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Connecting Asia Connecting Asia ADBI SERIES ON ASIAN ECONOMIC INTEGRATION AND COOPERATION Previous titles published in association with the ADBI include: Infrastructure and Trade in Asia Edited by Douglas H. Brooks and Jayant Menon Infrastructure’s Role in Lowering Asia’s Trade Costs Building for Trade Edited by Douglas H. Brooks and David Hummels Trade Facilitation and Regional Cooperation in Asia Edited by Douglas H. Brooks and Susan F. Stone Managing Capital Flows The Search for a Framework Edited by Masahiro Kawai and Mario B. Lamberte The Asian Tsunami Aid and Reconstruction after a Disaster Edited by Sisira Jayasuriya and Peter McCawley Asia’s Free Trade Agreements How is Business Responding? Edited by Masahiro Kawai and Ganeshan Wignaraja Monetary and Currency Policy Management in Asia Edited by Masahiro Kawai, Peter J. Morgan and Shinji Takagi Implications of the Global Financial Crisis for Financial Reform and Regulation in Asia Edited by Masahiro Kawai, David G. Mayes and Peter J. Morgan Infrastructure for Asian Connectivity Edited by Biswa Nath Bhattacharyay, Masahiro Kawai and Rajat M. Nag A World Trade Organization for the 21st Century The Asian Perspective Edited by Richard Baldwin, Masahiro Kawai and Ganeshan Wignaraja New Global Economic Architecture The Asian Perspective Edited by Masahiro Kawai, Peter J. Morgan and Pradumna B. Rana Connecting Asia Infrastructure for Integrating South and Southeast Asia Edited by Michael G. Plummer, Peter J. Morgan and Ganeshan Wignaraja The Asian Development Bank Institute (ADBI), located in Tokyo, is the think tank of the Asian Development Bank (ADB). ADBI’s mission is to identify effec- tive development strategies and improve development management in ADB’s developing member countries. ADBI has an extensive network of partners in the Asia and Pacific region and globally. ADBI’s activities are aligned with ADB’s stra- tegic focus, which includes poverty reduction and inclusive economic growth, the environment, regional cooperation and integration, infrastructure development, middle-income countries, and private sector development and operations. Connecting Asia Infrastructure for Integrating South and Southeast Asia Edited by Michael G. Plummer Director, SAIS Europe and Eni Professor of International Economics, Johns Hopkins University, Bologna, Italy Peter J. Morgan Senior Consultant for Research, Asian Development Bank Institute, Tokyo, Japan Ganeshan Wignaraja Advisor, Economic Research and Regional Cooperation Department, Asian Development Bank, Manila, Philippines and formerly Director of Research, Asian Development Bank Institute, Tokyo, Japan Cheltenham, UK • Northampton, MA, USA © Asian Development Bank Institute 2016 All rights reserved. No part of this publication may be reproduced, stored in a retrieval system or transmitted in any form or by any means, electronic, mechanical or photocopying, recording, or otherwise without the prior permission of the publisher. Published by Edward Elgar Publishing Limited The Lypiatts 15 Lansdown Road Cheltenham Glos GL50 2JA UK Edward Elgar Publishing, Inc. William Pratt House 9 Dewey Court Northampton Massachusetts 01060 USA A catalogue record for this book is available from the British Library Library of Congress Control Number: 2015945474 This book is available electronically in the Economics subject collection DOI 10.4337/9781785363481 ISBN 978 1 78536 347 4 (cased) ISBN 978 1 78536 348 1 (eBook) Typeset by Servis Filmsetting Ltd, Stockport, Cheshire Contents List of contributors vii Foreword ix List of abbreviations xii 1 Introduction and overview 1 Michael G. Plummer, Peter J. Morgan and Ganeshan Wignaraja PART I HARD INFRASTRUCTURE AND FINANCING 2 Land- based cross- border transport infrastructure 37 Jean- François Gautrin 3 Infrastructure to support seaborne trade between South Asia and Southeast Asia 70 David Wignall and Mark Wignall 4 Infrastructure finance and financial sector development for cross- border connectivity 96 Shubhomoy Ray PART II SOFT INFRASTRUCTURE AND IMPACTS 5 Policies to enhance trade facilitation 133 Anthony Bayley 6 Implementation challenges and coordination arrangements 160 Moe Thuzar, Rahul Mishra, Francis Hutchinson, Tin Maung Maung Than and Termsak Chalermpalanupap 7 Economic implications of deeper South Asian–Southeast Asian integration: a CGE approach 186 Ganeshan Wignaraja, Peter J. Morgan, Michael G. Plummer and Fan Zhai v vi Connecting Asia PART III NATIONAL STRATEGIES FOR CONNECTIVITY 8 Myanmar: the land bridge 215 Hector Florento and Maria Isabela Corpuz 9 India: building connectivity under the Act East Policy 244 Prabir De 10 Thailand: key subregional hub 274 Suthiphand Chirathivat and Kornkarun Cheewatrakoolpong 11 Bangladesh: perspectives on deepening cross- border links 304 Mustafizur Rahman, Khondaker Golam Moazzem, Mehruna Islam Chowdhury and Farzana Sehrin 12 Nepal: a connectivity- driven development strategy 330 Pradumna B. Rana and Binod Karmacharya 13 Sri Lanka: regional sea transport hub 359 Dushni Weerakoon and Nipuni Perera Index 383 Contributors Anthony Bayley is an independent transport logistics specialist and consultant, Australia. Termsak Chalermpalanupap is Fellow and Lead Researcher ( political security) at the ASEAN Studies Centre, ISEAS – Yusof Ishak Institute, Singapore. Kornkarun Cheewatrakoolpong is Assistant Professor, Faculty of Economics, Chulalongkorn University, Thailand. Suthiphand Chirathivat is Professor of Economics, Chairman of the Chula Global Network and Executive Director of the ASEAN Studies Center, Chulalongkorn University, Thailand. Mehruna Islam Chowdhury is Former Senior Research Associate, Centre for Policy Dialogue (CPD), Bangladesh. Maria Isabela Corpuz is a consultant with the Regional Cooperation and Integration Division, Economic Research and Regional Cooperation Department (formerly the Office of Regional Economic Integration), Asian Development Bank, Philippines. Prabir De is Professor, Research and Information System for Developing Countries (RIS), India. Hector Florento is a consultant with the Regional Cooperation and Integration Division, Economic Research and Regional Cooperation Department (formerly the Office of Regional Economic Integration), Asian Development Bank, Philippines. Jean- François Gautrin is an independent consultant in transport and regional economic planning and Associate Research Fellow of the Malaysian Institute of Economic Research (MIER), Malaysia. Francis Hutchinson is Fellow and Coordinator of the Regional Economic Studies Program, ISEAS – Yusof Ishak Institute and Managing Editor of the ISEAS Journal of Southeast Asian Economies, Singapore. Binod Karmacharya is Advisor, South Asia Centre for Policy Studies (SACEPS), Nepal. vii viii Connecting Asia Rahul Mishra is Research Fellow, Indian Council of World Affairs, India and a 2015 Asia Fellow at the East–West Center, Washington, DC, USA. Khondaker Golam Moazzem is Additional Research Director, Centre for Policy Dialogue (CPD), Bangladesh. Peter J. Morgan is Senior Consultant for Research, Asian Development Bank Institute, Japan. Nipuni Perera is Research Assistant, Institute of Policy Studies of Sri Lanka (IPS), Sri Lanka. Michael G. Plummer is Director, SAIS Europe and Eni Professor of International Economics at the Johns Hopkins University, Italy. Mustafizur Rahman is Executive Director, Centre for Policy Dialogue (CPD), Bangladesh. Pradumna B. Rana is Associate Professor at the S. Rajaratnam School of International Studies, Nanyang Technological University, Singapore. Shubhomoy Ray is an infrastructure financing specialist and co-f ounder, Finnacle Capital Advisors, India. Farzana Sehrin is Former Research Associate, Centre for Policy Dialogue (CPD), Bangladesh. Tin Maung Maung Than is Visiting Senior Fellow, ISEAS – Yusof Ishak Institute, Singapore. Moe Thuzar is Fellow and Lead Researcher (socio-cultural) at the ASEAN Studies Centre and Coordinator of the Myanmar Studies Program, ISEAS – Yusof Ishak Institute, Singapore. Dushni Weerakoon is Deputy Director, Institute of Policy Studies of Sri Lanka (IPS), Sri Lanka. David Wignall is founder of David Wignall Associates, Singapore and Senior Vice President, Indonesian Port Corporation, Indonesia. Mark Wignall is Consultant, David Wignall Associates, Singapore. Ganeshan Wignaraja is Advisor, Economic Research and Regional Cooperation Department, Asian Development Bank, Philippines and was formerly Director of Research, Asian Development Bank Institute, Japan. Fan Zhai is Managing Director, China Investment Corporation, People’s Republic of China. Foreword Since the 2007–09 global financial crisis, Asian economies have been giving more emphasis to domestic and regional demand to secure sustain- able and inclusive growth. Closer regional integration is a means to foster Asian demand and growth. Regional integration confers benefits, includ- ing expanding the size of markets, thereby realizing scale economies and enhancing the scope for specialization, lowering trading costs, lowering funding costs and facilitating capital investment in the region. It can also promote more inclusive growth by bringing isolated regions and marginal- ized people closer to markets. Connecting Asia: Infrastructure for Integrating South and Southeast Asia highlights the potential contribution to growth that greater connectivity between these two regions can make. Trade and investment between them, while making progress, has been limited, hindered by bottlenecks and gaps in trade infrastructure, trade barriers and a low level of regional coopera-
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