Cross-Border Infrastructure: A Toolkit Cross Border Infrastructure: An Introduction Session on Planning & Policy Rita Nangia Asian Development Bank The views expressed here are those of the presenter and do not necessarily reflect the views or policies of the Asian Development Bank (ADB), or its Board of Directors, or the governments they represent.

Cross-Border Infrastructure: A Toolkit Session Description The session covers four areas -  Major attributes of network infrastructure that makes planning and public policy complex;  Planning and political economy aspects using case studies of Indonesia, Thailand, Philippines and People’s Republic of China (PRC);  Complexity inherent in planning for cross-border infrastructure; and  Estimates of infrastructure investments.

Cross-Border Infrastructure: A Toolkit Overview What do recent trends in Asia’s integration mean for cross-border infrastructure? Planning for cross-border infrastructure  What is so special about infrastructure?  Why is it different?  What is needed? Inherent complexities of cross-border infrastructure Political economy and planning case studies The Greater Mekong Subregion

Cross-Border Infrastructure: A Toolkit Linkages Between Trade and Infrastructure Trade - a major driver of economic growth and poverty reduction in Asia Transport infrastructure affects overall costs and value addition  Logistics account for 20% of GDP in PRC compared to 10% in USA  It can amount to two thirds of final costs of industrial and food production in PRC, but only 10% in USA Not only hard infrastructure, but how this is delivered in terms of logistics services

Cross-Border Infrastructure: A Toolkit What Do We Mean by Market Economy? Prices and quantities are set by market supply & demand  Many suppliers and many consumers  Competition leads to efficiency Producers maximize their profits, consumers maximize their surplus Largely decentralized decisions, flexible, practical and changeable. Market economy rests upon the fundamental principle of freedom of choice for all economic agents, i.e., a consumer, producer, or worker - accountability for own choices.

Cross-Border Infrastructure: A Toolkit What Is Different About Infrastructure? Capital intensive and economies of scale Flows of services from capital goods Produces services (ultimately performance of service market impacts on users, not provision of capital alone) Lumpy not incremental (difficult to match supply and demand) Long-lasting (implications for finance and maintenance)

Cross-Border Infrastructure: A Toolkit What Is Different About Infrastructure? Space-specific and use-specific in services provided (high sunk costs) Infrastructure is political Source of services for final consumption and as input to enterprise It is like new technology which lowers costs or promotes market development, (or expansion when new areas are opened) Finally, it is complicated - its impacts depend on other inputs

Cross-Border Infrastructure: A Toolkit Note: Excludable means that a user can be prevented from consuming the good or service. Rival means that consumption by one user reduces the supply available to other users. LowerExternalities Higher Private Common goodsproperty Telecommunications Urban Bus Fossil fuel power generation Groundwater Urban Roads Rural Sanitation (on-site disposal) Local power distribution Rail, airport, and port services Piped water supply High-voltage transmission Surface water irrigation Sanitary landfill Urban sewerage Rail, port, and airport facilities Rural roads Interurban highways Street sweeping (toll roads) Traffic signaling Club goods Public goods Rival Non- Rival Excludable Non-excludable Source: World Development Report, 1994

Cross-Border Infrastructure: A Toolkit Source: UNESCAP

Cross-Border Infrastructure: A Toolkit Cross-Border Infrastructure in the GMS

Cross-Border Infrastructure: A Toolkit Land area 2.5 million km 2 Population Million The Greater Mekong Subregion

Cross-Border Infrastructure: A Toolkit Thailand Land area: 513,000 km 2 Population: 64.7 M GDP per capita: US$ 2,727 Myanmar Land area: 677,000 km2 Population: 55.4 M GDP per capita: US$ 176 Yunnan & Guangxi, PRC Land area: 624,000 km 2 Population: 93.8 M GDP per capita: US$ 842 Viet Nam Land area: 332,000 km 2 Population: 83.1 M GDP per capita: US$ 622 Lao PDR Land area: 237,000 km 2 Population: 6.0 M GDP per capita: US$ 491 Cambodia Land area: 181,000 km 2 Population: 13.8 M GDP per capita: US$ 393 The GMS Economic Conditions Source: Beyond Borders – Regional Cooperation Strategy & Program Update, ; Asian Development Outlook, 2006; ADB Key Indicators, 2006; FAO/People’s Govt. of Yunnan Province;

Cross-Border Infrastructure: A Toolkit GMS Economic Cooperation Program 1992: Cambodia, Lao PDR, Myanmar, Thailand, Vietnam and Yunnan Province of PRC launched the GMS Economic Cooperation Program with support from ADB. Guangxi Zhuang Autonomous Region of PRC joined in December Encourages cross-border trade and investment by easing movement of people and goods across national boundaries. Pursues a 3-pronged strategy to achieve their vision of a peaceful, prosperous and more closely integrated subregion  Fostering greater Connectivity  Enhancing Competitiveness  Building a greater sense of Community

Cross-Border Infrastructure: A Toolkit GMS Economic Cooperation Program Confidence building Pragmatism and results orientation Building blocks:  Initial focus on infrastructure  Soft sectors: health, education, HRD, environment  Policy and regulatory frameworks

Cross-Border Infrastructure: A Toolkit Strong Economic Performance... GDP growth rates in % Source: Asian Development Outlook 2005 and Key Indicators, 2005

Cross-Border Infrastructure: A Toolkit Openness Is Growing... Trade as % of GDP Source: Asian Development Outlook 2005 and Key Indicators, 2005

Cross-Border Infrastructure: A Toolkit A Vibrant Region… Total exports are up from about  $36 billion in 1992 to $130 billion in 2004 Intraregional trade expansion  More than 11 times in past 12 years  Tourist arrivals has almost doubled to 18 million  FDI has more than doubled Source: Mekong Economic Review, various issues

Cross-Border Infrastructure: A Toolkit The GMS Experience Cross-border economic corridors

Cross-Border Infrastructure: A Toolkit The GMS Experience Infrastructure

Cross-Border Infrastructure: A Toolkit The GMS Experience Infrastructure

Cross-Border Infrastructure: A Toolkit The GMS Experience Infrastructure

Cross-Border Infrastructure: A Toolkit Thailand Hydro: 12,700 MW Coal: 2,400 MT Gas: 943 BCM Oil: 124 MT Cambodia Hydro: 15,000 MW Gas: BCM Oil: MT Myanmar Hydro: 100,000 MW Coal: MT Gas: 160 BCM Oil: 32 MT Yunnan, PRC Hydro: 150,000 MW Coal: 23,580 MT Gas: 32 BCM Oil: 226 MT Viet Nam Hydro: 30,000 MW Coal: 32,250 MT Gas: 144 BCM Oil: 82 MT Lao PDR Hydro: 26,000 MW Coal: 910 MT Greater Mekong Subregion Source: GMS Energy Strategy July 2006 Proceedings, work in progress

Cross-Border Infrastructure: A Toolkit The GMS Experience A A C B C B B D D E E 115 kV Line 220 kV Line 500 kV Line Hydropower plant (HPP) Thermal plant (TPP) Gas Field Legend: Generation Projects 1- Jinghong HPP (2013) 2- Nuozhadu HPP (2014) 3- Nam Mo HPP (2009) 4- Sekong 5 HPP (2015) 5- Sekong 4 HPP (2014) 6- Sekaman 3 HPP (2009) 7- Sekaman 1 HPP (2013) 8- Xeset 2 HPP (2008) 9- Nam Kong HPP 10- Xepian- Senamnoy HPP (2012) 11- Nam Ngum 2,3 HPP ( ) 12- Lower Sre Pok HPP (2018) 13- Hongsa Lignite TPP (2013) 14- Mong Duong TPP ( ) 15- Quang Ninh TPP ( ) 16- Nghi Son ( ) 13 C V V V T T M M Legend: Gas Fields C- Offshore Blocks (Cambodia) M- Yadana, Yetagun (Myanmar) T- Malay, Pattani (Thailand) V- Bach Ho, Rong, Dai Hung (Viet Nam) E F F G G Energy Scene Hydropower: 333,700 mega watts Coal: 59,340 million tons Gas: 1,378 billion cubic meters Oil: 478 million tons Source: Regional Power Trade Coordination Committee Proceedings

Cross-Border Infrastructure: A Toolkit Major Cross-Border Projects GMS Power Transmission Project (CAM): ongoing ADB funded project (target completion: 2008) GMS Power Transmission Line (PRC- Lao PDR-Thailand): proposed in place by 2013 GMS Power Interconnection Phase II (Bansok-Pleiku): proposed in place by kV Line (Southern Lao PDR to CAM): 115 kV Line (VIE to CAM): Power Generation Projects LAO: Nam Theun 2 HPP CAM: Offshore Gas Resource Development CAM: Lower Sre Pok HPP VIE: Mong Duong TPP VIE: Quang Ninh TPP VIE: Nghi Son TPP

Cross-Border Infrastructure: A Toolkit Key Messages Investment in cross-border projects and policy planning requires coordination at multiple levels. Cross-border infrastructure projects are time-consuming and skill-intensive processes. Retrofitting solutions is expensive.