Local governors seen as key to boost GMS trade

Photo by: STEVE FINCH
Local traders cross into Cambodia at the Poipet border gate. Poipet is a key frontier within the GMS trade network.

Thursday, 17 September 2009 15:01 Nathan Green

Asian Development Bank's Southeast Asia director says region must work at provincial level to better develop trade corridors

GREATER involvement by provincial governors and officials in efforts to boost economic ties between Greater Mekong Subregion (GMS) countries could lead to a “doubling or quadrupling” of trade in the region, a senior Asian Development Bank official said Wednesday.

Speaking on the sidelines of the opening day of a new economic forum in Phnom Penh, ADB Director General for Southeast Asia Arjun Thapan told the Post that provincial governors from the six member countries hold the key to facilitating trade and investment in the region through the development of so-called economic corridors.

“Intraregional trade in the GMS has remained resilient despite the global crisis,” he said. “Now we are looking at the potential of doubling or quadrupling this intraregional trade by opening up the borders, making the borders work more efficiently and more effectively, and by pulling in investments along the transport corridors to drive economic growth.”

The GMS is an economic zone bound together by the Mekong River. Covering 2.6 million square kilometres, the zone includes Cambodia, Laos, Myanmar, Thailand, Vietnam and China’s southern provinces. The GMS has a total population of over 300 million people.

In 1998, member countries adopted an approach to development that focused on three economic corridors. One, the Southern Economic Corridor, links Bangkok to Ho Chi Minh City via Cambodia.

Thapan said the physical link is in place, but that the corridor’s prospect of reaching its full potential depends on ensuring that towns and cities along it are equipped with the physical and regulatory infrastructure necessary to attract investment. That includes water supply, sanitation, waste management, urban transport, development controls and building regulations.

“That’s what will fuel the investments into the towns, and it is governors that are going to make these investments work, hence the need to get them engaged in the entire process,” he said.

A suitable framework will be provided by the Governors Forum, which was launched Wednesday and will meet regularly, Thapan said.

Sok Chenda, secretary general of the Council for the Development of Cambodia, the government’s key investment agency, acknowledged that Cambodia is starting at a competitive disadvantage compared to its bigger neighbours to the east and west when it comes to securing investment. However, he said the economic-corridors initiative provides a framework to move beyond competition and turn Cambodia into a key component of the region’s economic development.

“This is the beauty of the economic-corridor concept,” he said. “People can legitimately think we are a small country and we will just be a transit point, but this is why we need to move from being a transport corridor, helping goods move from one place to another, to an economic corridor where there is life and economic activity all along the corridor.”

No figures were available Wednesday for intraregional trade. However, figures obtained by the Post this month show Cambodia’s imports from Vietnam dropped 21.85 percent year on year during the first seven months from US$810 million to $633 million. Cambodia’s exports to Vietnam dropped 22 percent from $141 million to $110 million over the same period. Bilateral trade between the two countries was $935 million in 2006, rising to $1.19 billion in 2007 and up to a record $1.64 billion last year.

Six new border gates are set to be established by the end of this year between the two neighbours as part of efforts to boost annual bilateral trade to $2 billion.

Total trade between Thailand and Cambodia fell 31.7 percent to $913.58 million in the first seven months of the year, Thai customs figures show.