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Old Southeast Asia Combat Zone Gives Way to Burgeoning Trade Corridor

News Release | 11 June 2009

MANILA, PHILIPPINES - Commercial trucks from Thailand and Viet Nam are able to enter each others' territory for the first time to deliver and pick up goods following today's formal exchange of traffic rights and introduction of a regional customs transit system among the two countries and Lao People's Democratic Republic.

Overland shipments between Thailand and Viet Nam along the East-West Economic Corridor - which runs from Danang, Viet Nam, through Savannakhet, Lao PDR and into Thailand - can now proceed directly to their final destination. Shipments previously needed to be unloaded and re-loaded in Lao territory.

The latest initiatives, in tandem with recently-implemented single-window and single-stop border inspections, will sharply reduce overland transport time and boost trade and economic development.

"Ten years after Laos, Thailand and Viet Nam first agreed to ease cross-border traffic rules, the promise of that agreement is truly being realized," said Arjun Thapan, Director General of ADB's Southeast Asia Department.

"Narrow dirt trails that were once used to transport refugees and military hardware have given way to modern highways carrying electronic goods, exotic fruits and tourists," said Mr. Thapan.

Initially, 1,200 commercial vehicles - 400 from each country - have been provided with permits to enter into neighboring countries.

Under the Cross Border Transport Agreement, some goods shipments can be certified as 'low risk', allowing the shipments to be fast tracked at border-crossing check points.

Container seals will now be routinely accepted for the duration of the transit route, which will impede theft and damage previously caused by multiple container openings and unloadings.

ADB first supported the development of the East-West Economic Corridor through a $57 million concessional loan in 1999, primarily to fund the construction and upgrade of roads in Viet Nam and Lao PDR.

"Building international-standard roads was an important start, but not enough by itself," said Mr. Thapan. "Governments also had to slash the bureaucratic red tape that restricted the cross-border flow of goods and people."

"Because of the progress these countries have made, trade and tourism will prosper further.You can now set out from Thailand, do business in Laos, and arrive in time for dinner at Danang in Viet Nam - all in the space of a single day," said Mr. Thapan.

Since the completion of the second Mekong Bridge in December 2006 - the last link of the Corridor - trade has already dramatically increased.

Today's traffic rights exchange and customs transit system are expected to further reduce transport costs, producing even more dramatic increases in inter-regional trade volumes.

Ceremonies to commemorate today's exchange of traffic rights and customs transit system are being held at the two major border crossing points along the East West Economic Corridor: Lao Bao, Viet Nam-Dansavanh, Lao PDR; and Savannakhet, Lao PDR-Mukdahan, Thailand.

Today's ceremonies precede the 15th Greater Mekong Subregion (GMS) Ministerial Conference, which will be held in Petchburi Province, Thailand on June 17-19. At the Conference, government officials from the six GMS nations will discuss measures to strengthen transport, trade and tourism links, boost competitiveness, improve access to social services, increase energy access and security, and protect the environment.