development is key to raising rural incomes.

Agriculture

Sustainable agriculture growth is crucial to reducing poverty and achieving the Millennium Development Goals given that poverty in the GMS is largely rural in nature. The GMS Program helps poverty reduction in the GMS through partnerships with rural communities to promote agriculture trade, food security and sustainable livelihoods. Enhanced connectivity also helps expand market opportunities.

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