1. Economic Corridor Development: The Greater Mekong Subregion Experience
G-20 Global Infrastructure Connectivity Forum
Singapore
April 27, 2016
Alfredo Perdiguero Asian Development Bank .

2. Outline GMS Economic Corridors
GMS Framework for Economic Corridor Development
Economic Corridor Development Projects, Progress and Impacts in the GMS
Way Forward for Economic Corridor Development

3. I. GMS Economic Corridors

4. GMS Economic Cooperation Program
Countries: Cambodia, People’s Republic of China (Yunnan Province and Guangxi Autonomous Region), Lao PDR, Myanmar, Thailand, and Viet Nam
Strategic Priorities:
Vision – a more integrated, prosperous, and harmonious subregion
“3Cs” – Connectivity, Competitiveness, Community
Economic Corridor Development
Size:
$15 billion (1/3 from ADB)
80% in transport connectivity

5. Developing Economic Corridors is a Strategic Priority for the GMS
Transform some of the 9 transport corridors…
…into economic corridors to boost cross-border trade and investment and to stimulate jobs and growth.
Significant achievements have been made in strengthening physical connectivity in the GMS through improvements in transport links along the GMS North-South, East-West, and Southern transport corridors. These transport corridors networks have created conditions for broad-based economic growth and integration, but there remains a need to remove non-physical barriers to cross-border transport through more streamlined and harmonized policies and regulations. At the same time, new social and environmental challenges associated with improved connectivity have started to emerge.
The transformation of GMS transport corridors into economic corridors represents a strategic approach to maximize the economic and social benefits of physical infrastructure in the GMS. The economic corridor approach was adopted by the GMS countries during the 8th GMS Ministerial Meeting in 1998 and economic corridor development remains a strategic priority of GMS cooperation. The 5th GMS Summit in Bangkok on 20 December 2014 emphasized the importance of developing GMS economic corridors.

6. North-South Economic Corridor (NSEC)
East-West Economic Corridor (EWEC)
Southern Economic Corridor (SEC)
Let me now show you the actual configuration of the GMS Economic Corridors
The three main GMS Economic Corridors where work has proceeded so far are:
The North-South Economic Corridor (NSEC), which covers the major routes running from Kunming in Yunnan, China, going through Lao PDR and Myanmar, then through Chiang Rai to Bangkok in Thailand, its other arm from Nanning in Guangxi, China, through Hanoi to Haiphong in Vietnam; and
The East-West Economic Corridor (EWEC) - running from Da Nang in Viet Nam, through Lao PDR and Thailand to Myanmar, this represents the only continuous land routes that connects the South China Sea and the Andaman Sea.
The Southern Economic Corridor (SEC), running through the southern parts of Thailand, Cambodia, and Viet Nam, and possible extension to Dawei, Myanmar (as per the results of the Symposium for Developing the SEC, March 2011, Phnom Penh).

7. Evolution of Transport Corridors into Economic Corridors1 2 3 4 5
Transport Corridor – Physical Infrastructure
TTF Corridor – Cross-border transport operations and efficient border formalities
Logistics Corridor – Broader trade facilitation (behind-the-border) and developed cross-border logistics services
Urban Development Corridor – Improved economic infrastructure and enhanced capacities of corridor towns for public-private partnerships
Economic Corridor – Increased private investment, well-developed production chains
To provide strategic context for my presentation on transport and trade facilitation, I would like to give a brief overview on what we believe to be the stages of transforming transport corridors into economic corridors.
As shown, there are 5 stages: Stage 1 – transport corridors; Stage 2 – TTF Corridor; Stage 3 – Logistics Corridor; Stage 4 – Urban Development Corridor; and Stage 5 – Economic Corridor.
All three GMS corridors so far are considered transport corridors as most of the key infrastructure, especially roads and bridges, have been upgraded to standards that will allow cross-border traffic.
I will describe stages 2 to 5 in later slides.
Let me make a special note that in all stages of economic corridor development, it is imperative that associated environmental and social externalities are adequately addressed.

8. A Framework for Corridor Development (P. Srivastava)
Broad
Nar
row
Zone II
National + Broad
Zone IV
Regional + Broad
Urban, SMEs, Rural Roads
CBEZ, Integrated regional border plan
Zone I
National + Narrow
Zone III
Regional + Narrow
Zone I, representing the national and narrow stage of the corridor is a useful starting point, marked by the corridor or highway’s initial construction, or by upgrading of existing (lower quality) roads.
For Zone II, there are several initiatives that may be undertaken for widening the corridor. These include activities that may broadly be termed ‘area development plans’ through a variety of methods such as urbanization, improving urban infrastructure, promoting industrial development, enhancing business climate and capacities for SMEs, and investing in tourism infrastructure.
Zone III, narrow and regional, is the transformation of the (narrow) national into regional corridor through extension beyond national boundaries. The focus of the “narrow” corridor is on moving goods and people at fast speed and least cost from “point to point”. The “points” are usually urban centers, which may now be in more than one country along the corridor. between the centers served by the regional corridor. Enhancing the regionality of narrow corridors may also be supported by promoting development and strengthening of trade and logistics -- logistics facilities and services -- e.g., dry ports/inland container depots, warehouses, border SEZs, inter-modal transport links.
Finally, Zone IV marks the last stage of corridor development, wherein the transformation of the corridor from a narrow, national entity into a broad and seamless regional entity is completed. This is an advanced stage that is neither inevitable, nor easy to achieve in the short run. Movement towards Zone IV corridors may require joint regional plans, or joint plans for cross-border area development by the concerned countries or, at the least, coordination of national plans.
Road construction, upgrading
TTF, logistics
National Regional

9. II. GMS Framework for Economic Corridor Development

10. Economic Corridor Development Approach
Adopted in 1998 in the GMS:
Practical response to maximize impact of limited resources for regional projects
Cluster regional projects along corridors
Catalyze investment from within and outside region
Facilitate prioritization of regional projects and coordination of national projects with regional implications
Adopted early in GMS, in 1998, and the 3 GMS Corridors were identified – the EWEC, the NSEC and the SEC. This was 10 years before the ECF was established.
The corridor development approach is a very practical response to maximizing the impact of typically limited resources available for regional projects. Although an impressive $15 billion or so invested in GMS projects, this represents only 10% of ODA.
The corridor development approach can be described as using transport corridors to provide a backbone or spatial focus for regional cooperation projects and activities, clustering them along corridors or at nodal centers on the corridors.
This is expected to help develop surrounding areas, including through catalyzing other investment from within and outside the region. The spatial focus can also facilitate prioritization of regional projects, and coordination of national projects among neighboring countries. 2

11. The Economic Corridor Development Approach
Infrastructure was developed in specific geographical areas based on economic potential.
Initially transport links; subsequently improving “software” and then other infrastructure investments for urban development, SEZ, agriculture
Successful Economic Corridors:
Link major markets/nodal points;
Ensure cheap, fast and reliable transport and trade
Catalyze private investment
Benefit the local population living nearby the corridors;
An important element of the GMS Program’s regional development strategy is the development of economic corridors. Under this approach, infrastructure is planned and developed taking into account the economic potential of a specific or a set of specific geographical areas, and working to maximize economic benefits from the infrastructure investments.
The infrastructure base for the economic corridors is usually the cross-border transport links that have been built, but eventually extends to other infrastructure, such as for urban development, and also to the software needed to maximize the benefits from the infrastructure.
The economic corridor approach to subregional development was first adopted in 1998, at the 8th GMS Ministerial Meeting. In their Joint Statement, the GMS Ministers declared that “GMS member countries will create economic corridors”, which will “link the subregion to major markets”, and “with nodal points within these economic corridors that will serve as centers for enterprise development…”
The economic corridors are also expected to extend the benefits of improved transport linkages to remote and landlocked locations in the GMS, which have been disadvantaged by their lack of integration with more prosperous and better located neighboring areas. They will also open up many opportunities for various types of investments from within and outside the subregion; promote synergy and enhance the impact of subregional activities through the clustering of projects; and generate tangible demonstration effects, on which to build further successes.

12. GMS Economic Corridors Forum
Established in Seven already organized
ECF is held annually at the Ministerial level.
A Provincial Governors Forum linked to the ECF.
“The ECF shall serve as the main advocate and promoter of economic corridors in the GMS. It shall raise the profile and increase awareness of the needs and priorities of GMS economic corridor development, and enhance collaboration among various stakeholders in the development of GMS economic corridors.”
The Economic Corridors Forum (ECF)
During the first decade and a half of the GMS Program, there was no specific body that coordinated economic corridor development in the GMS. To address this deficiency, the GMS Leaders in their 3rd Summit mandated the establishment of a GMS Economic Corridors Forum, or ECF, which was launched here in Kunming, where ECF-1 was held on 6 June 2008
The ECF is the body within the GMS institutional framework that serves as the main advocate and promoter of economic corridor development in the GMS. It is designed to enhance collaboration among areas along the GMS economic corridors, among GMS sector working groups, and between the public and the private sectors. A Governors Forum, which is a mechanism for coordination among governors of the provinces along the economic corridors, has also been formed to complement the ECF, and held its first meeting back-to-back with ECF-2 in Phnom Penh in September In said meeting it was agreed that there is a need for further, separate meetings of governors/local authorities of provinces along specific corridors, to promote networking and better coordination among local authorities and other stakeholders in these areas, and to address issues that are particular to them.

13. GMS Strategies and Action Plans for Economic Corridor Development
The SAPs were prepared over , roughly coinciding with the establishment of ECF in Together, they reinforced the central role of economic corridor development in the GMS Program.
The SAPs for EWEC and NSEC were endorsed at the 15th GMS Ministerial Conference held on19 June 2009 in Petchaburi Province, Thailand.
The SAP for SEC was endorsed at the 16th GMS Ministerial Conference held on 20 August 2010 in Hanoi, Viet Nam.
Why were the SAPs needed? The economic corridor approach to GMS development was adopted by the GMS countries in 1998, at which time the EWEC, NSEC and SEC were designated priority economic corridors.
A pre-investment study was conducted for EWEC in 2001, but it was not until 10 years later when SAPs were prepared for the three economic corridors.
Over time, as physical connectivity improved along the corridors, it was increasingly recognized that transforming transport corridors into economic corridors requires the integration of multi-sector activities and projects that are focused on the corridors.
The SAPs helped address this challenge by: operationalizing a multi-sector approach to economic corridor development: improving coordination and sustaining implementation of economic corridor initiatives; mobilizing resources for economic corridor development; and broadening stakeholder support, especially at the local level for GMS economic corridor development.

14. Formulation Process for Strategies and Action Plans
Stakeholder consultations: national & local
Confirming configuration and alignment
Preparing corridor assessments
- Socio-economic characteristics
- Development potential
- Comparative advantages
- Constraints and challenges
- Opportunities for cooperation
Preparing strategic directions and action plans for each corridor
The SAP formulation process involved the following steps:
First, consultation meetings and workshops were held for each of the economic corridors at the national and local levels, and at different stages of the SAP formulation process.
Second, the configuration and alignment of the corridors were discussed and confirmed with the concerned GMS countries to ensure that there was agreement on the main routes and influence areas of the corridors.
Third, an assessment of the main attributes of the corridors was prepared covering their: [as in slide].
Finally, based on the results of the consultations and corridor assessments, the SAPs were formulated. Each SAP was tailored to match the characteristics of each corridor.

15. Strategic Framework for the NSEC Action Plan
Vision
Ultimate Goals
Objectives
Focal Sectors
Environment
Dynamic, well-integrated
Engine for socio-economic development
Attract investment
Gateway for ASEAN-PRC trade
Generate higher income
Increase employment opportunities
Reduce income disparities
Improve living conditions
Address social and environmental concerns
Strengthen physical infrastructure
Facilitate cross-border trade and transport
Promote investment
Address human resource constraints
Enhance institutional arrangements
Infrastructure
Trade and transport facilitation
Investment promotion
Using the strategic framework for NSEC as an example, this slide shows the links between the vision and goals, strategic objectives, and key sectors involved in implementing the SAP for NSEC.
The vision of NSEC defined across 4 key pillars.
The ultimate goals are focused on benefitting the people living along the NSEC.
To achieve the vision and goals, the more immediate objectives of NSEC development are multi-sectoral and cross-cutting in nature.
For the NSEC, there are 6 focal sectors.
Human resource development
72 projects in the NSEC Action Plan
For each project or activity:
Expected outcomes/results
Progress indicators
Implementing bodies/agencies
Timeframe
Status
Institutional development

17. Assessment of GMS Corridor Development
Around 75% of planned projects completed or ongoing
Notable achievements are in road transport infrastructure
Rail and power sectors requires more attention
Good progress in tourism, social & environment sectors
More efforts required for cross-border transport and trade facilitation, investment promotion, private sector participation
The overall finding of this review is that around three-fourths of all projects in the SAPs have either been completed or are on-going. This shows that significant progress has been made in implementing the SAPs as well as in developing the corridors.
The most visible achievements are in road transport infrastructure, though less so in other infrastructure (such as rail and power).
As the following slides will illustrate, the main road links with the corridors have been completed, except for some segments which need further improvement and expansion.

18. Lessons learned from the economic corridors SAP
Provided a strategic macro-planning framework for corridor development
Promoted a multi-sector approach
Encouraged participation of local authorities in corridor development
Economic corridor planning process could have been strengthened by more regular monitoring , and greater engagement with the private sector.
There is a need to translate SAPs into implementation plans for specific sections of the corridors with high development potential
On the whole, the formulation and adoption of the SAPs contributed positively to efforts to transform transport corridors into economic corridors.
More specifically, the SAPs (i) provided a strategic framework for the development of the each primary GMS economic corridor; (ii) they helped to operationalize a multisector approach; and (iii) they facilitated the participation of local authorities in economic corridor development.
However, the SAPs could have contributed even more to economic corridor development through more regular monitoring and updating, and greater engagement with the private sector.

19. III. Economic Corridor Development Projects, progress and impacts in the GMS

20. This slide shows the status of major road transport projects in EWEC.
VIE: East-West Corridor (Lao Bao-Dong Ha)
LAO: East-West Corridor (Phin-Dene Savanh)
Project under preparation with ADB assistance i
This slide shows the status of major road transport projects in EWEC.
The EWEC is virtually complete. The Government of Japan and ADB have helped finance key components of the corridor in Lao PDR and Viet Nam, including Route 9, the Hai Van Tunnel, and Da Nang port.
The Thai Government has upgraded its section of the corridor, and has provided financial assistance to Myanmar for the rehabilitation of part of the Myanmar portion of the corridor.
ADB is preparing a project to complete the remaining missing link on the Myanmar segment of the corridor.
JBIC-assisted 2nd Mekong International Bridge
With assistance from the Royal Thai Government i
JBIC-assisted Hai Van Tunnel Construction and Da Nang Port Improvement

21. North-South Economic Corridor
Completed
Upgraded with JBIC assistance; in good condition
Upgrading completed in 2006.
Completed with ADB assistance
Recently upgraded with Govt financing
Completed in Dec. 2005
This slide illustrates the progress in various sections of the NSEC.
Most of the road connections in the PRC, Thailand, Lao PDR, and Viet Nam have already been upgraded to subregional standards.
Major projects include: (i) the Lao section of the Kunming-Bangkok subcorridor; (ii) the Mekong bridge between Houxai in Lao PDR and Chiang Khong in Thailand; and the (iii) Noi Bai-Lao Cai expressway in Viet Nam.
Completed in 2013 with financing from PRC, Thailand and ADB
4th Mekong international bridge completed
Expressway completed in2014 with ADB assistance 21 21

22. GMS Southern Economic Corridor
Mostly 4-lane highways; not a constraint to cross-border traffic.
Upgrading completed ADB and Japan assistance.
Upgrading of a section in Cambodia (70 km) completed with assistance from Viet Nam; financing requested for remaining sections.
Upgrading completed with PRC assistance.
Mostly 4-lane highways; not a constraint to cross-border traffic
In good condition
Upgrading and rehabilitation of key sections of the SEC have been substantially completed except for some sections in Cambodia and Lao PDR, and the extension to Dawei.
A major achievement is the completion of the Tsubasa Bridge on the Mekong River in Phrey Veang, Cambodia, which was the key missing link in the SEC.
Upgrading completed in 2007 with Thailand, Korea, World Bank and ADB assistance.
Mekong bridge completed in with financing from Japan
Upgrading completed with ADB and Japan assistance.
Upgrading to be completed by 2010 with ADB, Korean, and Australian assistance. 22 22

23. Examples of Development Impacts of Improved Connectivity: Southern Economic Corridor
Phnom Penh-Ho Chi Minh City Highway Improvement Project
In 1999 (Before upgrading road)
Travel time from Phnom Penh to HCM City: 9-10 hours;
Cross-border trade at Moc Bai (Viet Nam) – Bavet (Cambodia): $ 10 million / year
In 2014 (After both hardware and software are implemented)
Travel time reduced to 5-6 hours;
Cross border trade at Moc Bai – Bavet: $ 708 million / year
Trang Bang Industrial Park (in Moc Bai) : 41 projects, $ 270 million in new investments and 3,000 jobs created
Let me now try to give you some illustrative examples of actual results on the ground GMS regional infrastructure projects:
Phnom Penh - Ho Chi Minh City Highway Project (Road was completed in 2005)
The total value of trade through the Moc Bai-Bavet border increased by from around US $ 10 million per annum in 1999 and to more than US$ 700 in 2013.
Travel time reduced 50% in 2013 as compared with that in 1999.
One of the industrial zones in the Viet Nam side developed as a result of the road improvement project (Trang Bang Industrial Park) and is generating a large number of employment opportunities for the local population.
Overall, the resulting increased economic exchange and cooperation between Cambodia and the southern region of Viet Nam, including the multiplier effects of such exchange and cooperation, have been resulting in improved incomes of the population in the project influence areas. Beneficiaries include suppliers, carriers, and purchasers of goods that are being delivered at lower cost.

24. IV. Way forward for Economic corridor development

25. Developing GMS Economic Corridors
Requires a multi-sector approach to maximize the economic benefits of physical infrastructure:
Cross-border and Special Economic Zones
Corridor Town Development
Logistic and agro-processing Centers, Dry Ports
Requires private sector participation to identify investment opportunities and contribute to project financing (viable PPPs)
Focus on the “software” side of Economic Corridors (eg. Transport and Trade Facilitation)
Need to realign corridors to include Myanmar, link all GMS capitals and deep ports to the corridor network and align with trade flows
Prepare “section-specific corridor concept plans”
In addition to retaining the strategic frameworks of the SAPs, the following recommendations come from the review:
There is a need to prepare “section-specific corridor concept plans” for selected pilot areas, and we have initiated this process.
(ii) The Action Plans need to be refined by reducing the number of projects, and only include high-priority projects.
(iii) There is a need to Monitor and update the Action Plans, preferably utilizing the monitoring system for the RIF Implementation Plan.

26. -GMS Leaders at the 5th GMS Summit; Bangkok Thailand
 We are committed to continue our joint efforts to transform the GMS transport corridors into economic corridors... Implementation of the SAPs should focus on selecting priority sections along the corridors which offer the greatest potential for attracting investment and yielding long-term development benefits. For these corridor sections, the identification of investment needs and opportunities should draw upon inputs from provincial and local government officials, the private sector and community residents.
-GMS Leaders at the 5th GMS Summit; Bangkok Thailand
December 20, 2014
This pilot initiative is in response to the guidance set forth by the GMS Leaders at the 5th GMS Summit held on December 20th, 2014 in Bangkok, Thailand. In the joint statement, the leaders stated that they are committed to continue joint efforts to transform the GMS transport corridors into economic corridors... And to focus on selecting priority sections along the corridors which offer the greatest potential for attracting investment and yielding long-term development benefits.
Further, the Leaders stated that : For these corridor sections, the identification of investment needs and opportunities should draw upon inputs from provincial and local government officials, the private sector and community residents.

27. A Pilot Initiative for Economic Corridors
Section Specific Concept Plans
Initiate planning processes for conceptual development plans focused on three prioritized sub-sections of the GMS Economic Corridors.
Promote a bottom-up, participatory planning process which solicits views and ideas about each corridor's strengths, weaknesses, opportunities and constraints (SWOT analysis) from local stakeholders, including provincial and local officials, the private sector and community representatives.
By adopting a broad, multisectoral approach the resulting concept plans can serve as a basis for future regional planning, a model for other cross-border planning in the GMS, and provide inputs to the current projects in the corridors.
Thus, the pilot initiative for the EC Section Specific Concept Plans was launched. The key objectives are to: …..

28. Three Pilot Locations Along Major GMS Economic Corridors
SEC: Bavet, Cambodia- Moc Bai, Viet Nam
EWEC: Mae Sot, Thailand – Myawaddy, Myanmar
NSEC: Jinghong, PRC-Luang Namtha, Lao PDR
As I mentioned earlier, there are three priority economic corridors in the GMS.
One pilot location was selected for each of the three primary Economic Corridors. These areas are:
SEC (Svay Rieng, Cambodia and Tay Ninh, Viet Nam)
EWEC (Tak, Thailand and Kayin State, Myanmar)
NSEC (Yunnan, PRC and Luang Namtha, Lao PDR)
These areas were selected because of the confluence of several priority development activities and new developments in each of the areas.