GMS Economic Corridor GMS Economic Corridor Development and TradeDevelopment and Trade

By Arjun GoswamiBy Arjun GoswamiDirector, Regional Cooperation and Operations Director, Regional Cooperation and Operations

Coordination Division, Southeast Asia DepartmentCoordination Division, Southeast Asia Department Asian Development BankAsian Development Bank

Presentation OutlinePresentation Outline

• 1. GMS in a Nutshell1. GMS in a Nutshell

• 2. The Economic Corridor Approach 2. The Economic Corridor Approach

• 3. The Hard Infrastructure Component and 3. The Hard Infrastructure Component and Investments Impact of Corridor Development Investments Impact of Corridor Development

• 4. The EWEC: the first GMS economic corridor4. The EWEC: the first GMS economic corridor

• 5. The Trade Impact of the EWEC5. The Trade Impact of the EWEC

• 6. The Poverty Reduction Impact of the EWEC6. The Poverty Reduction Impact of the EWEC

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GMS Program in a NutshellGMS Program in a Nutshell• Participating Countries: Participating Countries:

Cambodia, People’s Republic of Cambodia, People’s Republic of China, Lao PDR, Myanmar, China, Lao PDR, Myanmar, Thailand, and Viet NamThailand, and Viet Nam

• Strategic Priorities:Strategic Priorities:o Vision – a Vision – a more integrated, more integrated,

prosperous, and harmonious prosperous, and harmonious subregionsubregion

o ““3Cs” – Connectivity, 3Cs” – Connectivity, Competitiveness, CommunityCompetitiveness, Community

• GMS projects GMS projects – totaled $14 billion – totaled $14 billion as of end-2010as of end-2010

The Economic Corridor ApproachThe Economic Corridor Approach

Infrastructure is developed in specific geographical areas based on Infrastructure is developed in specific geographical areas based on economic potential.economic potential.

Successful economic corridors serve as:Successful economic corridors serve as:

• Links to major markets/corridor nodal points;Links to major markets/corridor nodal points;

• Arteries of trade, open opportunities for participation in regional Arteries of trade, open opportunities for participation in regional and global value chains;and global value chains;

• Catalyze private investment;Catalyze private investment;

• Provide demonstration effects;Provide demonstration effects;

• Extend connectivity to remote locations.Extend connectivity to remote locations.

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Corridor development over timeCorridor development over time

• First round of corridor investments: building the First round of corridor investments: building the infrastructure base – mainly transport (bulk of GMS infrastructure base – mainly transport (bulk of GMS projects so far), then extends to other basic infra, e.g., projects so far), then extends to other basic infra, e.g., power, telecomspower, telecoms

• Subsequent development requires other investments:Subsequent development requires other investments:o Trade and logistics Trade and logistics -- logistics facilities and services -- e.g., -- logistics facilities and services -- e.g.,

dry ports/inland container depots, warehouses, border SEZs, dry ports/inland container depots, warehouses, border SEZs, inter-modal transport linksinter-modal transport links

o Urban development Urban development -- utilities (urban water supply, power -- utilities (urban water supply, power distribution, ICT), urban sanitation facilities, urban mass distribution, ICT), urban sanitation facilities, urban mass transporttransport

o Others Others – investments diversified across sectors in more – investments diversified across sectors in more advanced stagesadvanced stages

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LAO: East-West Corridor (Phin-Dansavanh)

VIE: East-West Corridor (Lao Bao-Dong Ha)

JBIC-assisted 2nd Mekong International Bridge

JBIC-assisted Hai Van Tunnel Construction and Da Nang Port Improvement

With assistance from the Royal Thai Government

East-West Economic CorridorEast-West Economic Corridor

Average Annual Growth Rate of Average Annual Growth Rate of ExportsExports

2000-2009 (in %)2000-2009 (in %)

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Exports Lao PDR Myanmar Thailand Vietnam GMS World

Lao PDR 0 NA 22.44 12.88 18.01 13.16

Myanmar NA 0 30.13 46.35 27.37 15.90

Thailand 17.58 13.28 0 20.99 20.18 9.24

Vietnam 11.11 24.47 15.72 0 12.50 16.46 Figures are for the year 2000-2008..

Data Source: United Nations Commodity Trade Statistics Database. Growth rates calculated.

Export Performance of Thai–Lao Export Performance of Thai–Lao EWEC Border Trade, 1997–2008EWEC Border Trade, 1997–2008

9Source: EWEC Strategy and Action Plan

Poverty Reduction Impact of the Poverty Reduction Impact of the EWECEWEC

Benefits from EWEC for Savannakhet Benefits from EWEC for Savannakhet Province, Lao PDR:Province, Lao PDR:

• Travel time and cost savings – e.g., bus trip from Travel time and cost savings – e.g., bus trip from border with Viet Nam to Savannakhet reduced border with Viet Nam to Savannakhet reduced from 12 to 3 hrsfrom 12 to 3 hrs

• New buildings, service and other commercial New buildings, service and other commercial facilities along Route 9facilities along Route 9

• FDI: increased from US$18M to US$200MFDI: increased from US$18M to US$200M• New income/livelihood opportunities for villagersNew income/livelihood opportunities for villagers• Improved access to schools and safe waterImproved access to schools and safe water• Poverty incidence down by 35% in SavannakhetPoverty incidence down by 35% in Savannakhet

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Thank YouThank You

For more information:For more information:on the GMS Program – visiton the GMS Program – visithttp://www.adb.org/gms On the midterm review of the GMS On the midterm review of the GMS

strategy – visit strategy – visit http://www.adb.org/documents/

reports/mid-term-review-gms/default.asp