Increasing Mileage in the Mekong

For the Asian Development Bank (ADB) the end of 2009 offered no respite in the flurry of deals it was constantly signing throughout the year to develop the transport infrastructure in the Greater Mekong sub-region (GMS). The countries within this regional pack – China, Cambodia, Thailand, Laos, Myanmar and Vietnam – are pushing forward connectivity to enhance economic competitiveness. They have some great projects up their sleeves but need cash to be pulled from the hat.

In December alone the ADB announced loans of $77.1m to finance a highway expansion project in Thailand and another $42m to help in the rehabilitation of Cambodia's rail network. ADB advisor, regional cooperation integration group Arjun Goswami told roadtraffic-technology.com that the organisation pledges money based on the 3Cs approach of enhancing connectivity, improving competitiveness and forging a greater sense of community. "Needless to say, cross-border transport infrastructure plays a key role in this approach," Goswami says.

But with so many projects that are worthy causes, the ADB economic cooperation programme – simply titled the GMS Program – which was set up in 1992, is often spoilt for choice.

To give some clarity to the aim of these projects the bank divided projects into "economic corridors", under which infrastructure is developed taking into account the economic potential of specific geographical areas.

These corridors were eventually defined as:

• The East-West Economic Corridor. This runs from Da Nang in Vietnam to Laos and from Thailand to Myanmar, and is the only continuous land route connecting the South China Sea with the Andaman Sea.
• The North-South Economic Corridor. This corridor covers a number of major routes from China through to Lao and Myanmar. Its remit includes the transport link from Chiang Rai to Bangkok in Thailand and Hanoi to Haiphong in Vietnam.
• The Southern Economic Corridor. This runs through from southern parts of Thailand, Cambodia and Vietnam.

Road to success

As a land bridge between the growing economies of South and East Asia the GMS offers substantial opportunities for transport-connectivity based on economic exchange among these regions. Today some of the most impressive bridges and road networks found anywhere in the world are located in the region. Examples include China's Xihoumen Bridge – the second-longest suspension bridge in the world – and the Hong Kong-Zhuhai Macau Bridge, which consists of a
series of tunnels.

As a consequence the GMS hub is often highlighted as a locality where major or international projects are pulled off with success. It is, however, not always plain sailing. "Cross-border road projects present a challenge in that they involve more than one country and therefore the associated challenges of coordination, determination of implementing / executing agencies, contract awards and so on," Goswami says. When road projects cross international borders separate loans are awarded by the ADB to the individual nations involved. But as they require very large amounts of financial resources, the challenge is often being able to design appropriate public-private partnerships that will attract private investors.

"Another challenge, which may be the most important one, is the need to ensure that these cross-border roads and corridors will be used optimally. The ultimate objective is, of course, to transform these corridors into arteries of commerce and fully functioning economic corridors," Goswami says.

Without the effective implementation of the appropriate software to ease transport and trade facilitation across borders, the benefits of these corridors cannot be fully realised and the implementation of these initiatives still faces many challenges.

Despite these obstacles the ADB is forging ahead with its projects and at the end of 2008, transport projects accounted for 83% of total investment projects under the GMS Program. The major ongoing sub-regional road projects that the ADB is involved with include the Western Guangxi Roads Development Project, which will cost $1.5bn, and the Kunming-Hai Phong Transport Corridor, valued at $1.2bn.

There are a number of projects in the GMS region that the ADB is considering getting involved with. They include the Ha Long-Mong Cai expressway in Vietnam to improve connectivity with the Chinese border, which will cost $900m. For this ADB has pencilled in a $500m commitment for 2012. In addition, the bank also has funding in the pipeline for the $900m Ben Luc-Long Thanh Expressway, also in Vietnam, under the Southern Corridor and Eastern Corridor initiatives.

Cross-border transport links form the basis of integrating markets and promoting trade. By showing commitment to funding these projects in the GMS – and facilitating their development with financial agreements to all parties involved – the ADB is giving money out in exchange for greater returns stemming into the global economy from these countries going forward.