Learning Curves

IED

TransportandTradeFacilitation intheGreaterMekongSubregion TimetoShiftGears

ADBhassuccessfullysupportedtheGreaterMekongSubregionprogrambyproviding assistanceforphysicalinfrastructuredevelopmentandcatalyzingmultilateraldialoguefor enablingregionalcorridors. ADBisinapositiontograduatetothenextlevelofaddingfurthervaluetotheGMS programbyenablingregionalinstitutionstoaddresscrossborderissues.
Background Launchedin1992,theGreaterMekong Subregion(GMS)programfocusedontransportand tradefacilitationinitiativestoenhanceconnectivity andimprovecompetitivenessacrossinternational borders.TheAsianDevelopmentBanks(ADB) fundingforthetransportsectorintheGMSprogram reached$3.3billionbyDecember2008.ADBs participationintheGMSprogramrangedfrom provisionoffinancingforphysicalinfrastructureand forsoftware,suchasthedevelopmentofcross borderagreementsandtradefacilitation.In2008, ADBsOperationsEvaluationDepartmentevaluated 1 theperformanceofADBsassistanceandidentified issuesandareaswhereADBandGMScountries couldworktogethermoreeffectivelytoimprovethe developmenteffectivenessoftheirpartnership. SummaryofFindings TheimprovementoftheGMSroadshasresulted insignificantsavingsinvehicleoperatingcostsand reducedtraveltime.Bordercrossingtimein Cambodia,LaoPeoplesDemocraticRepublic(Lao PDR),andVietNamhasalsobeenreduced. Althoughseveralbenefitsareapparentfrom completedprojects,twomainissueshamperthefull deliveryofbenefits:first,fullimplementationofthe CrossBorderTransportAgreement(CBTA)is pending;andsecond,missinginfrastructurelinks
Independent Evaluation Department Asian Development Bank

March 2009

havereducedtheeffectivenessofthecompleted projects.Roadimprovementhasledtoanincreasein nationaltrafficacrossthecorridors,indicatingthat nationallevelbenefitshavebeenhigh.However, internationaltraffichasbeenslowtogrow,partly duetotheabsenceofanagreementtofacilitatecross bordermovementofvehicles. ThecombinedimpactofADBassistanceforthe transportandtradefacilitationsectorsisvisibleat variouslevels.Attheprojectlevel,ADBassistance hasresultedinincreaseddomesticeconomicactivity, withnewindustriesandspecialeconomiczones developingalongtheroad.Atthecorridorlevel, passengerfareshavedecreased,reflectinglowercosts. Atthenationallevel,theimpactonsmallsized economiesCambodiaandLaoPDRhasbeen highersincealargerproportionoftheirtradeuses theborderpointsontheSouthernandtheEastWest Corridors.Theimpactonlargereconomiessuchas VietNamisrelativelyless,sinceithasseveralother tradepointsincludingseaports. Theimportancegiventodevelopingtransport andlogisticsserviceswiththeneighboringcountries isconsistentacrosstheGMScountries.ADBs strategieshavematchedupwiththisemphasis. Whilethestressonphysicalconnectivityhasbeen adequate,therelatedsoftwarecomprising harmonizationofregulations,procedures,and standardshasbeenslowtodevelop.AlthoughADB identifiedindustrial,agricultural,andother

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economicactivitiestotransformthetransport corridorsintoeconomiccorridors,ADBsstrategies havenotconsideredthebiggerpictureofhowthis connectivitywillbeusedbythecountriestoincrease theirindustrialandagriculturalproduction. ADBhaslimitedfundingresources,and mechanismsneedtobestructuredtochannelmore fundsintoCambodiaandLaoPDRwhencompared withthecurrentlevelsofAsianDevelopmentFund grants. TheGMStransportandtradefacilitation programhascreatedademonstrationeffectthatis beingreplicatedinotherAsiansubregions.Onthe institutionalside,theGMSStrategicFrameworkand countrystrategiescontinuetodependonnational institutionsforplanningandimplementingtransport projects.Theoverallattitudetowardinstitutional strengtheningwithintheGMSprogramistilted towardaddressingnationalconstraintsratherthan developingregionalarrangements. Severalpositivefactorssupportthesuccessful ratingforGMStransportandtradefacilitation assistance.First,ADBhassuccessfullyledthepush formultilateraldialogueamongtheGMScountries. Second,therehasbeenanappropriatemixoflending andnonlendingassistancetosupportandsustainthe dialogue.Third,theselectionandimplementationof physicalinfrastructureimprovementshavebeen appropriatetotheneedsatthenationaland subregionallevels.Finally,thefocusoncrossborder issuesandthediligenceinpreparingtheCBTAare appropriate. Thetransportandtradefacilitationsectorsofthe GMSprogramcouldbefinetunedtakinginto considerationtheexperienceofthelastdecade.Core issuestobeaddressedarereachingaconsensuson howthetransportcorridorscanbeconvertedinto economiccorridors,andratifyingandimplementing theCBTAwithoutdelay.Toaddressthese,the followingfactorsshouldbeconsidered:(i)further enhancingsynergiesbyprovidingabetterbalanceof nationalandregionalprojects,(ii)encouraging cofinancingtocounterrisingdemandsforfunds, (iii)carryingoutspecificactionstocountersocialand environmentalissues,(iv)developingmultimodality incorridordevelopment,(v)focusingonnonphysical barrierstotrade,and(vi)mobilizingprivatesector participationinoperationsandmaintenance. Keylessonsidentifiedinclude(i)forthebenefits oftheGMSprojectstospreadtothesubregionallevel, tradefacilitationshouldbeexpedited;(ii)subregional
Learning Curves available @ www.adb.org/evaluation/

projectshaveenabledcooperationamongthe countriesbyimprovingtheefficiencyoftransport andcreatingafavorableclimatefordialogueand exchangeofinformation;(iii)thecreationofnational transportfacilitationcommitteesineachGMS countryisapositivestep,butneedstobe accompaniedwithamoreinclusivefunctioningwith theircounterpartsinothersectors;(iv)supportfor policyreformsisneededtoenableprivatesector participation;(v)ADBneedstofocusonareaswhere ithasinhouseexpertiseandshouldmobilizeother developmentpartnerstoleadinothersectors;(vi)the TransportSectorStrategy,20062015shouldbe improvedbyrecognizingtheimportanceofsocial andenvironmentalrepercussionsofregional transportprojects;and(vii)ADBcanleadin developingaspecificresultsbasedmonitoring frameworkwithintheGMStransportsectorstrategy tomeasurethetransformationoftransportcorridors intoeconomiccorridors. Recommendations

ADBshouldassistinfillingthegapsintransport infrastructureandimplementtheCBTAwithan agreedtimetableandmonitoringmechanisms. ADBshouldfacilitatedevelopmentofregional institutionsthataddresscrossborderissues. Tofocusonthebiggerpicture,ADBshould encouragepartnershipsbetweentheGMS programandotherregionalcooperationinitiatives outsideAsiaandderivelessonsfromthem. ADBshouldmobilizealternateformsoffunding, eitherfromtheprivatesectororfromother developmentpartnersbilateralandmultilateral.

Feedback WhentheseLearningCurveswereprepared,ADB ManagementsResponseandtheChairsSummary oftheDevelopmentEffectivenessCommittee Discussionswerenotavailablefordisclosuretothe public.ThestudywascompletedinDecember2008. 1ADB.2008.SectorAssistanceProgramEvaluationfor TransportandTradeFacilitationintheGreaterMekong SubregionTimetoShiftGears.Manila.Available: http://www.adb.org/Documents/Reports/sape/reg/ sapreg200886/sapreg200886.pdf
Team Leader: Narendra Singru; Tel +63 2 632 4256; nsingru@adb.org