GMS Strategic Framework, 2012–2022

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The Greater Mekong Subregion Economic Cooperation Program Strategic Framework 2012–2022

The Greater Mekong Subregion (GMS) Economic Cooperation Program will begin its third decade in 2012. Since its inception, the program has achieved noteworthy successes in fostering cooperation in a region that, at the commencement of the program, was emerging from a period of prolonged conflict. The program has built a reputation as a flexible, results- oriented, project-delivering vehicle for promoting regional cooperation and contributing to economic growth and poverty reduction as well as to the provision of regional public goods.

Increased recognition of the benefits of regional cooperation is manifested in the evolution of regionalism both in Asia and more broadly. New institutions have emerged while others have become more vigorous. Within this context of evolving regionalism, the GMS Program remains highly relevant. The start of a new decade is an opportune time for the GMS Program to assess its achievements and develop this new strategic framework for 2012–2022.

The new strategic framework builds on the substantial progress the program has made and the likely global and regional trends. It also builds on the commitment that member countries have made in their national development plans to the promotion of regional integration, and will guide the efforts of member countries to steer the program during the new decade to the next level in terms of results.

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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 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 are policy dialogue, loans, equity investments, guarantees, grants, and technical assistance.

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Asian Development Bank

The Greater Mekong Subregion Economic Cooperation Program Strategic Framework 2012–2022. Mandaluyong City, Philippines: Asian Development Bank, 2011.

1. Greater Mekong Subregion. 2. Strategic framework. 3. Economic corridors I. Asian Development Bank.

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ii Contents

Abbreviations iv Introduction 1 The Gms Program after 20 Years 2 Current Vision, Goals, and Approach 2 Strategic Thrusts 4 Resource Mobilization and Institutional Development 6 The Changing Global and Regional Context 8 Economic Trends 8 Institutional Developments 10 A Strategic Framework for the Next 10 Years 11 Vision, Goals, and Approach 11 Sector and Multisector Priorities 12 GMS Corridor Development 12 Transport 13 Energy and Power Market Integration 14 Telecommunications and Information and Communication Technology Applications 15 Tourism 16 Agriculture 16 Environment and Biodiversity 17 Human Resources Development 18 Implementing the Strategic Framework 20 Resource Mobilization 20 Knowledge Platform 21 Strategic Alliances and Partnerships 21 Capacity Building 21 Engagement with the Private Sector and Other Stakeholders 22 Monitoring and Evaluation 22 Evolution of Sector Forums and Working Groups 22 Role of External Partners 23 Annex: Summary GMS Program Results Framework 24

iii Abbreviations

ADB Asian Development Bank ASEAN Association of Southeast Asian Nations ASEAN+3 ASEAN, the People’s Republic of China, Japan, and the Republic of Korea CBTA Cross-Border Transport Agreement CEP–BCI Core Environment Program and Biodiversity Corridors Initiative EOC Environment Operations Center FDI foreign direct investment G20 Group of Twenty major economies GDP gross domestic product GMS Greater Mekong Subregion HRD human resources development ICT information and communication technology ISN information superhighway network Lao PDR Lao People’s Democratic Republic MOU memorandum of understanding PPP public–private partnership PRC People’s Republic of China SMEs small and medium-sized enterprises TTF transport and trade facilitation WGA Working Group on Agriculture

iv Introduction

In 1992, six countries—Cambodia, the People’s landlocked countries as it enables them to inte- Republic of China (PRC) (Yunnan Province), the Lao grate with external markets. Cross-border coop- People’s Democratic Republic (Lao PDR), myanmar, eration facilitates the development of regional Thailand, and Viet Nam—established the Greater infrastructure networks and the management of mekong subregion Economic Cooperation Program spillover of costs and benefi ts across borders. The (Gms Program) as an activity-based subregional globalization process of past decades, as well as economic cooperation program, and asked the issues such as climate change, natural resource Asian Development Bank (ADB) to be the program’s scarcity, communicable diseases, and even the secretariat. Guangxi Zhuang Autonomous Region global fi nancial crisis, have further underlined the of the PRC joined the program in 2004. relevance of regional cooperation.

In 2012, the Gms Program will begin its third Increased recognition of regional coopera- decade. since its inception, the program has tion is manifest in the evolution of regionalism achieved noteworthy successes in fostering regional both within Asia and more broadly. New institu- cooperation in a region that, at the commence- tions have emerged (e.g., the G201), while others ment of the program, was emerging from a period have become more vigorous. The Association of of prolonged regional confl ict. As of september southeast Asian Nations (AsEAN) in particular 2011, the program had implemented 55 invest- has unveiled a blueprint for an AsEAN economic ment projects with a total project cost of about community, which is in the process of implemen- $14 billion, involving subregional road, airport, and tation by member countries. Within this context of railway improvements; hydropower projects for evolving regionalism, the Gms Program remains cross-border power supply; tourism infrastructure highly relevant today, both as an established plat- development; and communicable disease control. form for member countries to cooperate on a The Gms Program has built a reputation as a fl ex- range of issues, and as a proven vehicle for deliv- ible results-oriented project-delivering vehicle for ering projects and results. At the same time, the promoting regional cooperation and contributing program can explore complementarities and to economic growth and poverty reduction as well synergies within the expanding Asian regionalism, as meeting the needs of regional public goods. including AsEAN+32 and the East Asia summit.

Economic cooperation among countries with Notwithstanding its continued relevance to the shared borders has long been recognized as eff orts of member countries to pursue growth and contributing to the creation of larger markets for poverty reduction, the start of a new decade is an national producers and consumers and encour- opportune time for the Gms Program to assess aging scale economies by reducing barriers the achievements of the current Gms strategic to trade and movements of capital and labor. Framework, which ends in 2012, and to develop Regional cooperation is particularly relevant for this new strategic framework for 2012–2022.

1 The Group of Twenty (G20) is a forum that promotes discussion between industrial and emerging market countries on key issues related to global economic stability (www.g20.org). 2 AsEAN+3 refers to AsEAN, the People’s Republic of China, Japan, and the Republic of Korea.

1 The GMS Program after 20 Years

his section draws on (i) the fi ndings and protecting the environment and promot- recommendations of the mid-term review ing the sustainable use of shared natural Tof the Gms strategic Framework, (ii) the resources. retrospective on that review, and (iii) the feed- back from in-country consultations. To further focus the program, and as part of the strategic framework, the Gms countries also agreed on 11 fl agship programs: Current Vision, Goals, and Approach the North–south Economic Corridor, the East–West Economic Corridor, the southern Economic Corridor, The Gms member countries envisioned that the telecommunications backbone, the Gms Program should help link their coun- regional power interconnection and trading tries through improvements in infrastructure, arrangements, and thereby promote trade and investment facilitating cross-border trade and investment, and stimulate economic growth. The countries enhancing private sector participation and also agreed that there were other sector issues, competitiveness, including in human resources development and developing human resources and skills environmental management, which needed to competencies, be addressed jointly at the subregional level to a strategic environment framework, complement national eff orts. To help realize this fl ood control and water resource manage - vision and address these issues, priority programs ment, and and projects were identifi ed and implemented in Gms tourism development. a range of sectors. since 2002, the Gms countries have met In 2002, the Gms countries assembled the various frequently at various levels, including at the level sector approaches with their associated programs of heads of state, to review the program and and projects into a comprehensive strategic fi ne-tune it in the light of progress in implemen- framework for subregional development—the tation. At the First Gms summit, held in 2002 in Gms strategic Framework—with a focus on fi ve Phnom Penh, Cambodia, the heads of govern- strategic thrusts: ments of the Gms countries endorsed the Gms strategic Framework as the “key means through strengthening infrastructure linkages; which closer economic cooperation and pros- facilitating cross-border trade and invest- perity will be achieved” in pursuit of the primary ment, and tourism; goals of Gms cooperation of fulfi lling the region’s enhancing private sector participation and vast potential, lifting people from poverty, and competitiveness; promoting sustainable development for all. At the developing human resources; and second Gms summit, held in 2005 in Kunming,

2 The Gms Program after 20 Years 3

Yunnan Province, the PRC, Gms heads of govern- countries to expedite implementation of high- ments reaffi rmed the goals and objectives of the priority subregional projects and initiatives. The program, and laid down “connectivity, competi- program has also mobilized an increasing amount tiveness, and community” as the building blocks of fi nancial assistance from development partners for achieving the Gms vision. At the Third Gms and other important stakeholders.3 In so doing, summit, held in 2008 in Vientiane, the Lao PDR, the program has delivered concrete results and Gms leaders reinforced the focus on connectivity contributed to economic growth and poverty and specifi ed that “enhancing competitiveness reduction in the subregion, as well as to the and accelerating our economic and social devel- broader realization of a prosperous, integrated, opment process through greater use of improved and harmonious Gms. Gross domestic product and expanded connectivity will be the focus of (GDP) in the subregion has grown at over 8% per our cooperation in the coming years.” year on average during the past 2 decades or so, real per capita incomes have more than tripled As the Gms Program approaches 2 decades of during the same period, the poverty incidence in operation, the Gms countries support the conclu- Gms countries based on national poverty lines sions of various program reviews and evaluations has declined substantially,3and Gms countries and confi rm the validity of the program’s vision have made major progress in meeting the other and goals. They also confi rm that the pragmatic, millennium Development Goals.4 Gms economies action-oriented, and results-focused approach have also become much more open, as measured of the program, as well as the mutual trust and by the increase in the trade–to–GDP ratio and the goodwill that has developed, have enabled Gms stock of foreign direct investment (FDI).5

3 ADB has provided around $5 billion in loans and grants for Gms projects. Other development partners have provided around $4.6 billion, and the Gms governments themselves have provided $4.3 billion. In addition, ADB and other development partners have supported 172 technical assistance projects with a total cost of $233 million for project preparation, capacity development, economic and sector work, and coordination and secretariat assistance. ADB has also played the role of lead development partner, coordinator, and honest broker in the Gms Program. 4 The economies of fi ve Gms countries, excluding the PRC, grew at a weighted average of 5.27% per year during 1993–2010, while Yunnan Province grew at 11.64% per year and Guangxi Zhuang Autonomous Region grew by 9.96% per year. sources: World Economic Outlook database, ADB Key Indicators database, CEIC Data on Guangxi Zhuang Autonomous Region and Yunnan Province, and ADB estimates. GDP per capita in 2009 was $677 in Cambodia; $3,744 in the PRC; $944 in the Lao PDR; $571 in myanmar; $3,940 in Thailand; and $1,052 in Viet Nam, according to the World Bank’s World Development Indicators. The statistical Communiqué of the PRC indicates that GDP per capita was $1,349 in Yunnan Province and $1,606 in Guangxi Zhuang Autonomous Region in 2007. In Cambodia the poverty rate declined from 47.0% in 1994 to 30.1% in 2007, in the Lao PDR the poverty rate fell from 45.0% in 1992 to 27.6% in 2008, in Thailand from 33.7% in 1990 to 8.1% in 2009, and in Viet Nam from 58.1% in 1993 to 14.5% in 2008. source: ADB. 2011. Framework of Inclusive Growth Indicators: Key Indicators for Asia and the Pacifi c. 2011 Special Supplement. manila. Poverty in the PRC declined from 6.0% in 1996 to 2.8% in 2004. source: World Development Indicators. http://data.worldbank.org/data-catalog/world-development-indicators. A detailed analysis of the progress Gms countries have made on both growth and poverty reduction over the past decade will be provided in the completion report for the current Gms strategic Framework. 5 Openness, as measured by the ratio of sum of exports and imports of goods and services to GDP (trade–to–GDP ratio), increased in fi ve Gms countries during the last 2 decades. From 1993 to 2010, Cambodia’s trade–to–GDP ratio increased from 48.3% to 136.6%, the PRC’s ratio increased from 42.0% to 54.2%, the Lao PDR’s ratio increased from 52.6% to 71.1%, Thailand’s ratio increased from 80.2% to 135.2%, and Viet Nam’s increased from 66.2% to 165.3%. sources: ADB statistical Database system online. https://sdbs.adb.org/sdbs/index.jsp; and World Development Indicators. http://data.worldbank. org/data-catalog/world-development-indicators. The stock of FDI in the Gms countries has increased manifold in the same period. The FDI stock in Cambodia in 2010 amounted to $5.96 billion (an increase of 47.7 times since 1993), in the Lao PDR the FDI stock in 2010 was $2.10 billion (36.5 times more than in 1993), in myanmar the FDI stock increased by 10.9 times from 1993 and stood at $8.3 billion, Thailand’s FDI stock in 2010 was $127.26 billion representing a nine- fold increase since 1993, and that of Viet Nam soared by 19 times to $65.63 billion in 2010. The PRC’s FDI stock increased 9.1 times, from $63.58 billion in 1993 to $578.82 billion in 2010. source: United Nations Conference on Trade and Development. http://unctadstat.unctad.org 4 The Greater Mekong Subregion Economic Cooperation Program Strategic Framework 2012–2022

In the light of these successes and looking ahead, Progress has been slower on the software aspects GMS countries wish to maintain the overall of cooperation in infrastructure. In transport, for direction of the GMS Program, while further fine- example, some progress has been made in the tuning it to boost its results. The countries believe implementation of the Cross-Border Transport that the program must remain well positioned with Agreement (CBTA), which is important in helping respect to emerging global and regional develop- transform transport corridors into economic corri- ments and should focus more on “software” activ- dors; but some GMS countries have still to ratify ities, or policy and institutional reforms, in cases all of the annexes and protocols. Some progress where the infrastructure or “hardware” is already has also been made in establishing the policy and in place. The program also needs to strengthen its regulatory framework for power trade in the GMS, overall monitoring and evaluation system. but there is still a long way to go. In telecommunications, the program has contributed to the gradual separation of the policy, regulatory, and Strategic Thrusts service operations functions, which is helping create a better enabling environment for the The GMS countries have set up sector forums and provision of basic services by the private sector. working groups to design each of the strategic thrusts of the GMS Strategic Framework and help In agriculture, which was the most recent addi- ensure their effective implementation. Progress tion to the GMS Program, the initial scope of has been most notable on the first strategic thrust the program was too ambitious and therefore (infrastructure linkages) and on the hardware as overstretched available resources. But the new opposed to the software aspects of the program. program—the Core Agriculture Support Program But in all five areas, important progress has been Phase II, 2011–2015—is focusing more directly on and continues to be made. issues involving cross-border trade in food and agricultural products, and climate change adaptation. Strengthening Infrastructure Linkages In both infrastructure and agriculture, strategy and The first strategic thrust of the current GMS project development and implementation have Strategic Framework involves subregional coop- been supported by sector forums and working eration in transport, energy, and telecommunica- groups, including the Transport Forum, the tions, as well as cooperation in agriculture to help Regional Power Trade Coordinating Committee, ensure the full development benefits of the infra- the Energy Forum, the Telecommunications Forum, structure investments. and the Working Group on Agriculture. More recently, the Economic Corridors Forum was been In all three of the infrastructure sectors, substantial established to promote multisector coordination progress has been made on the hardware aspects to help drive the transformation of the transport of cooperation. In transport, a major achievement corridors into economic corridors. has been the greatly improved physical connectivity in the subregion, exemplified by the near Facilitating Cross-Border Trade, completion of the transport component of the Investment, and Tourism three main GMS economic corridors: the East–West, The second strategic thrust of the current GMS the North–South, and the Southern. In energy, Strategic Framework involves promoting and GMS power interconnection projects have helped facilitating intra- and extra-GMS trade, invest- lay the basis for grid interconnection in the GMS, ment, and tourism. and a number of major hydropower projects have been developed with private sector participation. A number of diagnostic studies have been under- In telecommunications, the optical fiber intercon- taken on trade facilitation, including in the area nection of the telecommunications systems of the of enhancing implementation of the CBTA; sani- GMS countries is now in place and the information tary, phytosanitary, and other trade measures; the superhighway network (ISN) is being developed to custom transit system; and coordinated border provide a broadband platform among GMS coun- management. Bilateral agreements have been tries for voice, data, and internet services. signed by countries on the exchange of traffic The Gms Program after 20 Years 5

rights. Memorandums of understanding (MOUs) issues faced by the private sector in doing busi- on initial implementation of the CBTA at selected ness along the GMS corridors. To further increase pilot sites have also been signed. But progress in the effectiveness of the business forum it will be achieving the outcomes of improved transport important to expand effective representation of and trade facilitation has been slow. Institutional more sectors in the forum. issues have also constrained the interagency coordination, at both the subregional and national Developing Human Resources levels, that is necessary to achieve substan- The fourth strategic thrust of the GMS Strategic tive success in transport and trade facilitation. Framework endeavors to contribute to the realiza- Given that many agencies are involved in this tion of the human resources development goals of area, there is a need to ensure coordination and the GMS countries through subregional programs avoid overlap with other institutional parts of the that address capacity building, education and GMS Program. skills development, labor, and health issues.

Subregional cooperation has helped put the GMS One major accomplishment under this strategic firmly on the world’s tourism map. The task of thrust has been the development and implemen- “positioning the GMS in the eyes of the interna- tation of the Phnom Penh Plan for Development tional industry” has been accomplished through Management to build capacity among GMS a series of promotional campaigns and other government officials, particularly to strengthen initiatives. The Tourism Working Group has also their management capacities in support of regional been one of the most active of the sector working economic integration and the transition toward groups. It has its own secretariat—the Mekong more open economies.6 A second major accom- Tourism Coordinating Office—which is funded plishment has been the implementation of a range by GMS governments and collaborates closely of projects focused on the prevention and control with the private sector. of communicable diseases, including HIV/AIDS. Building on these accomplishments, the Human Enhancing Private Sector Resource Development Strategic Framework and Participation and Competitiveness Action Plan was prepared and approved in 2009 The third strategic thrust of the GMS Strategic and the Working Group on Human Resource Framework recognizes the critical role of the Development has been restructured to facilitate private sector as an engine of GMS development. implementation of the framework and action plan.

The most noteworthy initiative under this stra- Protecting the Environment and tegic thrust has been the establishment of the Promoting Sustainable Use of GMS Business Forum. The business forum, a joint Shared Natural Resources initiative of the chambers of commerce of the The fifth and final thrust of the current GMS GMS countries, has participated in GMS meetings Strategic Framework is directed toward ensuring on the policy and regulatory reforms necessary that environmental concerns are adequately to promote trade and investment in the GMS. It addressed in cross-border initiatives and properly has also participated in the Economic Corridors integrated into the subregion’s economic devel- Forum, where it has highlighted many of the opment efforts.

6 The Phnom Penh Plan for Development Management is a program that supports the building of a critical mass of highly competent and qualified middle- and senior-level development planners and managers to lead and drive the subregion’s socioeconomic development. The Phnom Penh Plan supports learning programs on a range of topics specifically designed to address the needs and enhance the competencies of the GMS civil service, a fellowship program in prestigious learning institutions for contextual immersion, a research program that supports new analytical insights for more informed policy choices, and an alumni program for continuous networking and expansion of professional contacts and lifelong learning. The Phnom Penh Plan also promotes access to development information through the establishment of learning resource centers, maintenance of a website, and publication of a newsletter and the GMS Journal of Development Studies. It promotes discussion of key development issues and sharing of insights and experiences through the GMS Development Dialogue. 6 The Greater Mekong Subregion Economic Cooperation Program Strategic Framework 2012–2022

Substantial progress has been achieved in this Recognizing Different Levels of area of cooperation in terms of laying the foun- Development dation for implementing a more effective and The GMS countries have clearly recognized the comprehensive agenda for sustainable develop- importance of giving special attention to the less- ment in the GMS, especially through the Core developed member countries to enable them Environment Program and Biodiversity Corridors to benefit from and contribute fully to subre- Initiative (CEP–BCI) with the vision of “a poverty- gional cooperation and integration. They have free and ecologically rich GMS.” The first phase of also recognized that this would require the GMS CEP–BCI (2006–2011) has helped improve land- Program to pay particular attention to capacity use management and sustainable finance mech- building in the low-income GMS countries. In the anisms in rural communities through the flagship absence of clear capacity-building targets, it is component of the BCI, and mainstream environ- difficult to assess how much progress has been mental issues into national planning processes made on this aspect of the GMS Program; but a through strategic environmental assessments review of ADB-supported GMS operations (both and environmental performance assessments. loans and technical assistance projects) shows An environment operations center (EOC) has a clear focus on GMS countries with lower per been established to serve as the secretariat of capita incomes. the GMS Working Group on Environment and the subregional implementing agency for CEP–BCI. Links to Other Regional Organizations and Initiatives Resource Mobilization and The GMS Program has paid particular attention to the importance of building strategic alliances Institutional Development and partnerships, particularly with ASEAN and the Mekong River Commission. The program has Resource Mobilization and Donor worked hard to avoid duplication and ensure Coordination close coordination with both of these initiatives All the GMS countries see the close link of the and has made important progress in this regard, GMS Program to resource mobilization as critical but more work is required to ensure that the to the program’s success because the resources GMS Program is better coordinated with the generated have enabled it to move from general broader ASEAN cooperation framework, including discussion of strategies and programs to imple- ASEAN+3. It is also important to continue to mentation of specific projects with real results. enhance the GMS Program’s interactions with other subregional initiatives, such as the Bay of Throughout its operation and particularly in Bengal Initiative for Multi-Sectoral Technical and recent years, the program has been successful in Economic Cooperation, and the Mekong River raising resources. The program raised $7.1 billion Commission. during 2007–2010 (equivalent to $1.8 billion per year) compared with $4.3 billion during 2000– Broadening Participation and 2006 (equivalent to $570 million per year). The Support main contributor to the recent increase has The GMS countries believe that it is critical that been loan-financed projects. ADB’s share of total knowledge and understanding of the GMS financing has also increased,7 suggesting that Program is built up not just at the top levels of greater efforts are necessary to generate more national governments but also further down the cofinancing from other official sources as well as bureaucracy and in local governments. It is also the private sector. critical, as the current GMS Strategic Framework

7 ADB’s share during 2007–2010 rose to 41%, up from 31% during 1992–2006. GMS governments’ share however fell from 33% during 1992–2006 to 29% during 2007–2010. The Gms Program after 20 Years 7

notes, that “genuine participation by all stake- meeting of senior officials at the policy level, holders—not just government but civil society, and (iii) sector forums and working groups at the nongovernment organizations, the private sector, project and operational levels. A national inter- academia, and the donor community as well—is ministerial committee assisted by a designated needed in the management and coordination of focal point or national secretariat coordinates the Program.” Anecdotal information indicates GMS activities in each country. A unit at ADB that there has been some improvement in recent headquarters provides overall secretariat support years, including more interagency coordination to the GMS Program in coordination with national with respect to the GMS Program, an increase in secretariats in the GMS countries. the flow of communications within and among countries, and wider dissemination of informa- These arrangements have provided an adequate tion about the program. These efforts now need administrative framework for implementing further reinforcement. the GMS Strategic Framework. They are flexible, simple, and generally effective in supporting the Monitoring and Evaluation pragmatic, activity-driven, and results-oriented The GMS Program has stressed the importance approach of the GMS Program. The capacity of of good monitoring and evaluation, while recog- the GMS national secretariats is being improved nizing the complexity of evaluating regional and most of the GMS forums and working groups cooperation projects. Although the Vientiane have taken steps to sharpen the focus of their Plan of Action (2008–2012) is regularly updated work and make their activities more effective, for and ADB conducts post-implementation evalua- example by further prioritizing planned projects tions for some projects, this critical issue has not and preparing strategies and work plans to guide received the attention it deserves. The definition their activities. of what constitutes a regional project still needs to be effectively operationalized. Baseline indica- Ownership of the Program and tors need to be established for all programs and Role of ADB projects, and progress must be better monitored The GMS countries have strong ownership of the and evaluated. program, but they also appreciate the important secretariat role that ADB has played. They would Organizational Effectiveness like ADB to continue to play a secretariat role and The GMS Program has been pursued through to enhance it further by capitalizing on the respect an institutional arrangement consisting of and trust it has gained from member countries to (i) a GMS leaders’ summit at the political level, help forge agreements across countries on some (ii) a ministerial-level conference supported by of the more challenging aspects of the program. The Changing Global and Regional Context

he Gms countries believe it is critical that chain. That strategy requires excellent logistics, the Gms Program takes cognizance of the good information technologies, modern business Tchanging global and regional context and and inventory management, attention to stan- remains fl exible and adaptable in response to dards and quality, and speedy and dependable changing circumstances.8 supply. Understanding the requirements of business is critical for governments to prioritize the reforms that will enable fi rms in their countries to Economic Trends participate in supply chains.

Growth, Connectivity, and The Great Recession and the associated volatility in Competitiveness commodity markets and prices have reopened old The Great Recession has accentuated the shift in debates as to whether an export orientation is a economic activity toward Asia. The region proved superior development path to a focus on domestic to be more resilient than the rest of the world, demand. There is some evidence that more open despite the sharp contraction in trade, and devel- economies suff ered sharper growth slowdowns in oping Asian economies suff ered a smaller dip 2009; but they also rebounded faster than others and have benefi ted from a quicker rebound than and have had superior long-term growth perfor- advanced economies or other developing econ- mance. The lessons to be drawn are that an ability omies. This pattern also holds true for the Gms to manage risk through sound macroeconomic countries, which have benefi ted from the Gms management and healthy fi nancial institutions, strategy of connectivity and have become linked along with a diversifi cation of markets and prod- to the most vibrant, resilient economies in the ucts are the keys to taking full advantage of the world. Indeed, Gms countries have experienced opportunities provided by globalization. In this a very dynamic growth in trade with the rest of context, AsEAN’s commitment to establish an the world. Intra-Gms trade has been growing AsEAN economic community by 2015, the signing even faster than trade with the rest of the world, of the AsEAN–China Free Trade Agreement as well and there have been substantial changes in its as free trade agreements between AsEAN and composition, with growing signs of intra-industry other countries and regions, and the rapid growth trade and development of value chains. of both North and south Asia will provide great opportunities for all the Gms countries. Prospects for growth are good but the strength of the Gms and other Asian economies depends Spatial Development on maintaining their competitiveness. In Asia, Because of its export orientation, most of Asia’s competiveness has been driven by the creation of growth has been concentrated along its coast- regional supply chains with many diff erent coun- lines. In the larger Gms countries, interior regions tries adding value to specifi c parts of the supply and provinces have lagged behind national

8 A much more detailed perspective on the changing context is provided in ADB. 2011. Asia 2050: Realizing the Asian Century. manila.

8 The Changing Global and Regional Context 9

growth, prompting governments to articulate Climate change will accentuate the signifi- subnational development plans to bring pros- cant challenges of meeting the increased food perity to these regions. And while the poorer demand arising from a world population that members of the GMS (Cambodia, the Lao PDR, will approach 9 billion by 2050 and from the Myanmar, and Viet Nam) have achieved rapid higher incomes of consumers in hitherto poor growth and are converging with the rest of countries. Real agricultural prices are likely to ASEAN, the speed of this convergence is still slow. increase and national governments will need to provide the supporting policy and infrastructure The trend toward spatial concentration is likely environment to enable farmers to raise produc- to continue, along with a trend toward urban tivity and better manage risk. It will also be crit- development. This leads to growing inequality ical that the global trading regime helps ensure within economies and across countries. The GMS that changes in comparative advantage translate focus on agriculture, infrastructure, and human into unimpeded trade flows to balance world resources can help change the trajectory of these supply and demand. Over the past 2 decades, market forces, producing more equitable growth all GMS countries have considerably increased within and between GMS countries. Linking GMS their agricultural production, and technologies strategies with subnational growth plans would and practices already exist that can help farmers also promote coherence in area development, further enhance production by using water for example for northeast Thailand and Yunnan more efficiently, increasing crop yields further, Province in the PRC. and promoting climate-friendly agriculture. Governments can help encourage such devel- But development experience in lagging regions opments by rethinking ways to secure land and shows that infrastructure and other produc- water rights, diversify production to high-value tive investments can only help offset market crops, and provide financial safety nets. forces toward divergence to a certain degree. Migration tends to be a powerful force equalizing Finance for Development living standards. This puts a premium on human Finance for development has held up reasonably capital development and mechanisms to connect well despite the Great Recession. After a decade migrants with their homes, such as transport and of rapid expansion, net official development assis- financial links for remittances. tance flows fell slightly in current US dollar terms from $122.3 billion in 2008 to $119.6 billion in Climate Change and Food Security 2009 before increasing again to $128.7 billion in Climate change, including its implications for 2010. food security, has become a major global and regional issue. In the GMS context, two aspects The future may be less promising. As rich coun- need to be highlighted: the push to take action tries wrestle with growing budget deficits and on climate change mitigation, including control- fiscal stances shift from expansion to consolida- ling greenhouse gas emissions and rewarding tion, aid budgets are under attack. They may also carbon sinks, and the increasingly likely need to become more targeted. The rich world is committed adapt to climate change. The push toward mitiga- to providing more resources for climate change tion will raise the value of the GMS countries’ still mitigation, for example; but despite the rhetoric ample stock of forest resources, while the need to the contrary, it is likely that at least part of these for adaptation will raise the value of commodi- resources will be a substitute for traditional develop- ties that make intensive use of scarce factors of ment assistance. However some traditional donors production, such as water. GMS countries need are increasing their assistance, and emerging to understand how to unlock the potential future economies (including the PRC and Thailand) have value added of these natural resources through begun to establish significant development support appropriate agriculture, human resources, and programs with a strong regional focus. infrastructure development. In addition to effective global responses to climate change issues, The somewhat uncertain situation with respect to greater efforts at the regional and subregional development assistance does suggest, however, levels are also necessary. that GMS countries should also look elsewhere to 10 The Greater Mekong Subregion Economic Cooperation Program Strategic Framework 2012–2022

mobilize resources for development projects. The This example shows how regional and subre- private sector is the largest pool of capital in the gional institutions are being used as a link world, but insufficient creditworthiness in most between global programs and individual coun- GMS countries in the past limited the potential to tries. Regional and subregional organizations are mobilize private finance. That situation has now also playing a significant role in the negotiation changed and private FDI flows are becoming of free trade and other partnership agreements, important for all GMS countries. With appropriate and are increasingly acting as financial interme- risk mitigation and credit enhancement features, diaries for regional projects to help streamline it is realistic to expect that private capital will overall financing arrangements. play a more significant role in GMS countries in the future. Developments in Asia The trend toward a greater role for regional and Institutional Developments subregional institutions is prominent in Asia as well; indeed the GMS Program is firmly rooted in a broad evolving structure of Asian regionalism Global Developments that already includes 54 regional institutions. At the global level, the Group of Twenty (G20) These institutions fall into four broad categories: has emerged as the premier forum for interna- (i) overarching, with the purpose of convening tional economic cooperation, and development summits that provide normative and declaratory issues are likely to be integral to the framework frameworks that legitimize and support regional for strong, sustained, and balanced growth artic- cooperation and integration; (ii) functional, with a ulated by the G20. The decision by the G20 to specialized technical agenda on a focused topic; address development issues signals its members’ (iii) facilitating, through the provision of advisory, belief that future global growth will be driven by administrative, technical, and financial support to emerging economies. a given area; and (iv) security. The GMS Program is the principal facilitating institution for the subre- G20 discussions will have a close bearing on GMS gion, and, in the context of the increasing role activities. For example, the GMS is committed to of regional organizations of all kinds, it needs to the creation of a favorable environment for small coordinate effectively not only with ASEAN (and and medium-sized enterprises (SMEs). The G20 ASEAN+3) but also with some of the functional has formed the Financial Inclusion Experts Group entities operating in the same countries, such as with a subgroup on SME Finance to take stock of the Ayeyawady–Chao Phrya–Mekong Economic the role, needs, and barriers of SMEs. The G20 has Cooperation Strategy (ACMECS), the Mekong also launched a new Global Agriculture and Food River Commission, and the Southeast Asian Security Program, an example of a vertical fund Ministers of Education Organization (SEAMEO). through which aid resources are increasingly It also needs to coordinate more with regional being channeled. Moreover, countries applying to organizations in South Asia. this new program have had their own programs vetted by regional organizations, enhancing prospects for success. A Strategic Framework for the Next 10 Years

Vision, Goals, and their cooperation in designing and implementing the program. This means adhering to the principles Approach of member ownership, equal consultation, mutual benefi t, steady progress, win–win results, and recog- The strategic framework for the next 10 years nition of the diff ering levels of development of the of the Gms Program builds on the substantial Gms countries. It also means continuing with the progress the program has made and the likely very practical, action-oriented approach to the future global and regional trends. It also builds program that has characterized its design and imple- on the commitment that member countries have mentation over the past 2 decades. made in their national development plans to the promotion of regional integration and, in that In the context of the vision, goals, and approach context, to encouraging greater Gms integration for the Gms Program, member countries agree on as part of a broader process of greater integration the need for further fi ne-tuning of the program; within AsEAN and the Asia region. speeding up the implementation of policies, programs, and projects; and taking the program Bearing in mind the progress that has been made to the next level in terms of results. member coun- and the expectations for the future, Gms member tries also concur on how such improvements will countries wish to maintain the vision and goals be accomplished. that currently guide the program: First, there needs to be a more eff ective focus on Gms countries envision a mekong subregion the software aspects of the program to comple- that is more integrated, prosperous, and ment the continued focus on hardware. This will equitable. require not only greater progress on the policy The Gms Program will contribute to realizing and institutional dimensions of infrastructure the potential of the subregion through (i) an development (e.g., transport and trade facilita- enabling policy environment and eff ective tion or power market integration), but also an infrastructure linkages that will facilitate increased emphasis more broadly on knowledge cross-border trade, investment, tourism, and generation and management related to program other forms of economic cooperation; and initiatives and cross-country coordination. (ii) the development of human resources and skills competencies. second, there should be more selectivity and To ensure that this development process is prioritization of focus areas within sectors, equitable and sustainable, environment and including less emphasis on information sharing social interests will be fully respected in the and a greater focus on decision making on issues formulation and implementation of the Gms that are clearly regional in nature. This should lead Program. to more tangible results and greater impact.

member countries also recognize the importance Third, the program should be more closely linked to of continuing with a similar overall approach to the broader regional integration agenda, leading

11 12 The Greater Mekong Subregion Economic Cooperation Program Strategic Framework 2012–2022

to more clarity on which regional issues should be To strengthen the results focus of the program and covered by the GMS Program and which ones are enhance monitoring and evaluation, a common better left to other regional organizations. framework has been developed for each priority of the new GMS Strategic Framework and associ- Fourth, it is important that the program focuses ated program that links the various sector forums more attention on the linkages across different and working groups with specific interven- sectors (e.g., between energy, agriculture, and tions. These, in turn, are connected with sector food security, and the environment) and recog- results (outputs and outcomes), and ultimately nizes climate change as a broader development to improvements in region-level outcomes and issue as well as an environment issue. impacts. The summary program results framework is provided in the Annex. Detailed sector Fifth, there is scope for some rebalancing of atten- and multisector indicators and targets will be tion and resources without changing the broad prepared through the sector working groups in sector focus of the program and bearing in mind the first year of implementation. organizational capacities and the potential for achieving real results across the sectors. GMS Corridor Development Strategies and action plans have been prepared Finally, the GMS Program will focus more strongly for each of the economic corridors to help ensure and effectively on monitoring results and on that they contribute to enhanced agriculture, other improvements in program implementation industry, and service sector development and that will help enhance its overall effectiveness trade (including the development of SMEs), and and impact. to the overall promotion of economic growth and poverty reduction. These strategies differ Sector and Multisector significantly from earlier strategies in recognizing the important interlinkages across sectors while Priorities being very focused on relatively fewer high-profile initiatives. For each corridor, there is a need for The GMS Program will continue to focus on a carefully planned investments aimed at strength- broad range of sector and multisector priorities: ening urban development, upgrading logistics, improving the network of feeder and rural developing the major GMS corridors as roads, and developing other transport modes. economic corridors; These investments should be reflected in a new strengthening transport linkages, particu- regional master plan. Easier movement of goods larly roads and railways; and people through improvements in the soft- developing an integrated approach to ware of transport and trade facilitation (TTF) will deliver sustainable, secure, and competitive also be essential. In addition, private sector invest- energy; ment through supply chains and in the special improving telecommunication linkages and economic zones or industrial parks that have been information and communication technology established at the borders or along the corridors (ICT) applications among the GMS countries; will need to be encouraged. Further development developing and promoting tourism in the of the corridors must also take due account of food Mekong as a single destination; and energy security and climate change concerns. promoting competitive, climate-friendly, and sustainable agriculture; Within the context of this broad set of sector and enhancing environmental performance in cross-sector issues, a comprehensive approach to the GMS; and the urgent need to improve TTF has been final- supporting human resources development ized that covers initiatives that facilitate the process of GMS integration while addressing any negative transport facilitation—including expanding consequences of greater integration. and streamlining exchange of traffic rights A Strategic Framework for the Next 10 Years 13

arrangements, improving the customs transit corridors, the reduction of nonphysical barriers to system, accelerating infrastructure construc- transport and trade, and the eventual transformation and improved procedures at border tion of the road transport corridors into economic posts, pursuing the proposed establishment corridors. The strategy also recommends broad- of a GMS freight transporters’ association, and ening the scope of the transport program in the strengthening the road transport industry; GMS to include not only roads but also railways and trade facilitation—including enhancing co- other modes of transport (water and air). ordinated border management and aligning these efforts with regional trade facilitation As the strategy nears completion, and with major measures, enhancing the sanitary and phy- road links now in place in all countries except tosanitary regime for GMS trade, strength- Myanmar, GMS countries are increasing the focus on ening national and subregional institutions for trade facilitation, and developing an ef- encouraging multimodal systems, particu- fective regional trade logistics strategy; and larly road and rail; capacity building and improving the legal improving road safety and addressing the and regulatory framework for TTF. broader social dimensions of transport investments; The Economic Corridors Forum will coordinate ensuring that climate change considerations the overall development of the regional corri- are considered in transport development dors, including through implementation of the (e.g., controlling greenhouse gas emissions agreed strategies for each of the corridors and through freight traffic management); strengthening coordination and ownership of addressing the nonphysical barriers to cross- the strategies at the provincial and local levels. border transport; and Consideration will also be given to expanding the promoting the development of economic responsibilities of the forum to include a wider corridors. range of cross-sector issues, including trade and investment facilitation and the development of The importance of focusing on both the hard- urban areas along the corridors. This will require ware and the software has been recognized in the increased coordination with other sector working case of railways where the strategic framework for groups and a clear division of responsibilities that connecting the GMS railways, finalized in August also reflects the specific institutional arrange- 2010, highlights the following priority actions: ments of each of the GMS countries. For example, transport sector agencies will need to take the ensuring that all GMS countries are connected lead on cross-border transport facilitation through to a GMS rail network by 2020; exchange of traffic rights, while a different set of promoting the development of a seamless agencies will need to focus on other aspects of rail network in the GMS by corridor development related to trade facilita- (i) agreeing on common technical standards tion and investment promotion. Efforts will also of interoperability, be made to integrate the progress and lessons (ii) streamlining and harmonizing procedures learned with respect to trade and investment facil- for cross-border movement of people and itation for the economic corridors into the broader goods, agenda of trade and investment facilitation being (iii) agreeing on regional operating rules and pursued in the context of ASEAN integration and safety standards, in other forums. (iv) fostering cooperation between GMS railways, and Transport (v) ensuring connection to other modes of Transport will remain at the forefront of the GMS transport; Program and will continue to be guided by the GMS Transport Strategy 2006–2015, which focuses ensuring that railway infrastructure and equip- on the development of priority road transport ment in the GMS are modern and sufficient to 14 The Greater Mekong Subregion Economic Cooperation Program Strategic Framework 2012–2022

meet the demand for services, and operated ering sustainable, secure, and competitively priced and regulated according to best practices in energy. In this context, GMS energy cooperation the operation and regulation of railways; has recently been expanded and now focuses on developing GMS railway organizations to four major strategic objectives: support the network by establishing a GMS rail coordination office; and enhance access to energy for all sectors and involving the private sector in the planning communities, particularly the poor in the and development of the GMS railway network. GMS, through promotion of best energy practices in the subregion; The strategic framework for railways has four develop and utilize more efficiently indig- components to support these priority actions: enous, low carbon, and renewable resources, while reducing the subregion’s dependence completing at least one connecting route on imported fossil fuels; before 2020, improve energy supply security through providing the supporting investments need- cross-border trade while optimizing use of ed to upgrade the capacity of the existing subregional energy resources; and railway lines on the selected route, promote PPP and private sector participa- undertaking technical assistance projects to tion, particularly through SMEs for subre- prepare national strategies and investment gional energy development. studies and develop information networks, and Priority regional initiatives for both hardware and establishing the GMS Railway Coordination software improvements have been identified as part Office. of the Energy Road Map and include the following:

The GMS Transport Forum will continue to coordi- across the energy sector: nate the overall program, including reviewing the (i) promoting environmentally sustainable current GMS Transport Strategy and developing regional power trade planning, coordina- a new strategy for the years beyond 2015, while tion, and development in the GMS; the newly established GMS Railway Coordination (ii) improving energy efficiency through Office will facilitate implementation of the stra- demand-side management and energy tegic framework for connecting the GMS railway conservation in the GMS; systems. These groups will need to increasingly (iii) promoting the development of renew- interact with other regional organizations in to able energy resources such as biogas, ensure the system is well linked to other regions, solar, wind, hydro, and geothermal, and such as South Asia. The program as a whole will clean fuels such as compressed natural also need to look in more depth at broader issues gas; and of intermodal transport and logistics as well as (iv) promoting a policy framework for facili- promoting more private sector financing of trans- tating renewable energy development port infrastructure and more public–private part- and energy efficiency; nerships (PPPs) in the sector. in the power subsector: continuing the Energy and Power Market development of a regional power market Integration through a two-pronged approach: providing Given the widespread energy poverty of the GMS the policy and institutional framework for and recent global developments, such as finan- power trading, and developing the grid cial turmoil, fluctuating energy prices, pressures interconnection infrastructure to connect on the environment, geopolitical uncertainties of the various GMS power systems; energy supply, and interconnectedness of global in the oil and gas subsector: supporting energy markets, GMS countries have never felt a realization of GMS segments of the trans- stronger need for an integrated approach to deliv- ASEAN gas pipeline and promoting the A Strategic Framework for the Next 10 Years 15

development of environmentally friendly oil Telecommunications and and natural gas logistics and network; and Information and Communication in the coal subsector: promoting clean Technology Applications technologies while remaining cognizant of The long-term goal of subregional coopera- the importance of coal in meeting countries’ tion in telecommunications will be to improve energy demand. telecommunication linkages and promote ICT applications among the GMS countries, thereby The Subregional Energy Forum will be respon- facilitating communications and access to sible for overseeing this comprehensive and information, lowering transaction costs, and ambitious program. It will also ensure that social enhancing the competitiveness of the subregion and environmental factors are integrated into as a whole. Further progress toward this goal will energy planning, and that high levels of private require an updated sector strategy focused on financing are mobilized for major energy proj- efforts to ects. The forum plans to identify a lead country for specific projects that would be developed, strengthen the institutional structure for ensuring greater GMS ownership of the proj- sector cooperation, ects, as well as getting the countries to coordi- identify and prioritize further information nate with development partners for funding and superhighway network (ISN) infrastructure technical support. This will help to better align needs, partners’ country programs with their regional build capacity for the use of advanced and GMS programs. The forum is also tasked with technology, regular monitoring of the progress of the Road advance cooperation on new ICT, Map for Expanded Energy Cooperation, and will promote ICT applications including e-com- serve as the vehicle for information sharing on merce and e-learning, GMS energy cooperation. To properly monitor channel human resources to ensure the sus- and reflect the successes in realizing its goals, the tainable development of the sector, and forum has begun to adopt national and subre- continue to develop pilot ICT projects in gional performance targets in the various areas of rural areas. the Energy Road Map. Given the demonstrated success globally of the It will also be important to develop more private sector in efficiently delivering ICT services, momentum for the integration of the regional there is also a need to clearly assess the rela- power market, due to the enormous efficiency tive roles of the private and public sectors in ICT benefits to be gained, by establishing a GMS development. It is also necessary to identify and regional coordination center to oversee power prioritize issues to be addressed at the regional trade development and report to the Regional level through GMS cooperation. The strategy for Power Trade Coordination Committee. The the sector will recognize that national point-to- center would focus initially on synchronizing the point interconnections have been established, building of new power plants and transmission and it will therefore focus on promoting ICT appli- lines in the region and would later turn its atten- cations services, especially those associated with tion to allowing or encouraging competition in cross-border activities using the ISN. the electricity market as it grows in size and matu- rity. Besides harmonizing regional power plans The Subregional Telecommunications Forum will and investments and coordinating regulatory and coordinate the updated sector strategy and deter- trading regimes and sector reforms, the center mine the specific actions to be supported in the would systematically internalize environmental coming years, based on the findings and recom- and social impacts in the preparation of the GMS mendations of the sector study. The forum will power expansion plans. This link with the envi- need to consider how its work should relate to and ronment further reinforces the case for the GMS be coordinated with GMS telecommunications Program to focus more on linkages across GMS cooperation under the GMS ISN bodies created sectors of cooperation. by memorandums of understanding (MOUs) on 16 The Greater Mekong Subregion Economic Cooperation Program Strategic Framework 2012–2022

ISN development signed in 2004 and 2005. While groups from the negative impacts of tourism, these MOUs have expired, the GMS countries are accelerating the development of pro-poor preparing a successor MOU, to be signed later in tourism products and services, developing 2011, that will continue the functioning of the ecologically sensitive and socially responsible ISN bodies. The forum will also need to deter- tourism infrastructure, promoting private mine what future secretariat support it will require sector investment in responsible tourism ven- and how this should be provided in the context tures, and promoting energy efficiency and of ADB’s decision to transform the cooperation environmentally friendly technologies. mechanism of the sector. Sustainable Marketing and Product Development Program. The program Tourism focuses on improvements in quality stan- GMS cooperation in tourism will continue to dards of tourism facilities and services, joint be guided by the GMS Tourism Sector Strategy marketing of priority Mekong River seg- (2006–2015), adopted in 2005, and the recently ments, further streamlining of cross-border agreed modifications to that strategy designed travel (including visa) formalities, and harmo- to provide greater focus and prioritization. The nizing the collection, analysis, and dissemina- overall aim of GMS tourism cooperation remains tion of tourism statistics. to “develop and promote the Mekong as a single destination, offering a diversity of quality and The GMS Tourism Working Group will continue to high-yielding subregional products that help to review the implementation of priority programs distribute the benefits of tourism more widely; and projects, exchange lessons on the implemen- add to the tourism development efforts of tation of projects, coordinate with development each GMS country; and contribute to poverty partners, and report to the GMS tourism ministers reduction, gender equality and empowerment and senior officials. It is also mandated to interact of women, and sustainable development, while with other GMS working groups, including those minimizing any adverse impacts.” Recently, the on environment and human resources, and with seven strategic programs of the original strategy the GMS economic corridors and transport forums. were consolidated into three to better align with The Mekong Tourism Coordinating Office, as the the institutional capacity and resources of the working group’s secretariat, will continue to coor- national tourism organizations and to encourage dinate the implementation of particular projects; multisector cooperation during implementation. lead the single-destination marketing program; The spatial strategy has also been revised to focus monitor developments in the subregion; maintain more directly on segments of the Mekong River promotional and institutional websites; and main- tourism corridor and linked circuits. tain relations with national tourism offices, the private sector, and development partners. Efforts GMS national tourism offices, development will be exerted to resolve the legal status of the partners, and the private sector will now focus coordinating office to enable it to mobilize addi- resources on implementing the following activi- tional resources and discharge its responsibilities ties under three consolidated programs and in more effectively. the priority Mekong segments and subregional tour circuits: Agriculture Under the Core Agriculture Support Program Tourism-Related Human Resource Dev- Phase II, the GMS countries have agreed on elopment Program. The program focuses new strategic directions to address emerging on capacity building and training of govern- regional challenges to agricultural development. ment officials and tourism hospitality enter- The second phase of the program recognizes prises, and upgrading of tourism training the drivers of change in the region, including facilities. the ongoing process of trade liberalization, Pro-Poor Sustainable Tourism Develop- changing market demands, the degradation of ment Program. The program focuses on natural resources, the contribution of agricul- safeguarding heritage and vulnerable ture to climate change and the impact of climate A Strategic Framework for the Next 10 Years 17

change on the sector, and global concerns about initiatives aimed at regional cooperation which food security. It also acknowledges the need to promotes cross-border agricultural trade and agri- prioritize focus areas in the context of limited business investment will be emphasized. A more resources, and focuses specifically on issues effective institutional mechanism for the WGA will linked to expanded cross-border trade in agri- be defined to improve project performance and food products and climate change adaptation. engage GMS member countries in a more system- atic and sustained manner. The new program has three pillars: Environment and Biodiversity Pillar 1: Building global competitiveness In considering the further development of the in food safety and modernizing agricul- Core Environment Program and Biodiversity tural trade. This pillar will be pursued by pro- Conservation Corridors Initiative (CEP–BCI), the moting agricultural trade and agribusiness GMS countries have identified the following investment in the GMS economic corridors priority thematic issues: through harmonized food safety standards based on international standards, informa- Biodiversity conservation and poverty tion technology-based traceability systems alleviation. With infrastructure and other and e-commerce, and a community-based development being major drivers of eco- participatory guarantee approach. system fragmentation and destruction and Pillar 2: Promoting climate-friendly ag- as poverty alleviation remains at the core of riculture and natural resource manage- the GMS countries developmental efforts, it ment. This pillar will be pursued by sup- will be important to expand the biodiversity porting climate-resilient farming systems; a conservation and pro-poor activities of the weather-based insurance system; and con- CEP–BCI, especially among the vulnerable trol of transboundary invasive species, pests, upland communities and as a means of en- and animal diseases. suring biodiversity conservation. Pillar 3: Promoting agriculture as a leader Climate change adaptation and mitiga- in rural renewable energy technology and tion. GMS countries are also concerned eco-friendly cross-border supply chains. about the potential negative impacts of cli- This pillar will be pursued through a regional mate change on food and energy security. bioenergy regulatory framework and har- Increasing weather variability is also likely monized standards, biomass technologies to increase the vulnerability of ecosystem and fertilizers for carbon credit, and eco- services and amplify impacts on dependent label systems for market access. poor communities. Furthermore, major destruction of biomass in recent years from the The new program responds to many of the broad subregion’s forests is frustrating efforts to ideas for strengthening the effectiveness of the control greenhouse gas emissions. GMS Program, including the need for greater prior- Capacity development. This will include itization and the focus on climate change issues increased activities under CEP–BCI projects and on software issues more broadly. Proposed and programs involving the participation of new projects under preparation emphasize young GMS national researchers through the country-led initiatives aimed at regional partnering environmental education network, thereby to promote cross-border agricultural trade and enhancing environmental awareness in the agribusiness investment. The GMS Working Group younger generation and increasing envi- on Agriculture (WGA) will continue to monitor ronmental management performance and the overall implementation of the program and nature conservation in the subregion. GMS ensure it is well coordinated with other sector universities and civil society will also support programs. The WGA will seek a broader range of such targeted capacity development. financing sources, including multilateral and bilateral development partners, private enterprises, To address these issues and ensure enhanced and national government financing. Country-led environment and development performance 18 The Greater Mekong Subregion Economic Cooperation Program Strategic Framework 2012–2022

within the GMS, the GMS countries have agreed The framework highlights the need to focus on the following four components of CEP–BCI on activities that are truly regional in nature by Phase II: exploiting one or more of the following types of opportunities: sustained development planning systems, methods, and safeguards; facilitating subregional integration by har- improved management of conservation monizing HRD regulations, standards, poli- landscapes for sustainable livelihoods; cies, and procedures; enhanced climate resilience and promotion addressing cross-border HRD issues resulting of low-carbon development; and from subregional integration; strengthened institutions and sustainable obtaining additional value added by con- financing for environmental management. ducting selected activities at the subregional level; The next phase of the CEP–BCI is consistent with exchanging relevant information and experi- the changes being implemented for the GMS ence within the subregion; and Program as a whole. The overall CEP–BCI program complementing subregional investments in will be closely coordinated with the work of other other sectors. GMS working groups. The action plan covers five areas: The GMS Working Group on Environment will continue to play its steering and umbrella functions promoting regional cooperation on education by continuing to deliberate on the annual program and skills development, including building the of implementation, receiving progress reports capacity of GMS government officials in devel- from the GMS Environment Operations Center opment management through further phases (EOC), and reporting to the GMS Environmental of the Phnom Penh Plan for Development Ministers Meeting and the GMS ministerial meet- Management and developing and piloting a ings. National support units will play a pivotal role framework for the mutual recognition of tech- in overseeing implementation of program and nical and vocational skills in the GMS; project activities launched under the CEP–BCI and facilitating safe labor migration within the will be the network nodes between the EOC and subregion, including upgrading labor migra- the GMS country focal points for various sectors. tion management systems, enhancing social The EOC will maintain the core functions of facili- protection for migrant workers, and improv- tation, coordination, program and project design, ing labor market information systems; monitoring, and securing and leveraging financial supporting communicable disease control resources for implementation of the investment (including HIV/AIDS, malaria, and dengue) in framework. It is also envisaged that the EOC will the subregion and improving food and drug emerge as the subregional referral center for envi- safety; ronmental issues relating to the CEP–BCI. enhancing regional cooperation for social development, including strengthening subre- Human Resources Development gional cooperation in anti-human-trafficking The Strategic Framework and Action Plan for Human activities, improving the capacity of vulner- Resource Development in the GMS, approved in able groups including women, and conduct- 2009, aims to (i) support human resources devel- ing research on the social impacts of increased opment (HRD) initiatives that directly facilitate the subregional connectivity; and enhancing the process of subregional cooperation and integration, sense of community in GMS youth; and such as managing labor migration and harmonizing strengthening regional institutional links and HRD standards; and (ii) address cross-border issues mechanisms for HRD cooperation in the GMS. directly linked to GMS integration, such as cross- border transmission of communicable diseases, and It will be important to further prioritize initia- human trafficking. tives in each of these areas. Labor migration may A Strategic Framework for the Next 10 Years 19

deserve greater attention in the light of expected subregional, subsector, and national levels. In addi- regional developments. The future directions of tion, strategic partners in the HRD program, which the Phnom Penh Plan and the GMS Program’s are critical to the GMS Program’s overall success— overall capacity building programs will also need including international, regional, and subregional careful review. organizations; bilateral donors; nongovernment organizations; and GMS universities and research Given the multisector nature of subregional coop- institutes—will be encouraged to become more eration in HRD, the institutional arrangements, engaged. The working group is expected to meet structure, and operations of the GMS Working more regularly (probably on an annual basis) and is Group on Human Resource Development will considering organizing subgroups on a less formal continue to be reviewed and strengthened at the and more task-driven basis. Implementing the Strategic Framework

here will be no fundamental change in the work, including second- generation investment organization of the Gms Program or its projects,9 will be formulated based on a regional Timplementation arrangements; but Gms planning exercise which will begin in 2012. The countries would like to see continued improve- pipeline will be provided as a detachable supple- ments in areas such as capacity building (particu- ment to the strategic framework, and will be larly for Cambodia, the Lao PDR, myanmar, and updated at suitable intervals over the next decade. Viet Nam); coordination with other regional orga- The supplementary annex to this report provides nizations; participation of all concerned stake- an interim indicative baseline investment program holders; and monitoring and evaluation. for the Gms, associated fi nancing requirements, and, where available, potential sources of fi nance.

Resource Mobilization Resource mobilization eff orts will need to be stepped up to meet the fi nancing needs of the The close links of the Gms Program to resource program over the next decade. In addition to mobilization will continue to be important for its continued support from ADB and the Gms coun- overall success. A good understanding of resource tries themselves (particularly the more devel- availability will also help in the prioritization and oped Gms countries), the program should look to sequencing of future investments and other activi- other development partners for greater fi nancial ties. During the next 10 years, the relative share of support. The Gms Program recognizes the impor- investments in road infrastructure will diminish with tance of accessing some of the newer and special- the completion of the major transport corridors; ized global funds, including those concerned but some investments in roads will still be impor- with climate change. The program will also need tant—particularly in myanmar and in secondary to tap private sources of fi nancing more eff ec- roads. In addition, there will be a continued need tively, and review various possible mechanisms, for major investments in the energy and, possibly, including guarantees. The public–private part- telecommunications. There may also be major new nership (PPP) modality, which is already being investments in railways and the hardware dimen- developed in some of the member countries, may sions of other sector programs in the context of be viable during the next decade in other coun- Gms corridors development. tries. Each Gms country will be expected to play an active role in project development and private The fi nancial resource needs of the program will sector resource mobilization. ADB’s Private sector therefore remain very large. A detailed invest- Operations Department is also expected to play a ment pipeline to implement the strategic frame- larger role.

9 multisector and sector investments in areas like urban development, logistics, industrial parks, secondary roads, and rural development, that will build on transport arteries developed by fi rst generation investments.

20 Implementing the Strategic Framework 21

Knowledge Platform Asia Regional Economic Cooperation (CAREC, on the transport and trade agenda); the Bay of Bengal Initiative for Multi-Sectoral Technical and In the coming years, the GMS Program will move Economic Cooperation (BIMSTEC); the Indonesia– increasingly into more complex software and Malaysia–Thailand Growth Triangle (IMT-GT, on second-generation issues where high-quality broader connectivity issues); the Southeast Asian analytic work and effective discussion and con- Ministers of Education Organization (SEAMEO, sensus building around its results will be critical. on higher education); and the Ayeyawady–Chao Issues to be addressed could include (i) identi- Phrya–Mekong Economic Cooperation Strategy fying the relative costs and benefits to member (ACMECS). countries from integration through transport and trade facilitation; (ii) addressing the complex interlinkage between energy, agriculture and Capacity Building food security, and the environment; and (iii) the role of improved labor market flexibility, including The GMS Program will maintain its focus on migration, in the future integration of the GMS. capacity building, particularly for the lower- To address such issues, a knowledge platform income member countries. In addition to enhanc- needs to be established as an integral part of the ing the Phnom Penh Plan for Development GMS Program and the necessary resources mobi- Management, which is a major capacity building lized to undertake critical knowledge activities. effort, capacity building will continue to be a In developing such a platform, the program will major component of most sector initiatives.10 The work closely with the Greater Mekong Subregion program will also work closely with the Mekong Academic and Research Network and other insti- Institute and other organizations involved in tutions and think tanks involved in work relating capacity building for GMS regional development. to the GMS. The Phnom Penh Plan will seek innovative strat- Strategic Alliances and egies for capacity development of GMS civil servants to contribute to the implementation of Partnerships the new GMS Strategic Framework. It will continue to offer learning programs focused on leader- The GMS countries are committed to ensuring ship for regional cooperation and development. that the program develops stronger linkages The quality and depth of the learning programs with other regional initiatives. The relation- will be improved with new partnership modali- ship of the program to ASEAN and ASEAN+3 is ties; training of trainers; learning materials devel- of particular importance because of the GMS opment (case studies, multimedia materials, Program’s potential to help drive some of the manuals, and tool kits); and blending learning broader objectives related to ASEAN integra- formats. The program will organize more learning tion and the formation of an ASEAN economic programs along the GMS economic corridors to community. The relationship of the program to give government officials hands-on experience of the Mekong River Commission will also be of the challenges and development opportunities in increasing importance as many of the initiatives the subregion. The program will continue efforts supported by the GMS Program have substan- to better integrate with other GMS Program activ- tial implications for management of the Mekong ities and sector working groups to influence and River and other aspects of water resource support their work programs and strategies. The management. The GMS Program will also need Phnom Penh Plan’s monitoring and evaluation to work closely with many other subregional systems will be further improved to ensure that organizations and initiatives, including Central the envisaged results are achieved.

10 The Transport and Trade Facilitation Program, for example, has an important capacity building component which will focus, among other things, on training government officials responsible for providing services at border posts. 22 The Greater Mekong Subregion Economic Cooperation Program Strategic Framework 2012–2022

Engagement with the information and effective use of that information in monitoring and evaluating GMS initiatives Private Sector and is limiting the effectiveness of those initiatives. Other Stakeholders This constraint will be amplified in the future as the program moves into more complex second- generation and software issues. The GMS Program has always recognized the critical role of the private sector as an engine of GMS Responding to these concerns, the new GMS development and understood the need for its Strategic Framework focuses more specifically perspectives and concerns to be well integrated on the results expected from each sector initia- into all of the program’s initiatives. The program tive and the program as a whole. Results matrices needs to become more effective at raising private will be carefully monitored by the relevant sector sector resources for major infrastructure and other working groups and senior GMS officials, and by development projects, and developing PPPs for the GMS ministers themselves when appropriate. infrastructure development. In addition, it will be The monitoring and evaluation process for the important that the GMS Business Forum expands its strategic framework will complement and rein- sector representation and is used more effectively force the monitoring and evaluation arrange- to ensure that private sector perspectives are well ments for the different GMS sectors of cooperation reflected in the deliberations of all the GMS sector which are already embedded in various sector forums and working groups, and that government strategies and road maps. officials are able to obtain a more thorough understanding of the evolving requirements of the business sector. The GMS Business Forum will also be expected to play an important role in promoting Evolution of Sector PPPs and encouraging the development of small Forums and Working and medium-sized enterprises (SMEs). Groups The program also needs do more to make contact with other concerned stakeholders. Information The GMS countries believe that fine-tuning, on the program needs to be disseminated more rather than a major overhaul of GMS institutional widely, including using local languages. It also arrangements, is the correct approach. Recently, needs to continue to pursue consultative mecha- most of the GMS forums and working groups have nisms in the design, implementation, and moni- taken steps to sharpen the focus of their work and toring of GMS projects. make their activities more effective, including further prioritization of planned projects and preparation of strategies and work plans to guide their activities. Some have been restructured in Monitoring and Evaluation line with the new strategies (e.g., the GMS Working Group on Human Resource Development). Others The importance of good monitoring and evalua- may need restructuring once new strategies and tion has never been in dispute as the GMS Program work plans have been finalized. It will also be has evolved, but neither has it been pursued with important to give further consideration to the the seriousness and intensity of effort required. merits of establishing separate secretariats for the ADB monitors and evaluates the GMS investment forums and working groups, as is now the case and technical assistance projects it supports and for the Tourism Working Group and the Working its Independent Evaluation Department has also Group on Environment. The experience of these carried out some more general evaluations of groups could be evaluated as an input to consid- work in specific sectors and of the effectiveness ering appropriate arrangements for other forums of the program as a whole. Although these are and working groups. very valuable inputs, they are not a substitute for a strong GMS monitoring and evaluation system. In the medium and long term, it is likely that the It is already apparent that the absence of good institutional structure for each of the forums Implementing the Strategic Framework 23

and working groups will evolve in very different advisors could be formed to periodically review ways, depending on the nature and require- the program and advise member countries on ments of the issues pursued. For some of the areas for improvement. programs it is already clear that major institutional change will be necessary. In the case of the power sector, for example, the transition Role of External Partners to an integrated power market will require the establishment of a GMS regional power coor- GMS countries have requested that ADB retain dination center, among other things. For other its secretariat role in the context of the new GMS programs less major change may be neces- Strategic Framework and enhance it with respect sary. At some point more in-depth work on to analytic work and supporting member coun- the longer-term evolution of the sector forums tries in developing a consensus on some of the and working groups and the GMS organization more complex and challenging issues in which as a whole (including the national GMS secre- the program is likely to be engaged in the coming tariats, the GMS ministerial meetings, and the years. Member countries are also requesting other GMS Summit of Leaders) will be needed. It will external partners to be actively involved in the also be useful to consider other institutional program as financiers, providers of technical assis- mechanisms to ensure that the GMS Program tance, and knowledge partners, and in seeking is responsive to changing global and regional innovative ways to strengthen their contribution developments and continuously improves its to the vision of the GMS. performance. For example, a high-level board of Annex: Summary GMS Program Results Framework

The Greater Mekong Subregion (GMS) Program studies, and analytic work; policy changes; has long recognized the importance of good projects; and institutional changes. The inter- monitoring and evaluation. The member coun- ventions listed are more generic in nature, as tries also agree that more efforts will be needed is appropriate for the summary results frame- to better understand the impacts and outcomes work of a strategic framework. This is not an of regional cooperation initiatives. With the shift exhaustive list of all planned interventions in the program toward greater complexity, both but rather an articulation of the intended foci due to multisector investment projects and the of any number of interventions. However, policy and institutional reforms related to soft- specific flagship projects or interventions ware issues, there is need to enhance the seri- may be listed in Level 2 of the more detailed ousness and intensity of efforts for good-quality sector-level results frameworks to be devel- monitoring and evaluation. oped later. Indicators at this level will include measurement of the GMS portfolio of proj- In this context, the new GMS Strategic Framework ects in the sector concerned. focuses much more specifically on the results to be expected from each of the sector initiatives Level 3—Sector Outputs. Level 3 captures and the program as a whole. To strengthen the the changes at the sector level in terms of results focus of the program and enhance moni- the systems and infrastructure that will be toring and evaluation, a common framework has improved, expanded, or enhanced over time. been developed for each of the priorities of the Sector outputs are the desired changes in new GMS Strategic Framework and associated systems and infrastructure brought about by program that links the various sector forums and the GMS interventions. These occur within working groups with specific interventions. These the sectors of the different GMS countries, interventions are, in turn, connected to sector for example road and rail infrastructure and results (outputs and outcomes), and ultimately to systems. Indicators at this level measure the improvements in regional outcomes and impacts. amount of infrastructure or the nature of The framework has five levels: the systems, for example the length of roads connecting countries. Level 1—GMS Bodies. Level 1 lists the various GMS bodies and institutions that are Level 4—Sector Outcomes. Level 4 active in the various sectors. The framework articulates the changes that are desired in starts at this level and sets out the structure terms of sector outcomes. Sector outcomes that supports the implementation of the are defined as the use of sector outputs program’s results focus. by beneficiaries or clients. For example, this would include the use of road and rail Level 2—GMS Interventions. Level 2 is infrastructure to transport people and goods intended to capture the interventions that across borders. Indicators at this level would will be undertaken to achieve the expected measure the amount of cross-border freight, results. The interventions include strategies, for example.

24 Annex: Summary GMS Program Results Framework 25

Level 5—Regional Impacts. Level 5 projects. All concerned stakeholders, particularly includes the “end” or “final” impacts that the sector working groups, will finalize an agreed are desired at the level of the subregion. set of indicators and targets for their respective Indicators at this level can be country-level results matrix. The results matrices will be carefully indicators aggregated to the regional level. monitored by the relevant sector working groups as well as by the GMS senior officials and, as and The Summary Program Results Framework based when appropriate, by the GMS ministers them- on the five levels is provided in the Summary GMS selves. The monitoring and evaluation process Program Results Framework on the next page. This for the strategic framework will complement and framework will be applied for each of the sector reinforce the monitoring and evaluation arrange- and multisector initiatives in parallel with a regional ments for the different GMS sectors of coopera- planning exercise that will identify the prioritized tion which are already embedded in various sector investment framework and pipeline of investment strategies and road maps. 26 Annex: Summary GMS Program Results Framework

Summary GMS Program Results Framework

Regional Increased economic growth, reduced poverty, and environmental sustainability across the GMS Impacts

Increased cross-border Increased use Increased Increased Increased Increased flows: investment, of energy by access to tourism with sustainable conservation of traffic, labor migration, all sectors and information and reduced negative agricultural nature with reduced human communities, communications impacts production Sector trafficking particularly the Outcomes poor

Economic corridors Enhanced Increased Improved tele- Improved Science- Strengthened established labor migration generation of communication tourism based protected area management energy from linkages among infrastructure regional networks All GMS countries systems indigenous, GMS countries (pro-poor, safety connected to a GMS and social low carbon, pro-women, and standards Sector rail network protection and renewable environmentally operational Outputs for migrant sources friendly) workers Increased Increased resilience of connection of agriculture GMS country to climate power systems change and functioning of regional power market

Promotion of Promotion Promotion of Capacity Capacity building Drafting Strengthening development of of regional environmentally building and and training of of science- Working economic corridors cooperation sustainable promotion of government based Group on and trade facilitation in education regional power information and officials, and harmonized Environment GMS institutions and skills trade planning communication tourism and good and national Interventions development technology, hospitality agricultural support units Subregional transport Promotion of especially for enterprises practices and infrastructure and Support for environmentally rural dwellers food safety Environment systems planning communicable friendly oil and Upgrading of standards Operations disease natural gas tourism training Center control and logistics and facilities Regional functions HIV and AIDS network sustainable as GMS prevention biofuel and environmental biomass referral and policy service center implemented

Subregional Economic Working Group Subregional Subregional Tele- Tourism Working Working Working Transport Corridors on Human Energy Forum communications Group Group on Group on Forum Forum Resource Forum Agriculture Environment Development GMS Bodies

GMS = Greater Mekong Subregion. Source: ADB. The Greater Mekong Subregion Economic Cooperation Program Strategic Framework 2012–2022

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