Regional : Support for Implementing the Action Plan for Transport and Trade Facilitation in the Greater Mekong Subregion (Subproject 2)

Industry and trade / Trade and services

Transport / Multimodal logistics

At the 16th Ministerial Conference in Hanoi, Viet Nam in August 2010, the GMS Ministers endorsed a GMS Transport and Trade Facilitation Action Program (TTF AP) for 2011-2016, viewed as essential to promoting GMS competitiveness and accelerating transformation of transport corridors into economic corridors. Given the TTF APs importance, the Ministers requested ADB to facilitate its implementation as the lead development partner for TTF. Subsequently, ADB approved the Regional Policy and Advisory Technical Assistance Cluster (C-R-PATA) on Support for Implementing the Action Plan for Transport and Trade Facilitation in the GMS on 26 November 2010 in an aggregate amount not exceeding the equivalent of $5,700,000 to be financed by the Government of Australia and administered by the ADB. Implementation of the C-R-PATA is to be undertaken in phases through 3 subprojects (SPs). SP1 was approved on 29 August 2011 and completed in 31 July 2014.

Given the lessons learned under SP1 and a refined scope to support the remaining TTF issues and challenges, ADB and the Australian Government agreed to combine the SP2 and SP3. The SP2 was approved on 28 October 2014 and will cover the remaining timeframe period of 31 October 2014 through 31 December 2016. The SP2 therefore would constitute as the final phase of the Cluster TA. The refined scope of SP2 incorporates the feedback from extensive consultations with country counterparts and development partners supporting TTF initiatives

(i) Faster, easier, cheaper, and more inclusive cross-border transport and trade;

(ii) Improved coordination between national, subregional, regional and multilateral commitments and activities, with particular focus on customs transit

2. Expanding transport rights and traffic rights

2.1 Mapping Completed for harmonized bilateral and trilateral transport agreements

2.2 Cross-border traffic rights expanded and routes extended

2.3 Road usage charge scheme designed

3. Developing subregional trade logistics systems for more competitive services

3.1 Private sector transport operators and logistics services supported in CLMV

1. Strengthening Transit Operations

1.1 CLMV countries are better prepared to implement a GMS Electronic Customs Transit System (eCTS)

1.2 GMS transit and inland customs clearance procedures are aligned with international best practices

1.3 Coordinated risk management and subregional Authorized Transit Traders Scheme is developed

1.4 Second Joint Customs inspection is piloted

1.1 CLMV countries are better prepared to implement a GMS Electronic Customs Transit System (eCTS)

An introductory workshop on preparations to implement the ASEAN Customs Transit System (ACTS) with the Myanmar Department of Customs was held in Yangon on 19-20 February 2015. A detailed presentation of the ACTS was given as well as an overview gained of Customs automation as part of the planned new Myanmar Automated Cargo Clearance SYSTEM (MACCS), based on Japans NACCS and NCIS systems, with financial support from JICA. The main output of the workshop was an agreement on a draft 2015/2016 action plan, which will be developed further to cover IT aspects (along the East-West Economic Corridor or EWEC), customs procedures and training to help Myanmar adopt the ACTS early in 2017, following completion of the North-South demonstration project between Singapore, Malaysia and Thailand. Similar activities were held in the Phnom Penh, Cambodia, on 4-5 May 2015; and Vientiane, Lao PDR on 11-12 May 2015.

The second round of technical discussion on the ACTS was completed in October-November 2016 as follows: 12-15 October in Vientiane; 19-22 October in Hanoi; 9-12 November in Phnom Penh; and 16-19 November in Yangon. In this discussions, the ACTS technical and functional specifications, ACTS documentation, and hardware and software requirements were presented, together with a live simulation (for Customs, other government agencies and the private sector) of the European NCTS system on which the ACTS is based. Also, technical discussion was completed in Kunming, PRC on 17 March 2016.

The gap analyses (for business processes, IT and legal systems) in CLMV and Output 1 work plans / budgets for a full range of ACTS preparation activities with Customs, OGAs and the private sector for implementation in 2016 were also completed.

A series of follow up discussions on the work plan was conducted with the CLMV countries in June-July 2016, and a firm has been mobilized to implement the work plan in January 2017. A detailed implementation work plan has been finalized, taking into account the outcome of the coordination session with ASEAN Secretariat on the updates of ACTS and consultation with the private sector. The implementation would be carried out in close coordination with the ASEAN Secretariat in their on-going ACTS pilot between Singapore- Malaysia-Thailand.

Kick-off meetings with ADB, the ASEAN Secretariat and EU ARISE Teams (ACTS Consortium and Intrasoft International) responsible, respectively, were organized for the overall ACTS project, implementation of the ACTS pilot and development of the ACTS applications; and a detailed ACTS inception report identifying critical project risks and assumptions and flaws in the activity intervention logic was completed.

1.2 GMS transit and inland customs clearance procedures are aligned with international best practices.

A final draft of amendments to the 1999 GMS Cross Border Transport Facilitation Agreement (CBTA) to align the transit arrangements under the CBTA with those of the ACTS, commitments made under the WTO Trade Facilitation Agreement (TFA), and current international best practice has been completed and submitted to the CBTA Joint Committee at their recent 5th Meeting in December 2016.

The draft was developed in consultation with the countries, and presents annotation of the current CBTA texts based on transposition of the CBTA, its Annexes and Protocols into a Word-document matrix, allowing Article-specific comments and recommendations for instrument of the Agreement in line with the agreed methodology was circulated including an executive summary and traffic light coded instruments per perceived need for revision. Deliberation on the revised text of CBTA will commence in 2018 with a view to finalise the revised text in 2020.

In large part, the preparatory work for a revised and updated CBTA 2.0' in the form of annotated copies (in matrix form, explaining the rationale for updates and amendments) of the CBTA main text, Annexes and Protocols, and clean updated copies of the same, is complete. However, with the GMS countries preferring to focus on Early Harvest' CBTA implementation (see below), a decision was taken to set aside discussions on CBTA revision until after the Early Harvest' launch. (see section 2.2)

1.3 Coordinated risk management and subregional Authorized Transit Traders Scheme is developed

The suggested approach was to gather information, as a precursor to the tabling and subsequent development of common parameters for coordinated risk management in the GMS, linked to those of the broader ASEAN region; including the planned ACTS Authorized Transit Traders (ATT) compliance scheme as part of the ACTS.

In the period to June 2015, materials were collected from Cambodia, Lao PDR and Myanmar. The planned mobilization of external resources was deferred, however, due to overlap with activities undertaken under the JFPR funded RETA 8707 Strengthening Trade Facilitation in the Greater Mekong Subregion through Partnership with the Private sector (US$ 1.5 million) project, which also has a focus on RM. As such, a decision was taken to focus SP2 activities on RM in relation to Single Stop and Single Window Inspection, especially since clear weaknesses in current RM practice emerged at the July-August 2015 SP2 border visits in Cambodia, Lao PDR, Thailand and Vietnam. Weaknesses included high (up to 100%) levels of physical inspection, lack of differentiated inspection techniques, absence of line-release, and lack of frontier post feedback to update trader profiles. SSI/SWI operations manual has been developed for Dansavanh Lao Bao, which will partly address these issues. The manuals would be used as template for subsequent use elsewhere in the region.

1.4 Second Joint Customs inspection is piloted

Consultations and site visits were undertaken to review of the experiences of Lao PDR and Vietnam in implementing Single Stop Inspection as part of their coordinated border management (CBM) initiatives at the Lao Bao-Dansavanh border along the East West Economic Corridor. Support has also been provided in the conduct of joint task force meetings to discuss future SSI system in Mukdahan-Savannakhet.

The TA organized, facilitated and intermediated three Joint Task Force Meetings (held in Mukdahan and Savannakhet on 10 to 11 August, 21 to 23 September, and 9 to 11 November) between the Customs, Immigration, Quarantine, Transport and Foreign Affairs agencies of Thailand and Lao PDR to revise, develop and operationalize their (unimplemented) 2005 MOU on the Initial Implementation of the GMS CBTA at the Savannakhet - Mukdahan border crossing. It has also supported the drafting, discussion and further amendment of an addendum to the 2005 Savannakhet - Mukdahan MOU together with detailed technical arrangements for Customs, Immigration and Quarantine (covering human, animal, plant and health product inspection) and consolidated revised MOU text for signature by Lao PDR and Thailand in early 2016. Furthermore, it assisted in the coordination of a meeting on the technical arrangements for health product quarantine and inspection using SSI/SWI between Thailand and Lao PDR held in Udon Thani, Thailand on 28 and 29 October 2015 and drafted an equivalent revised MOU for the border crossings at Mae Sot Myawaddy and Mae Sai Tachilek between Myanmar and Thailand, together with preparatory discussions between NTFC leaders on 4 December 2015 in anticipation of formal negotiations and historic (re-)opening of the Myanmar transport market.

The TA organized and facilitated the discussions, process identification, and validation and document gathering for the development of the SSI/SWI Operations Manual at the Lao Bao (VIE) - Dansavanh (LAO) border crossing. Consultations were also conducted to validate the findings before finalizing the operation manual. Equipment procurement to improve current Common Control Area (CCA) facilities at Lao Bao Dansavanh have also been completed.

A language training course for border officials at the Lao Bao (VIE) - Dansavanh (LAO) border crossing has also been conducted, in collaboration with Hue University College of Foreign Languages. The language training course is expected to enhance communication between border officials of Viet Nam and Lao PDR who will need to work side by side in SSI/SWI system. 157 border officials were trained for the first round of the course. The TA also produced a Vietnamese-Lao-English phrase book for easy reference by the border officials in operating SSI/SWI.

2.1 Mapping Completed for harmonized bilateral and trilateral transport agreements

Consolidation of all the available (draft) transport agreements has been completed. Mapping of these agreements are currently being undertaken with a view to develop a common template to promote a more coordinated subregional approach to transport sector liberalization. In the case of tripartite or plurilateral agreements, they should also, necessarily, align with broader regional policy, such as ASEAN arrangements for transit transport. The template would serve as reference in deliberating new transport agreements and/or review existing agreements.

2.2 Cross border traffic rights expanded, and routes extended

The TA facilitated countries deliberation on the review of the CBTA texts. Recognizing the need to also implement concrete measure on the ground, the TA also facilitated the development of the MOU on Early Harvest' implementation of the CBTA, which will allow the movement of commercial and passenger vehicles along the CBTA Protocol 1 route network across the GMS and was signed by all the countries on 15 March 2018. Supporting documents for Implementation of the MOU such as (i) permits; (ii) Temporary Admission Documents (TADs); (iii) training and outreach materials; and (iv) implementation guides were prepared, printed and published online at https://greatermekong.org/early-harvest-implementation-cbta. As the MOU entered into force, the TA provided further support to countries as they prepared for the implementation of the Early Harvest' by training officials, briefing transport operators, issuing administrative circulars, the GMS Transport Permits and TADs, and compiling and exchanging national registers with other countries. To date, training of officials and briefing of transport operators were conducted for Lao PDR, Vietnam, Thailand and PRC. The TA also provided support by meeting with countries as requested, such as on 16 - 18 January 2017 in Vientiane with Lao PDR MPWT and Customs to discuss gap assessment for CBTA Early Harvest implementation. Early Harvest' implementation was launched on 1 August 2018 among GMS 5 with Myanmar joining in June 2020.

As part of enhancing Myanmar readiness to implement the subregional transport permit under the early harvest MOU, the TA facilitated discussion of the Bilateral Exchange of Traffic Rights for Cross Border Transport in the form of MOU on the IICBTA between Myanmar and Thailand on 30 - 31 August 2017, with further discussions conducted on 7 - 9 July 2018. The bilateral MOU was finalized and signed on 13 March 2019 and will also serve as template for subsequent negotiations between Myanmar- Lao PDR and Myanmar PRC. In the meantime, trainings for officials and private sector outreach were conducted in Yangon and Mwayaddy on 24 and 27 August 2018, respectively, to present the mechanics of and receive feedback about the Myanmar Thailand IICBTA implementation.

In addition to the CBTA implementation, the TA has also facilitated the conclusion of the revision to the Thailand-Cambodia bilateral transport agreement, which was then signed by the two contracting parties in December 2016. The revised agreement increased the traffic right quota from 40 to 150.

Mapping, ad referendum discussion and negotiations for the extension of corridors, routes and border crossings (the route network along which GMS Road Transport Permit bearing vehicles may operate) under CBTA Protocol 1 have been completed. The outcomes of these negotiations are reflected in a final draft Memorandum of Understanding on the Opening of Additional Routes and Border Crossings under Protocol 1 of the CBTA, and revised List of Corridors, Routes and Border Crossings, attached to the MoU. This MoU shall be signed with a view to its operationalization by 1 June 2019, with the route network available for _Early Harvest_ operations.

Aside from land transport expansion of routes and increase of traffic rights for land transport, the TA supported the development of a High-Level Framework for GMS Railways for an Improved Cross-border Rail Transport Connectivity in the GMS. Meetings were conducted on 3-4 May, 17-18 July, 27-28 September 2017 and 25-26 January 4 5 June 2018, and September 2018 to develop and deliver multilateral and bilateral railway agreements for railway network development and operation in the GMS. The TA also supported the conduct of the GMRA Board of Directors' Meeting in March 2018. A negotiation meeting will be held on May 2019 to discuss the amendments of the draft Revised Framework Agreement.

2.3 Road usage charge scheme designed

Lao PDR has an extensive road network and as a transit country faces road maintenance charges many times higher than those of its ASEAN neighbors (as a percentage of both population and GDP). The TA supported the development of Road User Maintenance Charge in Lao PDR which will be launched in stages, with the pilot stage scheduled to be launched in August 2018, parallel with the launching of and covering the routes under the MOU on the Early Harvest Implementation of the CBTA. The launch was delayed by the need for further instructions to be issued by the government agencies concerned (MPWT and Customs) and further training to be given to Lao officials on implementation of the scheme. The design of the ticket format (with translation and printing) was approved with specific numbering formats for each border crossing point.

3.1 Private sector transport operators and logistics services supported in CLMV

In 2015/2016, the SP2 conducted private sector briefings for transport companies and freight forwarders in CLMV and secured private sector feedback for incorporation into 2017 activities, including the identification of candidate ACTS _pilot companies_. In-depth discussions were concluded with larger transport operators (DHL, Linfox, Toll Group, Nissin), with a view to developing policy papers to help orient future TTF policy directions. Relevant gender actions were also reviewed and discussed, with a focus on private sector engagement and ensuring gender sensitive approaches to selected GMS border control(s). However, delays in the launch of the Early Harvest' and in the live roll out of the ACTS made it impossible to continue such activities. As such, private sector support will be given full attention pursuant to the launch of the CBTA Early Harvest'.

The monitoring and evaluation review of the EWEC focusing on route segment-specific time-cost-distance analysis, done in collaboration with the Economist Intelligence Unit also experienced delays (linked to country approvals for the necessary fieldwork and the capacity of the EIU team) with only the data collection work completed.

As the MOU on Early Harvest implementation of CBTA is launched, engagement with the private sector will be more intensive, particularly in monitoring the CBTA implementation as well as supporting the private sector in maximizing benefits from the CBTA.

As a related activity, ADB in close collaboration with the Australian Government Department of Foreign Affairs and Trade, organized the Second GMS TTF DP meeting on 12-13 March 2015 in Bangkok, Thailand. The Meeting was attended by representatives from the ASEAN Secretariat, European Union (EU), USAID, Japan International Cooperation Agency (JICA), Myanmar and Lao PDR, the World Bank (WB), UNESCAP and World Customs Organization Asia Pacific Regional Office for Capacity Building (WCO ROCB/AP). The DPs exchanged information on the progress of support to TTF. DPs also exchanged views on the possible development of a common monitoring and evaluation tools used for TTF support. The meeting also discussed the draft GMS TTF Partnership Program which DPs agreed to update regularly. A pamphlet on the ADB GMS Transport and Trade Facilitation Program has also been produced and launched at the recent GMS Ministerial Conference on September 2015 in Naw Pyi Taw, Myanmar.

The project also supported preparation of the 8th GMS Economic Corridors Forum (editing presentations by GMS speakers) and continues to facilitate TTF Development Partner co-ordination. There is also increasing cross-over with ASEAN, as the ASEAN Secretariat and ASEC-support facilities draw on GMS experience to help launch traffic

rights implementation (permit and TAD issuance) in the ASEAN-10.