Upgrading the road link between Phnom Penh and Ho Chi Minh City marks a milestone in the Greater Mekong Subregion (GMS) initiative to promote economic cooperation in a formerly conflict-torn area.

Cambodia - Chim Somphorse cradles her 10-month-old son, Chea Dy, in the back of a tidy motorcycle shop in southern Cambodia. Nearby, her husband, Chea Noeun, works quietly on a motorcycle engine.

Before the highway between Phnom Penh and Ho Chi Minh City was improved and brought a steady flow of motorcycles and other vehicles to the area, Chim Somphorse worked in a garment factory.

Today, she and her husband run a small motorcycle repair shop that also sells gasoline and helps repair flat tires. She earns about the same amount of money, but her time is spent with her family rather than at the factory.

"Life is easier now," she said. "We own our own business and I can stay with my baby all day."

The Phnom Penh-Ho Chi Minh City Highway, where the motorcycle shop is located, is the first multicountry ADB loan project that covers both Cambodia and Viet Nam. It marks a milestone in the Greater Mekong Subregion (GMS) initiative to promote economic cooperation in a formerly conflict-torn area.

The project began in 1998 when ADB approved loans amounting to $40 million for Cambodia and $100 million for Viet Nam to upgrade an existing - but rough - road between the two cities.

About 240 kilometers (km) of the road - 160 km in Cambodia and 80 km in Viet Nam - were upgraded to increase traffic and trade between Cambodia and Viet Nam. Border facilities were also improved and efforts are under way to cut bureaucratic requirements for border crossings.

"This is one of the first borders in the GMS where we are trying this," said Nou Vaddhananak, project manager for the Cambodian component of the highway. "This is a model project."

Smooth Road Leads to Business Boom

What used to be a long, grueling ride over rough road is now a much quicker trip over mostly smooth, paved surfaces. Tour buses can now be seen zipping between the two cities throughout the day, and restaurants and other businesses line the highway, offering conveniences for travelers.

"Traffic on the road increased immediately after it was improved," said Javed Sultan, a member of the ADB consulting team that supervised the Vietnamese section of the highway. "In fact, the highway has become so popular so quickly that we now have bottlenecks in some areas that we need to work out."

According to an ADB report, each year between 2003 and 2006, the total value of trade through the border increased by about 41%, the number of people crossing the border increased by 53%, and the number of vehicles crossing the border grew by 38%. The growth in traffic alone generated more than $450,000 in toll revenue for the Government of Viet Nam in 2004.

In Cambodia, travel time from Phnom Penh to the border has been reduced by 30%. Similar reductions have been achieved in Viet Nam, especially in urban areas. Several bus routes have reduced their trip times by about 28%.

"The project continues to produce sizable economic benefits, including higher levels of traffic, improved traffic flow, increased transport of goods, higher toll revenues, and enhanced bus services for passengers using public transport," an ADB study noted.

Dramatic Rise in Land Prices, Industry

Do Ngoc Dzung, vice general director of the Ministry of Transport, who is overseeing the project on the Vietnamese side, said the impact of the road on the area near Ho Chi Minh City has been significant. For instance, new industrial areas have already been built near the project roads, with one industrial area employing over 10,000 people.

"Trade between the two countries, including fish and sugarcane, is increasing," he said.

At the Cambodia side of the border, the increase in both passenger and goods traffic from Viet Nam has led to the rise of several hotels that attract large numbers of tourists. Ancillary services, such as restaurants and gas stations, have also increased along the road. An industrial park close to the border has also recently opened, providing employment opportunities for the local residents.

The most visible manifestation of increased road use is the tour buses that can be seen throughout the day. Highway improvements have resulted in reduced travel time and ticket prices for passengers, and lower maintenance costs for bus companies and other road users.

"In addition, firms are producing higher-quality service with larger, more comfortable, and, in some cases, air-conditioned buses," the report said. "Transport companies are employing more drivers, using more vehicles, moving more passengers, and generally operating more frequent trips between destinations."

The faster travel time and more comfortable buses have pushed up demand for bus tickets between the two cities. This has triggered fierce competition among bus companies, which have reduced ticket prices from $20 one way to as low as $5.

For travelers between Ho Chi Minh City and Phnom Penh, this new fast and affordable land link means an end to long and difficult overland journeys on rough roads - or expensive flights.

For Cheng Sophon, a 32-year-old fruit vendor who works on the Cambodian side of the highway, the growth in traffic flow has resulted in an increase in her income. She uses the extra money to buy books and support her 12-year-old son and 9-year-old daughter.

"My business has doubled since the road was improved," Ms. Sophon said. "There are customers all day now and they are not only Cambodians, but also Vietnamese and people from other countries. The whole town is busier now."

Mr. Dzung, who is with the Viet Nam Ministry of Transport, points out that the greatest economic benefits from the road are still to come as its use increases.

"This road is a major contribution to the economic development of Ho Chi Minh City and an important way for us to work together with our neighbors," he said.