GMS Phnom Penh Plan for Development Management Trade Policy and Development in the GMS

Speech | 13 February 2011

Welcome remarks by Paul J. Heytens, ADB Country Director, Beijing, People's Republic of China

Distinguished participants from the GMS countries, fellow ADB colleagues, ladies and gentlemen, good morning

It is my great pleasure to be here today to open the learning program on Trade Policy and Development in the Greater Mekong Subregion (GMS) and to welcome all the participants from the GMS countries to ADB's Resident Mission here in the People's Republic of China (PRC). This is the sixth learning program on Trade Policy conducted under the framework of the Phnom Penh Plan for Development Management — or the PPP — and the second one held in Beijing. A total of 111 senior civil servants have been trained under this program since it was first offered in 2006. Three of the graduates from this course have proceeded to further train as PPP Fellows at Harvard University.

My colleague, Alfredo Perdiguero, will soon explain the rationale, goals and achievements of the PPP. But please allow me to briefly recall the PPP's vision when it was launched at the first GMS Summit in 2002. The vision for the PPP is to build a core of highly trained civil servants with the capacity to cope and manage the complex process of development and change. This was particularly important for the transition economies that were then in the midst of market-opening reform processes, which needed to build new institutions, and change their legal and regulatory regimes.

The PPP, however, is playing a key role for yet a larger reason. As you are all aware, the six countries that you represent are participating in a regional cooperation program that we all know as the GMS Program, which started in 1992. Regional cooperation among the six countries was the means for linking the six economies, thereby expanding their limited market base, increasing trade and investment and stimulating economic growth. Infrastructure connectivity was the basic building block of the Program, especially during the initial years. ADB played a key role by providing a platform for regional dialogue and consultation. It also provided technical and financial assistance to priority subregional development projects.

Within the span of a decade, the Subregion has seen the emergence of a more integrated regional market. Intra-regional trade expanded, and as the GMS economies opened up, so did trade with the rest of the world. Economic progress has translated into marked improvements in living standards and human development outcomes as well as dramatic reductions in poverty.

Unilateral policy reforms and greater economic cooperation through the GMS Program in particular have led to positive trade and investment growth. More recently, membership in the WTO, participation in the ASEAN Free Trade Agreement (AFTA), ASEAN China-FTA and other preferential trading agreements have driven reforms. Despite these achievements, the trade policy reform agenda in the GMS countries remains incomplete. There is a need to further rationalize tariffs, and reexamine national approaches to trade diversification to mitigate vulnerabilities to external shocks such as those experienced in the recent crisis. Apart from diversification of the export commodity base to new markets and sectors, it may also be necessary to diversify and expand the number of export markets.

The experience of GMS countries during the recent crisis highlights the risks associated with significant dependence on extra-regional demand for exports, especially the US and EU markets. Finally, there are also issues associated with cross-border trade and its role in enhancing the subregion's competitiveness and promoting the GMS countries' participation in global value-chains. This involves maximizing the complementarities and geographic proximities among the GMS countries through trade and transport facilitation measures.

The GMS Leaders have consistently reaffirmed the GMS countries' commitment to achieve the vision of an integrated, harmonious and prosperous subregion. The three-tiered strategy to reach this vision was improved infrastructure Connectivity, enhanced Competitiveness in trade, and a sense of Community.

With connectivity infrastructure mainly in place, the GMS Program currently faces the challenges of transforming transport corridors into genuine economic corridors. This would be achieved by removing the regulatory and institutional impediments to cross-border flows of goods and people, providing businesses with key facilities, and developing logistics and other services needed to undertake effective cross-border trade transactions.

These measures are needed for the subregion to increase cross-border flows and, consequently, enhance competitiveness — the second of the three Cs. Thus, at their third Summit in March 2008, the GMS Leaders adopted the theme "Enhancing Competitiveness through Greater Connectivity." It is in this context that this Learning Program on Trade Policy is important. Capacities are needed at individual and institutional levels to effectively plan and manage a rapidly evolving and complex subregional trade development agenda. The goal of competitiveness rests on civil servants like you, who will design and implement the requisite policies and programs to effect substantive changes in the subregion in general, and your countries in particular.

Developing human resources is key to advancing GMS subregional cooperation and integration. The need for a competent and skilled civil service to manage national and regional programs is, in fact, an essential element of the overall regional integration effort. Only by developing a holistic and multi-disciplinary perspective can GMS civil servants effectively manage transitional issues embedded in the integration process. Learning programs such as this on Trade Policy and Development has been designed to provide trade practitioners with perspectives, tools, frameworks and key concepts to strengthen their competencies in developing and implementing functional and strategic policy and program interventions for trade.

I hope that this program will further broaden your horizons and deepen your insights on the many complex dimensions of trade policy. I wish you a very fruitful course and hope that you have a memorable experience in this exciting city of Beijing.

Thank you.