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Progress Report on the GMS RIF: Transport and Related Services

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Progress Report on the GMS RIF: Transport and Related Services Progress Report on the Regional Investment Framework Following the endorsement of the new GMS Strategic Framework (SF) by heads of state at the 4th GMS Summit in Myanmar in December 2011, it was agreed that a Regional Investment Framework (RIF) be formulated to identify and develop the investment pipeline as well as the software and other aspects of GMS regional cooperation in order to ensure the effective operationalization of the new SF. Accordingly during the course of this year analytical work has been undertaken from both a country and a sector/program perspective under ADB technical assistance project funded by the Government of Australia. The RIF Sector Reports are provided to present the findings of assessments used as inputs for the formulation of the RIF. At sector level, a dual approach was adopted in assessing the forward direction for the different sectors of GMS cooperation, with a combination of new assessments and use of existing strategies. New assessments were undertaken for the transport, energy and urban development sectors, as well as for migration trends in the GMS that provided inputs into the concurrent formulation of a strategic framework and action plan for the human resource development sector. For other sectors, specifically agriculture, environment, and tourism, the formulation of the RIF has drawn on existing sector strategies that were approved recently. REGIONAL INVESTMENT FRAMEWORK SECTOR REPORT TRANSPORT AND RELATED SERVICES 18th GMS Ministerial Conference Nanning, People’s Republic of China 11–12 December 2012 Printed on recycled paper Printed in the Philippines Initial Assessments of Road Transport Infrastructure and Transport and Logistic Services for Trade Facilitation in the GMS Countries: Draft Final Report The views expressed in this working paper are those of the authors and do not necessarily reflect the views and policies of the Asian Development Bank (ADB) or its Board of Governors or the governments they represent. ADB does not guarantee the accuracy of the data included in this publication and accepts no responsibility for any consequence of their use. By making any designation of or reference to a particular territory or geographic area, or by using the term “country” in this document, ADB does not intend to make any judgments as to the legal or other status of any territory or area. Note: In this publication, “$” refers to US dollars. Contents List of Tables and Figures v Abbreviations vi Executive Summary viii A. Transport Infrastructure Assessment viii B. Transport Services Assessment xi C. Logistics Assessment xii D. Identification of Primary Road Transport Trade Routes xiii E. Trade Logistics Support Infrastructure xiv F. Summary Preliminary Evaluation of Initiatives and Transport Sector Investment Projects xv G. Summary of Scope of the Follow on Assessment xvii I. Background and Objectives 1 A. Background 1 B. Objectives 3 II. Infrastructure Assessment 4 A. Trade Transport Corridors 4 B. Road Infrastructure Assessment along Corridors 4 III. Transport Services Assessment 19 A. Modal Competition 19 B. Air Transport 21 C. Maritime Transport 23 D. Rail Transport 29 E. Road Transport 32 F. Inland Waterways Transport 35 G. Conclusions 37 IV. Assessment of Logistics Services in GMS 39 A. Global Development of Logistics 40 B. Overview of Current GMS Experience 43 C. Country Assessments 47 D. Development Needs 52 E. Conclusions 54 V. Profile of GMS Trade 55 A. Introduction 55 B. GMS Trade 56 VI. Primary Trade Demand Routings 65 A. Transport Modes and Routes by Country 65 B. Impact of Future Changes in Trading Patterns 70 VII. Linkage between Assessments and Development of Trade Facilitation on GMS Corridors 72 A. Time and Cost Structures 72 B. Mapping of Corridors 74 iii Contents C. East Asian Linkages 83 D. Logistics and Private Sector Investment 85 VIII. Potential Priority Trade Investment Projects 91 A. Bottleneck and Gaps in Primary Trade Routes 91 B. Potential Investment Projects 92 References 98 Appendix 1 International Traffic Data Used in Modeling GMS Trade in ADB TA 7557: Promoting Regional Infrastructure Development Project 100 iv List of Tables and Figures Tables 2.1 Major Road Corridors in GMS Countries 5 2.2 GMS-TSS (2006) Proposed High-Priority Projects 7 2.3 NSC Assessment Summary 8 2.4 EC Assessment Summary 9 2.5 EWC Assessment Summary 10 2.6 SC Assessment Summary 12 2.7 SCC Assessment Summary 14 2.8 CC Assessment Summary 15 2.9 NC Assessment Summary 16 2.10 WC Assessment Summary 17 2.11 NEC Assessment Summary 17 5.1 GMS Trade 2009 by Value and (estimated) Weight 59 7.1 Results of Time/Distance/Costs Calculations on Bangkok-Kolkata route 85 8.1 Bottlenecks and Gaps along Primary Trade Routes 91 Figures 1.1 GMS Corridors 2 3.1 Modal Service Standards 21 4.1 Logistics Supply Chain 39 4.2 Trading Terms 46 5.1 Direction of Trade, 1990–2010 57 5.2 Intraregional and Interregional Trade in Asia 58 7.1 Typical Cost/Time/Distance Model 74 7.2 Annual Tonnage in GMS with International Traffic 75 7.3 Average Daily Truck Volumes in GMS with International Traffic 76 7.4 Primary Trade Corridors in GMS 84 8.1 Kawkareik – Thaton Road Project 93 v Abbreviations AC – asphalt concrete ADB – Asian Development Bank AEC – Asian Economic Community AH – Asian Highway ASEAN – Association of Southeast Asian Nations BCP – Border Control Point BOT – Build Operate Transfer CAPEX – capital expenditure CAREC – Central Asia Regional Economic Cooperation CBF – cross border facility CBTA – Cross-Border Transport Agreement CC – Central Corridor CFS – container freight station CIF – carriage insurance freight CIQS – Customs, Immigration, Quarantine, Security COMTRADE – United Nations Commodity Trade Statistics Database C/T/R – Cost/Time/Reliability DBST – double bituminous surface treatment DOH – Department of Highways EC – Eastern Corridor ECF – Economic Corridor Forum EWC – East-West Corridor EU – European Union FCL – full container load FDI – foreign direct investment FMCG – fast moving consumer goods FOB – free on board GDP – Gross Domestic Product GMS – Greater Mekong Subregion GMS TSS – GMS Transport Sector Strategy Study GRM – gross refining margin HCMC – Ho Chi Minh City ICD – inland clearance (container) depot IMT-GT – Indonesia Malaysia Thailand – Growth Triangle IWT – inland waterway transport JAL – Japan Airlines JICA – Japan International Cooperation Agency JIT – just-in-time JV – joint venture km – kilometer LCC – low cost carrier (airline) LPG – liquid petroleum gas MOT – Ministry of Transport NC – Northern Corridor NEC – Northeastern Corridor NR – national road vi Abbreviations NSC – North-South Corridor OPEC – Organization of the Petroleum Exporting Countries PDR – Peoples Democratic Republic PPAR – project/program performance audit report PPP – public–private partnership PPTA – Project Preparation Technical Assistance PRC – Peoples Republic of China REG – regional SASEC – South Asia Subregional Economic Cooperation SC – Southern Corridor SCC – Southern Coastal Corridor SF – Special Fund SOE – state owned enterprise TA – technical assistance TEU – twenty feet equivalent (container size) TOR – terms of reference UK – United Kingdom ULD – unit load device UN – United Nations UNESCAP – United Nations Economic and Social Commission for Asia and the Pacific USA – United States of America VLCC – very large crude carrier (tanker) WC – Western Corridor WTO – World Trade Organization 3PL – third party logistics (operator) Currency Equivalents (as of March 2012) $1.00 = Thai Baht 30.6 vii Executive Summary 1. The objective of this study1 is to undertake initial (desk-top) assessments of road transport infrastructure and of transport and logistics services for enhancement of trade facilitation in the GMS countries. These assessments will be used as the basis for the Terms of Reference (TOR) for the more detailed and comprehensive follow-on study to be undertaken by a firm.2 Trade facilitation in this study is taken in its wider context of ‘helping the business of trading,’ rather than the more common narrower focus on customs and border activities. 2. The scope of the road transport infrastructure assessment includes an examination of each of the major road transport corridors and linkages in the GMS highlighting their roles in the movement of international trade, identifying any residual bottlenecks and network gaps and from these, indicating and prioritizing potential ‘hard’ infrastructure investment projects that will promote trade facilitation in the subregion. The scope of the supporting transport services and logistics assessments encompasses profiling of the transport sectors by mode and their competitive role in providing services to the trading community, an appraisal of the existing logistics sector and its future potential in relation to trade activities and an analysis of international trade to and from GMS countries to determine the scale of the demand for transport services carrying trade traffic with mapping of the primary trade transport routes. A. Transport Infrastructure Assessment 3. The major trade transport corridors for GMS countries for both international and intra- GMS trade is expected to be those serving the ports. This is due to the dominance of maritime transport in the overall movement of the subregion’s trade. The termini for some GMS corridors are large port complexes located near major expanding industrial/manufacturing/agro-economic zones, such as Laem Chabang in Thailand’s Eastern Seaboard and the Ho Chi Minh City complex of port facilities in Viet Nam. Others
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