Trade, TTF, and Corridor Development

Pradeep Srivastava Southeast Asia Department Asian Development Bank

Outline
Update on transport and trade facilitation Trade flows in GMS Corridor development: Role of trade

TTF Update (1)

Implementation of first subproject under AusAID funded RETA for $ 2m initiated Nov 2011 First subproject under Gov of Japans trade facilitation initiative approved May 2012 Time Release Studies; Custom focus Analytical work on trade flows, TTF, logistics implemented; joint ADB-AusAID publication under prep

Progress in CBTA ratification: Myanmar 15 annexes and protocols; Thailand 14. Remaining in process Countries also looking at related national regulations, e.g. transport, customs

TTF Update (2)

Extension of the EWEC to GMS capitals (Bangkok, Hanoi and Vientiane) and deep sea ports (Laem Chabang and Haiphong); Exchange of traffic rights Aranyaprathet-Poipet (14 June 2012); Agreement on scheduled passenger transport service between Bangkok and Phnom Penh (by 1 August 2012); Protocol for PRC-Viet Nam Bilateral Road Transport Agreement; Signed on 31 May 2012 and implementation will start in August 2012
Trucks and buses could operate on the Kunming-Haikou- Lao Cai-HanoiHaiphong, and Hanoi- Friendship Gate-Nanning-Shengzhen route

TTF Update (3)

Bilateral transport arrangements still dominant; proposed study of bilateral and trilateral agreements and exchanges of traffic rights

GMS Customs Transit System (CTS) Little commercial activity. Transshipment still dominant; (A-A publication)
Trade along corridors: growing, but limited use of CBTA and associated TTF measures Several reasons: unviable routes, inadequate integration of transport, structural problems in CTS design, guarantee costs. But deeper reasons exist

GMS exports increased rapidly during 2000s

1600 1400 1200 1000 800 600 400 200 0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 50 200 300 250

150

100

PRC exports, Left axis

GMS5 (exclg PRC) exports, right axis

Billions, US$

Billions, US$

Share of intra-GMS trade remains small though it has increased

Year 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
Source: COMTRADE

GMS5 3.5 3.8 3.9 4.0 4.4 4.9 5.4 5.3 5.9 6.4

GMS 4.3 4.4 4.7 4.8 4.8 5.0 5.1 5.4 5.6 6.1

1% and 99%
96% of the GMS trade is with countries outside the GMS subregion. Maritime transport dominates these trade links with rest of the world Intra-GMS trade: data limitations, but maritime dominated; 90% of THA-VIE maritime Even if total intra-GMS trade is 80% maritime and 20% land-based,. . only about 1% of total GMS trade by value is comprised of land-based trade amongst themselves
Even smaller fraction (of 1%) linked to CBTA

Unlikely to change in medium term

History and geography.

Source: Isono, I., S. Kumagai, and F. Kimura. 2012. Agglomeration and Dispersion in China and ASEAN: A Geographical Simulation Analysis. ERIA Discussion Paper Series No. DP-2012-02.

Intra-GMS: commodities and transport mode

Liquid bulk cargo: dominated by oil-related. Maritime Dry bulk cargo: dominated by items like coal, iron ore, bauxite and other minerals and ores, and by cereals. Important component. Maritime Containerized and general cargo: Potentially both maritime and road. Can grow, but is very small segment. Improvements in port efficiency for handling containers, trade facilitation, ship technology, scale

Trade flows: physical aspects

Asymmetry in physical movement of goods; bilateral import to export tonnage ratios, 2007
Cambodia Cambodia PRC Lao PDR Myanmar Thailand Viet Nam PRC 14:01 Lao PDR Myanmar Thailand Viet Nam n.a. 5.4:1 n.a. 1.8:1 n.a. 6:01 2.4:1 1.6:1 3.7:1 10:01 2:01 01:01.4 n.a. 4.4:1 -

Transport services : different stages of development. Unequal benefits a regional transport service market

Corridor development: Role of trade

Land-based cross-border trade unlikely to transform GMS transport corridors into economic corridors by itself

Road transport role in trade mainly complementary, but Corridors can contribute to domestic connectivity and internal trade: e.g., regional tourism, rural labor, trade in services and goods Trade can transform transport into economic corridors: LB CBT may not, but internal trade can Need to balance external (maritime) trade with internal (road based) trade/domestic connectivity; and link the two

Implications for corridor development

Double LB CBT, or even 3% -- TTF But increase the size of the cake overall: develop centers of economic activity on and around corridors, and link them (domestic connectivity and trade) Corridor alignment/expansion: to enhance maritime connectivity Corridor widening and deepening
Develop centers of economic activity on and around corridors: investment (public and private, domestic and foreign (SEZs)) + software: business climate Connect hinterlands to the corridors i.e. feeder and rural roads

Thank You