Greater Mekong Subregion likely still a decade away

Greater Mekong Subregion likely still a decade away
Trucks drive past piles of shipping containers at the Qingdao port in Qingdao, Shandong province June 8, 2014.

With the vast Chinese market on its northern doorstep, it is being touted as the next big growth area in South-east Asia. And it is due to receive a US$51.5 billion (S$67 billion) boost when Greater Mekong Subregion (GMS) leaders meet this week in Bangkok.

But delivery on the ground is far behind policy guidelines and agreements. With major disparities in development, principally between Thailand and the other lower GMS countries - and the Mekong river itself becoming contentious, with Vietnam criticising Laos' plans to dam the waterway - a Europe-style seamless cross-border experience is probably a decade away.

There is also concern that the GMS project will essentially turn mainland South-east Asia into a vast Chinese backyard, with better roads and railways extending China's reach.

More than 120 projects will be discussed at the leaders' meeting tomorrow and Saturday. By far the biggest items will be transport infrastructure designed to stitch together the GMS - Myanmar, Thailand, Laos, Cambodia, Vietnam and China's Yunnan province and Guangxi Zhuang Autonomous Region - with roads and a new generation of railways.

The projects cut across 10 sectors, including energy, agriculture, human resources and trade.

Most will be funded by governments, mainly of China and Thailand, but investors will also be welcomed. The Asian Development Bank will also be financing some of the S$67 billion worth of projects.

The subregion will also receive a boost from the ASEAN Economic Community (AEC), which is due to become a reality - with some caveats for different countries - at the end of next year.

In theory, the future is rosy. Mr Thitinan Pongsudhirak, director of the Institute of Security and International Studies at Chulalongkorn University in Bangkok, this week wrote in the Nikkei Asian Review: "The Greater Mekong Subregion... harbours more than 300 million consumers and a combined gross domestic product of more than US$1 trillion, even by conservative estimates.

"Its collective annual growth trajectory is likely to stay in the 4 per cent to 6 per cent range for at least the decade ahead."

Given the low base of countries like Myanmar and Laos, that scenario is not difficult to imagine. Yet for the GMS, it will be a slow train: Not much will change directly after Dec 31 next year.

Last Friday, some of the concerns became clear at a meeting of transport and logistics operators in the province of Nakhon Sawan, two hours north of Bangkok.

Delegates from other GMS countries were invited to the Land Transport Association of Thailand's annual gathering. The theme: GMS Logistics Cooperation.

Forget about driving a truck from Thailand into Laos, said Mr Khammoune Bouaphanh, from Laos' Ministry of Public Works and Transport. Lao roads can take only up to one tonne of axle load. He cautioned that it was uncertain if Laos could upgrade in time for the ASEAN Economic Community.

Ms Cho Cho Aung, whose company operates a fleet of trucks in Myawaddy, the town in Myanmar across the border from Mae Sot in Thailand, said her trucks are not allowed to enter Thailand. "I hope that after 2015, we can drive the same truck across borders," she said.

In interviews, Dr Ruth Banomyong, associate professor and head of the department of international business, logistics and transport at Bangkok's Thammasat University, cited a similar example of reality lagging behind rhetoric. At the busy Poipet-Aranyaprathet crossing between Cambodia and Thailand, both countries limit the number of permits for commercial vehicles crossing the border to just 40 a year. This means only those 40 vehicles with permits can cross.

"The region has strong connectivity with its main trading partners," Dr Ruth said. "It is internal and regional connectivity which is the issue."

He added: "Physical connectivity is tangible, but the most complicated part is institutions and regulations. Laos is drowning in international agreements which it doesn't have the capacity to implement."

The Mekong region's national railways operate on narrow gauge. New rail lines will be standard gauge - offering seamless connectivity with China's rail system.

Mutual suspicions also remain hard to erase. In a phone interview, Hanoi-based Mr Vu Tu Thanh, Vietnam's representative on the US-ASEAN Business Council, said: "The Vietnamese are wholeheartedly interested and engaged."

But "there are challenges for them to really get the full potential from these initiatives", he added. "First of all, among these Mekong delta countries, interests do not always align," he said, citing Laos' hydro dams selling power to Thailand while hurting the delta downstream. Vietnam is heavily reliant on the delta to grow rice.

He said most of the GMS countries are also cash-strapped. The Bangkok summit will be trying to address that gap.

Dr Ruth said: "We know what needs to be done, and we will get there. But not by 2015... Maybe five or 10 years from then."

This article was first published on Dec 18, 2014.
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