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Sector Assistance Program Evaluation ASIAN DEVELOPMENT BANK Independent Evaluation Department SECTOR ASSISTANCE PROGRAM EVALUATION FOR THE TRANSPORT AND TRADE FACILITATION SECTOR IN THE GREATER MEKONG SUBREGION—TIME TO SHIFT GEARS In this electronic file, the report is followed by Management’s response and the Board of Directors’ Development Effectiveness Committee (DEC) Chair’s summary of a discussion of the report by DEC. Evaluation Study Reference Number: SAP: REG 2008-86 Sector Assistance Program Evaluation December 2008 Transport and Trade Facilitation in the Greater Mekong Subregion— Time to Shift Gears Operations Evaluation Department ABBREVIATIONS ADB – Asian Development Bank ADF – Asian Development Fund ADTA – advisory technical assistance AFTA – ASEAN Free Trade Area AH – Asian Highway ASEAN – Association of Southeast Asian Nations ASYCUDA – Automated System for Customs Data CAREC – Central Asia Regional Economic Cooperation CBTA – Cross-Border Transport Agreement CEPT – Common Effective Preferential Tariff CPS – country partnership strategy EIRR – economic internal rate of return EU – European Union EWEC – East–West Economic Corridor FDI – foreign direct investment GDP – gross domestic product GFP – Global Facilitation Partnership GMS – Greater Mekong Subregion GZAR – Guangxi Zhuang Autonomous Region HCMC – Ho Chi Minh City IDB – Inter-American Development Bank IIRSA – Integration of Regional Infrastructure in South America Lao PDR – Lao People’s Democratic Republic MOC – Ministry of Commerce, Cambodia/Lao PDR/Thailand/PRC MOT – Ministry of Transport, Thailand/Viet Nam MPWT – Ministry of Public Works and Transit, Cambodia/Lao PDR MRC – Mekong River Commission NGO – nongovernment organization NR – national road NTFC – National Transport Facilitation Committee OCR – ordinary capital resources OED – Operations Evaluation Department PCR – project completion report PPER – project performance evaluation report PPP – public–private partnership PPTA – project preparatory technical assistance PRC – People’s Republic of China RCIS – regional cooperation and integration strategy RCSP – regional cooperation strategy and program RETA – regional technical assistance RN – route national SAPE – sector assistance program evaluation SEDP I – First Socioeconomic Development Plan, Cambodia SEDP II – Second Socioeconomic Development Plan, Cambodia SFA-TFI – Strategic Framework for Action on Trade Facilitation and Investment STF – Subregional Transport Forum STFWG – Subregional Trade Facilitation Working Group TA – technical assistance UNESCAP – United Nations Economic and Social Commission for Asia and the Pacific VOC – vehicle operating cost WCO – World Customs Organization NOTE In this report, “$” refers to US dollars. Key Words regional cooperation, regional integration, gms, adb, asian development bank, greater mekong subregion, adb gms, cambodia, lao, myanmar, china, thailand, viet nam, development effectiveness, roads, roads maintenance, performance evaluation, transport, infrastructure, trade facilitation Director General H. Satish Rao, Operations Evaluation Department (OED) Director H. Hettige, Operations Evaluation Division 2, OED Team Leader N. Singru, Evaluation Specialist, Operations Evaluation Division 2, OED Team Members R. Lumain, Senior Evaluation Officer, Operations Evaluation Division 2, OED C. Roldan, Senior Operations Evaluation Assistant, Operations Evaluation Division 2, OED Operations Evaluation Department, SE-12 CONTENTS Page EXECUTIVE SUMMARY i MAP I. INTRODUCTION 1 A. Background 1 B. Objective and Scope 1 C. Evaluation Framework and Methodology 1 D. Findings of Earlier Evaluation of the GMS Program 2 E. Organization of the Report 2 II. SECTOR CONTEXT 3 A. Economic Growth and Trade Linkage 3 B. Transport Sector in the GMS 4 C. Member Government Plans 4 D. GMS Regional Cooperation Plans for the Sector 5 E. ADB Strategies and Plans for the Sector 7 F. ADB’s Assistance for the GMS Program 9 G. Strategies and Plans of Other Development Partners 11 III. STRATEGIC AND INSTITUTIONAL (TOP–DOWN) ASSESSMENT 13 A. Strategic Assessment 13 B. Institutional Assessment of the Sector 20 C. Value Addition of the GMS Program to the Sector 24 D. ADB Performance 29 IV. BOTTOM–UP ASSESSMENT OF THE SECTOR PROGRAM 31 A. Relevance 32 B. Effectiveness 34 C. Efficiency 40 D. Sustainability 44 E. Impact 45 The guidelines formally adopted by the Operations Evaluation Department (OED) on avoiding conflict of interest in its independent evaluations were observed in the preparation of this report. Although H. Satish Rao, Director General, OED, headed the East Asia Department, and Ramesh B. Adhikari, Director of Operations Evaluation Division 1, worked for the Southeast Asia Department, they were not involved in preparing, implementing, and supervising Greater Mekong Subregion projects. Mr. Adhikari supervised the report up to interdepartmental review. Jean-Francois Gautrin, Hien Thi Phuong Nguyen, Jennifer Simon, Pipong Phimphachanch, and Sota Ouk were the consultants in the transport sector study. To the knowledge of the management of OED, there were no conflicts of interest of the persons preparing, reviewing, or approving this report. V. OVERALL ASSESSMENT AND LESSONS FOR FUTURE ASSISTANCE 53 A. Key Findings 53 B. Lessons Identified 55 C. Recommendations for Future Assistance 57 APPENDIXES 1. Evaluation Framework and Methodology 59 2. Summary of GMS Loans and Grants for Transport and Trade Facilitation (1992–2007) 63 3. Transport and Trade Facilitation Sector 64 4. Summary of National Development Plans of GMS Countries 71 5. Technical Assistance Operations for Transport and Trade Facilitation for the GMS Program (1992–2008) 75 6. Other Regional and Subregional Initiatives Related to the Transport and Trade Facilitation Sectors 77 7. Financing of GMS Regional Cooperation Initiatives 80 8. Review of Advisory Technical Assistance to the GMS Transport and Trade Facilitation Sectors 82 9. Direction of Trade 96 10. Literature Review on the Impact of GMS Transport and Trade Facilitation Projects 99 11. Implementation Issues of GMS Transport Projects 103 12. Project Loans and Grants Assessment Summary 108 13. Review of Project Preparatory Technical Assistance to the Greater Mekong Subregion Transport Sector 138 14. Change in the Movement of People and Vehicles on GMS Regional Roads 162 15. Economic Analysis of Transport Projects 166 16. Status of Implementation of Social and Environmental Safeguards 185 SUPPLEMENTARY APPENDIXES (available on request) A. Assistance for Ports Sector B. Assistance for Civil Aviation Sector Attachments: Management Response DEC Chair Summary EXECUTIVE SUMMARY Transport and trade facilitation form the backbone of the Greater Mekong Subregion (GMS) program supported by the Asian Development Bank (ADB). It has been 15 years since the GMS program was initiated and the first transport project was approved. Covering Cambodia, Lao People’s Democratic Republic (Lao PDR), Myanmar, Thailand, Viet Nam, and the Yunnan Province and Guangxi Zhuang Autonomous Region in the People’s Republic of China (PRC), the GMS program has included investments in physical infrastructure as well as in the development of cross-border agreements across the subregion and related trade facilitation. This sector assistance program evaluation (SAPE) assesses the performance of transport and trade facilitation under the GMS program. More specifically, the SAPE examines the effectiveness of ADB-funded projects in achieving their development objectives. It identifies lessons for further development of GMS transport and trade facilitation and also for other regional cooperation initiatives. The transport sector analysis focuses mainly on the roads subsector, since the majority of ADB’s activities have been in this subsector. As of April 2008, of the 36 investment projects assisted by ADB in the GMS program, 26 were in the transport sector following ADB project classification. Transport projects formed 82% of the total project cost of $10 billion. ADB provided an aggregate funding of $3.3 billion or 40% of the project costs, using Asian Development Fund and ordinary capital resources funding. Trade facilitation initiatives have been implemented mainly through technical assistance (TA) grants amounting to $12 million covering five TA operations, out of which ADB funding was $2 million. The GMS Context The individual development plans of the GMS countries have been designed to develop trade through infrastructure development. While acknowledging the limitations of the existing network, the investment plans have an expansionary outlook targeted toward increasing the size of the network, typically developing international trade corridors and increasing competitiveness. Cambodia’s First Socioeconomic Development Plan (1996–2000) highlighted the importance of developing the border-to-border primary road system. It acknowledged Cambodia’s location at the center of the “GMS,” implying that the importance of the GMS had been registered and accepted as early as 1996. Similarly, other countries’ development plans prioritize links with the international borders within the GMS in an effort to reduce trade costs and improve connectivity. The GMS Strategic Framework focuses on five development thrusts to achieve its goal: (i) strengthen infrastructure linkages through a multisectoral approach, (ii) facilitate cross-border trade and investment, (iii) enhance private sector participation in development and improve its competitiveness, (iv) develop human resources and skill competencies, and (v) protect
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