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Trade and Trade Facilitation in the Greater Mekong Subregion

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Trade and Trade Facilitation in the Greater Mekong Subregion Trade and Trade Facilitation in the Greater Mekong Subregion The Greater Mekong Subregion (GMS) Program, with support from the MEKONG SUBREGION THE GREATER IN TRADE FACILITATION AND TRADE Asian Development Bank (ADB) and other development partners, has scored impressive gains in promoting regional connectivity over the past 2 decades. Efforts have also been made to strengthen institutions and policies for trade and transport facilitation to increase the impact of the regional physical infrastructure. Trade and Trade Facilitation This book, prepared under an ADB technical assistance project financed by the Australian Agency for International Development, in the Greater Mekong brings together studies highlighting deeper, structural challenges to trade facilitation in the GMS, including need for governance and bureaucratic reforms, trade competitiveness, and improved alignment Subregion of the regional corridors to trade flows. Importance of greater synergy between subregional and regional platforms for trade facilitation, for example between the GMS and ASEAN, is also highlighted. The analyses should be of interest to development practitioners working to improve trade and transport facilitation in the GMS, elsewhere in Asia, and in the rest of the world. About the Asian Development Bank ADB’s vision is an Asia and Pacific region free of poverty. Its mission is to help its developing member countries reduce poverty and improve the quality of life of their people. Despite the region’s many successes, it remains home to two-thirds of the world’s poor: 1.8 billion people who live on less than $2 a day, with 903 million struggling on less than $1.25 a day. ADB is committed to reducing poverty through inclusive economic Edited by growth, environmentally sustainable growth, and regional integration. Based in Manila, ADB is owned by 67 members, including 48 from the region. Its main instruments for helping its developing member countries Pradeep Srivastava are policy dialogue, loans, equity investments, guarantees, grants, and Utsav Kumar technical assistance. Asian Development Bank 6 ADB Avenue, Mandaluyong City 1550 Metro Manila, Philippines www.adb.org Printed on recycled paper Printed in the Philippines Trade and Trade Facilitation in the Greater Mekong Subregion Edited by Pradeep Srivastava Utsav Kumar © 2012 Asian Development Bank All rights reserved. Published 2012. Printed in the Philippines. ISBN 978-92-9092-828-7 (Print), 978-92-9092-829-4 (PDF) Publication Stock No. BKK124938 Cataloging-In-Publication Data Srivastava, P. and U. Kumar, eds. Trade and trade facilitation in the Greater Mekong Subregion. Mandaluyong City, Philippines: Asian Development Bank, 2012. 1. Trade. 2. Trade facilitation. 3. Greater Mekong Subregion. I. Asian Development Bank. The views expressed in this publication are those of the authors and do not necessarily reflect the views and policies of the Asian Development Bank (ADB) or its Board of Governors or the governments they represent. ADB does not guarantee the accuracy of the data included in this publication and accepts no responsibility for any consequence of their use. By making any designation of or reference to a particular territory or geographic area, or by using the term “country” in this document, ADB does not intend to make any judgments as to the legal or other status of any territory or area. ADB encourages printing or copying information exclusively for personal and noncommercial use with proper acknowledgment of ADB. Users are restricted from reselling, redistributing, or creating derivative works for commercial purposes without the express, written consent of ADB. Photos on cover (clockwise from top): ImagineChina, Getty Images/AFP, AFP, Photononstop. Notes: In this publication, “$” refers to US dollars; “ton” refers to metric ton. 6 ADB Avenue, Mandaluyong City 1550 Metro Manila, Philippines Tel +63 2 632 4444 Fax +63 2 636 2444 www.adb.org For orders, please contact: Department of External Relations Fax +63 2 636 2648 [email protected] Printed on recycled paper. Contents Tables, Figures, Boxes, and Appendixes iv Foreword vii Abbreviations ix Chapter 1: Introduction 1 Pradeep Srivastava and Utsav Kumar Chapter 2: GMS Trade—Trends and Patterns 11 Pradeep Srivastava and Utsav Kumar Chapter 3: Facilitating Trade along the Southern Economic Corridor 39 Christian Ksoll and Peter Brimble Chapter 4: Trade Transit System in the GMS—Can It Work as Proposed? 75 Des Grimble and Gordon Linington Chapter 5: Constraints on Exports in Cambodia and the Lao PDR 111 Gordon Peters, Thy Khemra, and Ben Hyman Chapter 6: Modes of Transport Underlying GMS Trade Flows 145 Anthony Bayley Contributors 170 iii Tables, Figures, Boxes, and Appendixes Tables 2.1 Average Annual GDP Growth Rates in the GMS Economies (%) 12 2.2 Total Exports and Imports of GMS Countries 18 2.3 GMS Export Destinations, 2000 and 2009 22 2.3a Share of Destinations in Each GMS Country’s Exports (%), 2000 22 2.3b Share of Destinations in Each GMS Country’s Exports (%), 2009 22 2.3c Average Annual Growth of Exports of Each GMS Country, by Destination (%), 2000–2009 22 2.4 Direction of Intra-GMS Trade, 2000 and 2009 23 2.5 Composition (11-Sector) of GMS5 Exports, by Destination, 2000 and 2009 25 2.6 Grubel–Lloyd Index of Intra-industry Trade, 2000 and 2009 30 2.6a Grubel–Lloyd Index, 2000 30 2.6b Grubel–Lloyd Index, 2009 30 3.1 Detailed Overview of Time and Costs along the Southern Economic Corridor 47 3.2 Performance by Corridor, Bangkok–Phnom Penh 50 3.3 Performance by Corridor, Phnom Penh–Ho Chi Minh City 51 4 Maximum Permissible Tonnage along the EWEC 103 6 Trade between GMS Countries, 2009 154 Figures 1 The GMS Economic Corridors 2 2.1 GMS Trade-to-GDP Ratio, 1993–2010 13 2.2 GMS Exports and Imports, 2000–2009 16 2.3 Importance of the PRC in GMS Trade with the World 16 2.4 PRC and GMS5 Exports, 2000–2009 17 2.5 Country Share in Total GMS5 Exports and Imports, 2000 and 2009 18 2.6 Country Share in Growth of GMS5 Exports and Imports, 2000–2009 19 2.7 Direction of GMS5 Exports 20 iv Tables, Figures, Boxes, and Appendixes v 2.8 Growth of GMS5 Exports, by Destination, 2000–2009 20 2.9 Composition (Two-Sector) of GMS5 Exports and Imports, by Direction, 2000 and 2009 24 2.10 Composition (Two-Sector) of GMS Exports, 2000 and 2009 26 2.11 Composition (Two-Sector) of GMS Imports, 2000 and 2009 27 3.1 The GMS Southern Economic Corridor 41 3.2 Time–Cost–Distance Model, Bangkok–Phnom Penh 48 3.2a Cost Model, Bangkok–Phnom Penh 48 3.2b Time Model, Bangkok–Phnom Penh 48 3.3 Time–Cost–Distance Model, Phnom Penh–Ho Chi Minh City 49 3.3a Cost Model, Phnom Penh–Ho Chi Minh City 49 3.3b Time Model, Phnom Penh–Ho Chi Minh City 49 3.4 Impact Analysis of the Proposed Policy Measures and Their Ease and Duration of Implementation 63 3.5 Improved Time–Cost–Distance Model, Bangkok–Phnom Penh 64 3.5a Improved Cost Model, Bangkok–Phnom Penh 64 3.5b Improved Time Model, Bangkok–Phnom Penh 64 3.6 Improved Time–Cost–Distance Model, Phnom Penh– Ho Chi Minh City 65 3.6a Improved Cost Model, Phnom Penh–Ho Chi Minh City 65 3.6b Improved Time Model, Phnom Penh–Ho Chi Minh City 65 3.7 Rating of Policy Recommendations by Exporters 67 5.1 Garments as a Share of Total Cambodian Exports, 2000–2010 115 5.2 Food Exports as a Share of Total Cambodian Exports, 2000–2010 118 5.3 Wood Exports as a Share of Total Cambodian Exports, 2000–2010 120 5.4 Wood Exports as a Share of Total Lao PDR Exports, 2000–2010 123 5.5 Logistic and Supply Chain Impediments in Cambodia 125 5.6 Logistic and Supply Chain Impediments to Wood Product Exports in the Lao PDR 128 5.7 Constraints on Increasing Exports in Garments Sector, Cambodia 130 5.8 Constraints on Increasing Exports in Food Products Sector, Cambodia 132 5.9 Constraints on Increasing Exports in Wood Products Sector, Cambodia 134 5.10 Constraints on Increasing Exports in Wood Products Sector, the Lao PDR 135 6 Modal Service Standards 149 vi Tables, Figures, Boxes, and Appendixes Boxes 2.1 Data Sources and Data Issues 14 2.2 Grubel–Lloyd Index of Intra-industry Trade 29 Appendix Tables A2.1 SITC (Rev. 2) Two-Digit Products and Product Categories Used 34 A2.2 Composition (11-Sector) of the Exports of GMS Countries, by Destination (%), 2000 and 2009 36 A4 Comparative Analysis of Customs Transit Systems 109 A5 Key Characteristics of the Firms Surveyed 143 Foreword Regional cooperation is central to the vision of the Asian Development Bank (ADB) of an Asia and Pacific region free of poverty and to the promotion of inclusive growth. Under ADB’s Strategy 2020, regional cooperation and integration is among the five core areas of ADB operations. The Greater Mekong Subregion (GMS) Economic Cooperation Program is the first and foremost regional cooperation initiative of ADB. Established in 1992 and now entering its 3rd decade, the GMS program has built a reputation as a flexible, member country–owned, results-oriented, and investment-driven vehicle for promoting regional cooperation. As of June 2012, ADB, along with other development partners and GMS governments, had supported $15 billion in investment projects in the GMS and provided $289 million in technical assistance. ADB is the lead development partner and coordinator of the GMS program. While improving subregional connectivity through investments in transport infrastructure projects has been a hallmark of the GMS program, there was early recognition of the need to address at the same time the policies and institutions related to trade and transport facilitation (TTF).
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