1. 1 Regional Connectivity in the Greater Mekong Subregion GMS Freight Transport Association (FRETA) Presentation to Regional Forum on ASEAN SME Regional Gateway – GMS SME Biz Network, Khon Kaen, Thailand, 6-10 September 2010 By Rattanatay Luanglatbandith, PhD Asian Development Bank Thailand Resident Mission

2. 2Scope 1. GMS Infrastructure Connectivity 2. Cross- Border Transport Agreement (CBTA) 3. Logistics status in the GMS

3. 3 Thailand Land area: 513 thou sq km Population: 65.3 M GDP per capita: US$2,727 Cambodia Land area: 181 thou sq km Population: 13.8 M GDP per capita: US$393 Myanmar Land area: 677 thou sq km Population: 54.8 M GDP per capita: US$255 People’s Republic of China Land area: 633 thou sq km Population: 93.8 M GDP per capita: US$1,032 (figures for Yunnan and Guangxi only) Viet Nam Land area: 332 thou sq km Population: 83.1 M GDP per capita: US$622 Lao PDR Land area: 237 thou sq km Population: 5.6 M GDP per capita: US$491 The GMS in 2005 Land area: 2.6 M sq km Population: 316 M GDP per capita: US$1,102 The Greater Mekong Subregion (GMS)

4. 4 The Economic Corridor Approach Infrastructure is developed in specific geographical areas based on economic potential. Usually starts with transport links, but extends to other infrastructure as well as the “software” for their optimal use. 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 integrates them with more prosperous areas; Extend the benefits of improved transport linkages to remote locations and 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. 4

5. 5 Existing Corridors

6. 6 North-South Economic Corridor

7. 77 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 Corridor

8. 8

9. 99 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 Corridor Roads

10. 10 All GMS Corridors

11. 11 The GMS Cross-Border Transport Agreement (CBTA) What is the CBTA? Multilateral agreement ratified by all six GMS countriesMultilateral agreement ratified by all six GMS countries Purpose is to eliminate non-physical barriers to cross-border transport in the GMSPurpose is to eliminate non-physical barriers to cross-border transport in the GMS Includes references to existing international conventions (such as the KYOTO)Includes references to existing international conventions (such as the KYOTO)

12. 12 The GMS Cross-Border Transport Agreement (CBTA) (cont.) Covers in one document all the relevant aspects of cross- border transport facilitation, which includes:Covers in one document all the relevant aspects of cross- border transport facilitation, which includes:  Facilitation of cross border movement of goods  Single-stop/single-window inspection  Harmonization/integration of systems  Exchange of traffic rights  Provision for transit traffic  Cross-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 points of entry and exit in the six countries.

13. 13 Cross-Border Transport Agreement (CBTA) Export/Transit Cargo 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+VQ-L+VI-L+V I-V+LQ- V+L C- V+L C-Customs I-Immigration Q-Quarantine L-Lao PDR V-Viet Nam Coverage Exchange of Traffic RightsExchange of Traffic Rights Facilitation of Frontier-Crossing FormalitiesFacilitation of Frontier-Crossing Formalities Components Framework AgreementFramework Agreement Annexes and Protocols (A&P)Annexes and Protocols (A&P) MOUs for Pilot ImplementationMOUs for Pilot Implementation

14. 14 Objectives of CBTA Facilitation of border crossing formalities (single window and single stop customs inspection, coordinating of hours of operation; and exchange of advance information and clearance)Facilitation of border crossing formalities (single window and single stop customs inspection, coordinating of hours of operation; and exchange of advance information and clearance) Facilitate cross-border movement of people (multi-entry visa, recognition of driver license)Facilitate cross-border movement of people (multi-entry visa, recognition of driver license) Facilitate cross-border movement of goods (regional transit regime, phytosanitary and veterinary inspection)Facilitate cross-border movement of goods (regional transit regime, phytosanitary and veterinary inspection) Exchange of traffic rightsExchange of traffic rights Requirements for admittance of road vehiclesRequirements for admittance of road vehicles Institutional ArrangementsInstitutional Arrangements

15. 15

16. 16 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 Coverage of CBTA 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

17. 17 Status of CBTA Implementation All GMS countries signed 20 Annexes and Protocols of CBTA.All GMS countries signed 20 Annexes and Protocols of CBTA. PRC, Cambodia, Lao PDR and Vietnam signed and ratified all 20 Annexes and Protocols of CBTA.PRC, Cambodia, Lao PDR and Vietnam signed and ratified all 20 Annexes and Protocols of CBTA. Thailand Ratified 11 Annexes and protocols, while Myanmar will ratify all of the Annexes and Protocols when it is ready to implement CBTA.Thailand Ratified 11 Annexes and protocols, while Myanmar will ratify all of the Annexes and Protocols when it is ready to implement CBTA. CBTA implementation very slow:- GMS Leaders in 2008 asked to expedite CBTA implementation to facilitate cross-border trade, investment and tourism in the GMS.CBTA implementation very slow:- GMS Leaders in 2008 asked to expedite CBTA implementation to facilitate cross-border trade, investment and tourism in the GMS.

18. 18 Status of CBTA Implementation Single-Window Inspection(SWI) being implemented at Savannakhet (Lao PDR) and Mukdahan (Thailand) border checkpoints, and at Hekou (PRC)-Laokai (Vietnam) border checkpoints.Single-Window Inspection(SWI) being implemented at Savannakhet (Lao PDR) and Mukdahan (Thailand) border checkpoints, and at Hekou (PRC)-Laokai (Vietnam) border checkpoints. Single-Stop Inspection (SSI) being implemented at Dansavanh (Lao PDR) and Lao Bao (Vietnam) border checkpoints.Single-Stop Inspection (SSI) being implemented at Dansavanh (Lao PDR) and Lao Bao (Vietnam) border checkpoints. Tripartite Exchange of traffic rights along the East- West Economic Corridor to commence on 11 June 2009.Tripartite Exchange of traffic rights along the East- West Economic Corridor to commence on 11 June 2009. GMS Customs Transit System (CTS) and GMS temporary transport permit in place along the East- West Corridor but not widely used by operators, especially in Thailand due high cost/high guarantee deposit required by Board of Trade of Thailand.GMS Customs Transit System (CTS) and GMS temporary transport permit in place along the East- West Corridor but not widely used by operators, especially in Thailand due high cost/high guarantee deposit required by Board of Trade of Thailand. Exchange of traffic rights along the Southern Economic Corridor at Bavet(Cambodia) and Mocbai (Vietnam) being implemented with quota increased from 40 to 150 in May 2009.Exchange of traffic rights along the Southern Economic Corridor at Bavet(Cambodia) and Mocbai (Vietnam) being implemented with quota increased from 40 to 150 in May 2009.

19. 19 Status of CBTA Implementation Addendum to implement exchange of traffic rights along the Southern Economic Corridor at Aranyaprathet – Poipet with quota 40 signed on 17 September 2009. Thailand and Cambodia need to reach agreement on location of new border checkpoints at Aranyaprathet – Poipet, and possibly reinstate rail link at Aranyaprathet – Poipet.Addendum to implement exchange of traffic rights along the Southern Economic Corridor at Aranyaprathet – Poipet with quota 40 signed on 17 September 2009. Thailand and Cambodia need to reach agreement on location of new border checkpoints at Aranyaprathet – Poipet, and possibly reinstate rail link at Aranyaprathet – Poipet. GMS Customs Transit System (CTS) and GMS temporary transport permit in place along the East- West Corridor but not widely used by operators, especially in Thailand due high cost/high guarantee deposit required by Board of Trade of ThailandGMS Customs Transit System (CTS) and GMS temporary transport permit in place along the East- West Corridor but not widely used by operators, especially in Thailand due high cost/high guarantee deposit required by Board of Trade of Thailand Manual Advance information Exchange being implemented at Dansavanh-Laobao border checkpoints;Manual Advance information Exchange being implemented at Dansavanh-Laobao border checkpoints; Exchange of traffic right between PRC and Vietnam discussed and revised in July 2010. Agreement that Vietnamese truck can now run up to Senzhen and Chinese truck can run up to Hanoi and Haiphong reached.Exchange of traffic right between PRC and Vietnam discussed and revised in July 2010. Agreement that Vietnamese truck can now run up to Senzhen and Chinese truck can run up to Hanoi and Haiphong reached.

20. 20 Key Implementation Issues of CBTA 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 managementDevelopment of ICT/MIS for efficient border management Passage of new legislation to establish various transport facilitation regimesPassage of new legislation to establish various transport facilitation regimes Continue to strengthen goodwill and trust among GMS countriesContinue to strengthen goodwill and trust among GMS countries

21. 21 Key constraints in freight (road) transport in the GMS Inconsistent standards of freight vehiclesInconsistent standards of freight vehicles lack of ongoing road maintenance;lack of ongoing road maintenance; trans-shipment of cargo at the borders creating additional costs due to increased touch points along the supply chain;trans-shipment of cargo at the borders creating additional costs due to increased touch points along the supply chain; lack of complementary arrangements, such as container freight depots, at border crossing points to facilitate a hub & spoke model, bonded warehousing;lack of complementary arrangements, such as container freight depots, at border crossing points to facilitate a hub & spoke model, bonded warehousing; lack of professional industry standards for freight management, vehicle maintenance, driver control, technology awareness, Health-Safety & Environment etc,lack of professional industry standards for freight management, vehicle maintenance, driver control, technology awareness, Health-Safety & Environment etc, Low economic volume and thus low freight traffic, with border-crossing trade more than transit.Low economic volume and thus low freight traffic, with border-crossing trade more than transit. The absence of standardization in freight transport business can be the biggest impediment in the progress of the regional trade.

22. 22 Logistics in the GMS Different degrees of logistics development among GMS countries with PRC more advanced followed by Thailand. CLVM lack behind.Different degrees of logistics development among GMS countries with PRC more advanced followed by Thailand. CLVM lack behind. Logistics services providers, shippers, transport operators and freight forwarders are mainly national centric with little or no regional orientation. High competition with international logistics services providersLogistics services providers, shippers, transport operators and freight forwarders are mainly national centric with little or no regional orientation. High competition with international logistics services providers Overall lack of institutional and legal framework governing logistics development in most GMS countries, and no single agency or institutional entity responsible for logistics development at the national level.Overall lack of institutional and legal framework governing logistics development in most GMS countries, and no single agency or institutional entity responsible for logistics development at the national level. No coherent regional logistics development policy and plan.No coherent regional logistics development policy and plan.

23. 23 Logistics 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 logistics service providersLack of cooperation network within GMS and between logistics service providers Distribution network is limited in the GMS, with little ICDs in the nodal centers along the corridorsDistribution network is limited in the GMS, with little ICDs in the nodal centers along the corridors Difficult to guarantee logistics service quality and reliability.Difficult to guarantee logistics service quality and reliability. Bilateral and trilateral exchange of traffic rights must be effectively expandedBilateral and trilateral exchange of traffic rights must be effectively expanded Routes of the corridors under CBTA limited, must be expanded; and quota issue must be revised.Routes of the corridors under CBTA limited, must be 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- importer-exporter, manufacturer and traders; legal and institutional capacity, competitive logistics skills needed.Capacity development for all, providers/operators, users- importer-exporter, manufacturer and traders; legal and institutional capacity, competitive logistics skills needed.

24. 24 THANK YOU