Regional Connectivity in the Greater Mekong Subregion GMS Freight Transport Association (FRETA)

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Regional Connectivity in the Regional Connectivity in the Greater Mekong SubregionGreater Mekong Subregion

GMS Freight Transport Association GMS Freight Transport Association (FRETA)(FRETA)

Presentation to Regional Forum on Presentation to Regional Forum on ASEAN SME Regional Gateway – GMS ASEAN SME Regional Gateway – GMS

SME Biz Network, Khon Kaen, Thailand, SME Biz Network, Khon Kaen, Thailand, 6-10 September 20106-10 September 2010

ByByRattanatay Luanglatbandith, PhDRattanatay Luanglatbandith, PhD

Asian Development BankAsian Development BankThailand Resident MissionThailand Resident Mission

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ScopeScope1. GMS Infrastructure 1. GMS Infrastructure

ConnectivityConnectivity

2. Cross- Border Transport 2. Cross- Border Transport Agreement (CBTA) Agreement (CBTA)

3. Logistics status in the GMS 3. Logistics status in the GMS

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Thailand

Land area: 513 thou sq km

Population: 65.3 M

GDP per capita: US$2,727

Cambodia


Population: 13.8 M

GDP per capita: US$393

Myanmar


Population: 54.8 M


People’s Republic of China


Population: 93.8 M


(figures for Yunnan and Guangxi only)

Viet Nam


Population: 83.1 M


Lao PDR


Population: 5.6 M

GDP per capita: US$491The GMS in 2005

Land area: 2.6 M sq km

Population: 316 M


The Greater Mekong Subregion The Greater Mekong Subregion (GMS)(GMS)

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The Economic Corridor ApproachThe Economic Corridor ApproachInfrastructure is developed in specific geographical areas based on Infrastructure is developed in specific geographical areas based on

economic potential.economic potential.

Usually starts with transport links, but extends to other infrastructure as well as Usually starts with transport links, but extends to other infrastructure as well as the “software” for their optimal use.the “software” for their optimal use.

Some Characteristics of Economic Corridors:Some Characteristics of Economic Corridors:

• Create links to major markets;Create links to major markets;

• With nodal points – centers of enterprise development;With nodal points – centers of enterprise development;

• Extend the benefits of improved transport linkages to remote locations and Extend the benefits of improved transport linkages to remote locations and integrates them with more prosperous areas;integrates them with more prosperous areas;

• Open up investment opportunities;Open up investment opportunities;

• Promote synergies through the clustering of projects;Promote synergies through the clustering of projects;

• Provide demonstration effects.Provide demonstration effects.

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Existing Existing CorridorsCorridors

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North-South Economic North-South Economic CorridorCorridor

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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

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Mostly 4-lane highways; not a constraint to cross-

border traffic.

Upgrading to be completed by 2008 with

ADB and Japan assistance.

Bridge over Mekong to be financed by Japan

Mostly 4-lane highways; not a constraint to cross-

border traffic

Upgrading completed in 2007 with Thailand,

Korea, World Bank and ADB assistance.

Upgrading to be completed by 2010 with ADB, Korean, and Australian assistance.

Upgrading completed in 2007 with PRC

assistance.

In good condition

Upgrading to be completed by 2009 with

ADB and Japan assistance.

Upgrading of a section in Cambodia (70 km) to be completed by 2010 with

assistance from Viet Nam; Financing requested for

remaining sections.

GMS Southern Economic CorridorGMS Southern Economic CorridorRoadsRoads

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All GMS CorridorsAll GMS Corridors

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The GMS Cross-Border The GMS Cross-Border Transport Agreement (CBTA)Transport Agreement (CBTA)

What is the CBTA?What is the CBTA?

• Multilateral agreement ratified by all six Multilateral agreement ratified by all six GMS countriesGMS countries

• Purpose is to eliminate non-physical Purpose is to eliminate non-physical barriers to cross-border transport in the barriers to cross-border transport in the GMSGMS

• Includes references to existing Includes references to existing international conventions (such as the international conventions (such as the KYOTO)KYOTO)

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The GMS Cross-Border The GMS Cross-Border Transport Agreement (CBTA) Transport Agreement (CBTA)

(cont.)(cont.)• Covers in one document all the relevant aspects of Covers in one document all the relevant aspects of

cross-border transport facilitation, which includes:cross-border transport facilitation, which includes: Facilitation of cross border movement of goodsFacilitation of cross border movement of goods Single-stop/single-window inspectionSingle-stop/single-window inspection Harmonization/integration of systemsHarmonization/integration of systems Exchange of traffic rights Exchange of traffic rights Provision for transit trafficProvision for transit traffic Cross-border movement of personsCross-border movement of persons

• Has 20 implementing annexes and protocols that:Has 20 implementing annexes and protocols that:

- Applies to selected and mutually agreed routes and - Applies to selected and mutually agreed routes and points of entry and exit in the six countries.points of entry and exit in the six countries.

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Cross-Border Transport Agreement (CBTA)

Export/Transit Cargo

Export/Transit Cargo

As required

As required

“No-Man’s Zone”

C-L,C-V Q-L,Q-V

CCA

Physical Inspection

C-L,C-V Q-L,Q-V

CCA

Physical Inspection

Lao PDR Viet Nam

C-L+V Q-L+V I-L+V

I-V+L Q-V+L

C-V+L

C-Customs

I-Immigration

Q-Quarantine

L-Lao PDR

V-Viet Nam

CoverageCoverage

• Exchange of Exchange of Traffic RightsTraffic Rights

• Facilitation of Facilitation of Frontier-Frontier-Crossing Crossing FormalitiesFormalities

ComponentsComponents

• Framework Framework AgreementAgreement

• Annexes and Annexes and Protocols (A&P)Protocols (A&P)

• MOUs for Pilot MOUs for Pilot ImplementatioImplementationn

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Objectives of CBTAObjectives of CBTA• Facilitation of border crossing formalities Facilitation of border crossing formalities

(single window and single stop customs (single window and single stop customs inspection, coordinating of hours of operation; inspection, coordinating of hours of operation; and exchange of advance information and and exchange of advance information and clearance)clearance)

• Facilitate cross-border movement of people Facilitate cross-border movement of people (multi-entry visa, recognition of driver license)(multi-entry visa, recognition of driver license)

• Facilitate cross-border movement of goods Facilitate cross-border movement of goods (regional transit regime, phytosanitary and (regional transit regime, phytosanitary and veterinary inspection)veterinary inspection)

• Exchange of traffic rightsExchange of traffic rights• Requirements for admittance of road vehiclesRequirements for admittance of road vehicles• Institutional ArrangementsInstitutional Arrangements

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• Ruili – Muse

• Mohan – Boten

• Veune Kham – Dong Kralor

• Hat Lek – Cham Yeam

• Mukdahan – Savannakhet

• Lao-Bao – Dansavanh

• Aranyaprathet – Poipet

• Bavet – Moc Bai

• Hekou – Lao Cai

• Myawaddy – Mae Sot

• Mae Sai – Tachilek

• Houayxay – Chiang Khong

• Nam Phao – Cau Treo

• Chongmek – Wang Tao

• Nongkhai – Thanaleng

Geographic Geographic Coverage of Coverage of

CBTACBTA

FIRST PHASE (commencing in 2005/06)

SECOND PHASE (commencing in 2007)

THIRD PHASE (commencing in 2008/2009)

POTENTIAL NEW BORDER CROSSING

POINTS

YOUYIGUAN (PRC) - HUU NGHI (VIE)

THAKHEK (LAO) – HA TINH (VIE)

LORK (CAM) – XA XIA (VIE)

PLAN: BY 2009

FULL IMPLEMENTATION

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Status of CBTA ImplementationStatus of CBTA Implementation• All GMS countries signed 20 Annexes and All GMS countries signed 20 Annexes and

Protocols of CBTA.Protocols of CBTA.• PRC, Cambodia, Lao PDR and Vietnam PRC, Cambodia, Lao PDR and Vietnam

signed and ratified all 20 Annexes and signed and ratified all 20 Annexes and Protocols of CBTA.Protocols of CBTA.

• Thailand Ratified 11 Annexes and Thailand Ratified 11 Annexes and protocols, while Myanmar will ratify all of protocols, while Myanmar will ratify all of the Annexes and Protocols when it is ready the Annexes and Protocols when it is ready to implement CBTA.to implement CBTA.

• CBTA implementation very slow:- GMS CBTA implementation very slow:- GMS Leaders in 2008 asked to expedite CBTA Leaders in 2008 asked to expedite CBTA implementation to facilitate cross-border implementation to facilitate cross-border trade, investment and tourism in the GMS.trade, investment and tourism in the GMS.

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Status of CBTA ImplementationStatus of CBTA Implementation• Single-Window Inspection(SWI) being implemented at Single-Window Inspection(SWI) being implemented at

Savannakhet (Lao PDR) and Mukdahan (Thailand) Savannakhet (Lao PDR) and Mukdahan (Thailand) border checkpoints, and at Hekou (PRC)-Laokai border checkpoints, and at Hekou (PRC)-Laokai (Vietnam) border checkpoints.(Vietnam) border checkpoints.

• Single-Stop Inspection (SSI) being implemented at Single-Stop Inspection (SSI) being implemented at Dansavanh (Lao PDR) and Lao Bao (Vietnam) border Dansavanh (Lao PDR) and Lao Bao (Vietnam) border checkpoints.checkpoints.

• Tripartite Exchange of traffic rights along the East-West Tripartite Exchange of traffic rights along the East-West Economic Corridor to commence on 11 June 2009.Economic Corridor to commence on 11 June 2009.

• GMS Customs Transit System (CTS) and GMS GMS Customs Transit System (CTS) and GMS temporary transport permit in place along the East-temporary transport permit in place along the East-West Corridor but not widely used by operators, West Corridor but not widely used by operators, especially in Thailand due high cost/high guarantee especially in Thailand due high cost/high guarantee deposit required by Board of Trade of Thailand.deposit required by Board of Trade of Thailand.

• Exchange of traffic rights along the Southern Economic Exchange of traffic rights along the Southern Economic Corridor at Bavet(Cambodia) and Mocbai (Vietnam) Corridor at Bavet(Cambodia) and Mocbai (Vietnam) being implemented with quota increased from 40 to being implemented with quota increased from 40 to 150 in May 2009.150 in May 2009.

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Status of CBTA ImplementationStatus of CBTA Implementation• Addendum to implement exchange of traffic rights Addendum to implement exchange of traffic rights

along the Southern Economic Corridor at along the Southern Economic Corridor at Aranyaprathet Aranyaprathet –– Poipet with quota 40 signed on 17 Poipet with quota 40 signed on 17 September 2009. Thailand and Cambodia need to September 2009. Thailand and Cambodia need to reach agreement on location of new border reach agreement on location of new border checkpoints at Aranyaprathet checkpoints at Aranyaprathet –– Poipet, and possibly Poipet, and possibly reinstate rail link at Aranyaprathet reinstate rail link at Aranyaprathet –– Poipet. Poipet.

• GMS Customs Transit System (CTS) and GMS GMS Customs Transit System (CTS) and GMS temporary transport permit in place along the East-temporary transport permit in place along the East-West Corridor but not widely used by operators, West Corridor but not widely used by operators, especially in Thailand due high cost/high guarantee especially in Thailand due high cost/high guarantee deposit required by Board of Trade of Thailanddeposit required by Board of Trade of Thailand

• Manual Advance information Exchange being Manual Advance information Exchange being implemented at Dansavanh-Laobao border implemented at Dansavanh-Laobao border checkpoints;checkpoints;

• Exchange of traffic right between PRC and Vietnam Exchange of traffic right between PRC and Vietnam discussed and revised in July 2010. Agreement that discussed and revised in July 2010. Agreement that Vietnamese truck can now run up to Senzhen and Vietnamese truck can now run up to Senzhen and Chinese truck can run up to Hanoi and Haiphong Chinese truck can run up to Hanoi and Haiphong reached.reached.

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Key ImplementationKey Implementation Issues of Issues of CBTACBTA

• Ratification of the annexes and protocolsRatification of the annexes and protocols

• Capacity building at national and border levelsCapacity building at national and border levels

• Establishment of required border infrastructureEstablishment of required border infrastructure

• Development of ICT/MIS for efficient border Development of ICT/MIS for efficient border managementmanagement

• Passage of new legislation to establish various Passage of new legislation to establish various transport facilitation regimestransport facilitation regimes

• Continue to strengthen goodwill and trust among Continue to strengthen goodwill and trust among GMS countriesGMS countries

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Key constraints in freight (road) Key constraints in freight (road) transport in the GMStransport in the GMS

• Inconsistent standards of freight vehicles Inconsistent standards of freight vehicles • lack of ongoing road maintenance;lack of ongoing road maintenance;• trans-shipment of cargo at the borders creating trans-shipment of cargo at the borders creating

additional costs due to increased touch points additional costs due to increased touch points along the supply chain;along the supply chain;

• lack of complementary arrangements, such as lack of complementary arrangements, such as container freight depots, at border crossing container freight depots, at border crossing points to facilitate a hub & spoke model, bonded points to facilitate a hub & spoke model, bonded warehousing; warehousing;

• lack of professional industry standards for freight lack of professional industry standards for freight management, vehicle maintenance, driver management, vehicle maintenance, driver control, technology awareness, Health-Safety & control, technology awareness, Health-Safety & Environment etc,Environment etc,

• Low economic volume and thus low freight traffic, Low economic volume and thus low freight traffic, with border-crossing trade more than transit.with border-crossing trade more than transit.

The absence of standardization in freight transport The absence of standardization in freight transport business can be the biggest impediment in the business can be the biggest impediment in the progress of the regional trade.progress of the regional trade.

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Logistics in the GMSLogistics in the GMS• Different degrees of logistics development Different degrees of logistics development

among GMS countries with PRC more among GMS countries with PRC more advanced followed by Thailand. CLVM lack advanced followed by Thailand. CLVM lack behind.behind.

• Logistics services providers, shippers, Logistics services providers, shippers, transport operators and freight forwarders are transport operators and freight forwarders are mainly national centric with little or no mainly national centric with little or no regional orientation. High competition with regional orientation. High competition with international logistics services providersinternational logistics services providers

• Overall lack of institutional and legal Overall lack of institutional and legal framework governing logistics development in framework governing logistics development in most GMS countries, and no single agency or most GMS countries, and no single agency or institutional entity responsible for logistics institutional entity responsible for logistics development at the national level.development at the national level.

• No coherent regional logistics development No coherent regional logistics development policy and plan.policy and plan.

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Logistics in the GMSLogistics in the GMS• Border crossing remains the weakest link in the corridors.Border crossing remains the weakest link in the corridors.

• Lack of cooperation network within GMS and between Lack of cooperation network within GMS and between logistics service providerslogistics service providers

• Distribution network is limited in the GMS, with little ICDs in Distribution network is limited in the GMS, with little ICDs in the nodal centers along the corridorsthe nodal centers along the corridors

• Difficult to guarantee logistics service quality and Difficult to guarantee logistics service quality and reliability.reliability.

• Bilateral and trilateral exchange of traffic rights must be Bilateral and trilateral exchange of traffic rights must be effectively expandedeffectively expanded

• Routes of the corridors under CBTA limited, must be Routes of the corridors under CBTA limited, must be expanded; and quota issue must be revised.expanded; and quota issue must be revised.

• Logistics information dissemination and sharing limited.Logistics information dissemination and sharing limited.

• Capacity development for all, providers/operators, users-Capacity development for all, providers/operators, users-importer-exporter, manufacturer and traders; legal and importer-exporter, manufacturer and traders; legal and institutional capacity, competitive logistics skills needed.institutional capacity, competitive logistics skills needed.

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THANK YOUTHANK YOU

Documents

Regional Connectivity in the Greater Mekong Subregion GMS Freight Transport Association (FRETA)