Assoc. Prof. Dr. Somjai Phagaphasvivat
The GMS is one of the most successful subregional economic integration among developing countries. It comprises of six countries:- Cambodia, the People’s Republic of China (Yunnan Province), Laos, Myanmar, Thailand and Vietnam, with more than 300 million people and over 2.5 square kilometers. All its members have enjoyed strong rate of economic growth of over 6% since 1990, fueled by increased trade and FDI, resulting in marked improvements in living standards and human development outcomes and dramatic poverty reduction.
It was established in 1992 with the assistance from the Asian Development Bank (ADB). Its initial objectives were to facilitate substantial economic growth, reduce poverty in its member countries by strengthening the economic linkages, enhance development opportunities, encourage trade and investment, streamline cross-border arrangement and meet common resource and policy needs.
The GMS achievement is also attributed to countries policy reforms and enhanced economic cooperation which helped raise positive trade growth. It has also been fueled by AEC, WTO and ASEAN plus three and six.
The GMS program has focused on three main corridors:- the North South Corridor, the East West Corridor and the Southern Corridor. With its more than two decades of development within the context of globalization and dynamic regionalism, particularly AFTA and AEC, the GMS has expanded enormously to cover new areas of cooperation. In its last summit meeting in Bangkok, Thailand in December 2014, a new milestone has been achieved with the adoption of the Regional Investment Framework Implementation Plan (RIF IP). RIF covers 10 fields:- transportation, energy, agriculture, environment, human resource development, urban development, tourism, trade and transport facilitation, ICT and others, with a total of 215 projects to be distributed among member countries.
Despite the achievements, there still are a number of critical challenges that limit the GMS potential. In general terms, we can group them into two different causes:-
1. The trade policy agenda remains incomplete. The biggest challenges facing GMS countries in improving their trade performance relate to accelerating trade facilitation reforms and dealing with a wide range of non-tariff barriers. As such, rationalization of tariff structure is urgently needed. In fact, GMS trade has been greatly enhanced with zero tariff rate achieved (with few exceptions) in 2015 with the approach of AEC.
2. The GMS countries have been subject to several external shocks in recent decades:- the so-called Tomyam Koong crisis, the Hamberger crisis and the Euro zone crisis, not to mention China’ s economic slow-down. To reduce and to preempt future vulnerability to external shocks, diversification of both export commodities and markets are called for, including intra-sectoral diversification of export commodities. In addition, intra-trade among ASEAN countries, including cross-border trade among GMS countries should be enhanced. Cross-border trade in services and FDI should also be promoted.
In fact, challenges and opportunities are two sides of the same coin. Any challenge, if properly diagnosed and managed, automatically becomes opportunities. They are closely interwined. The followings will be challenges and opportunities grouped into subject matters, which GMS countries have to identify and address.
GMS makes up of six member countries which are geographically contiguous and are increasingly linked among several corridors that provide huge opportunities for economic cooperation ranging from agriculture, energy, transport, cross-investment, tourism and particularly HRD.
In fact, the GMS countries have already adopted the so-called “GMS HRD Strategic Framework and Action Plan (2009-2012) to help accelerate economic growth, enhance productivity, connectivity and equitable distribution. In the context, there are areas that provide increasing opportunities for cooperation, provided certain challenges being addressed:-
One of the barriers or challenges that needs to be tackled is the different national HRD regulations, standards, policies and procedures. To rid of these barriers, harmonization is urgently called for. The subregional harmonization can assist cross-border flow of investment, goods and services, workers and students. For example, food and drug regulations, cross-border migration regulations and procedures, minimum conditions of employment and regulations on child labor and so on.
2. Cross-border issues
Cross-border issues comprise of control of infectious diseases such as HIV, tuberculosis, malaria and dengue fever. Other issues are:- cross-border trade in fake drugs, illegal drug trade, trafficking of women and children and cross-border travel to obtain medical care. To address these issues, national, subregional and regional cooperation is desperately needed.
3. Additional value through subregional cooperation
Some HRD activities involve various types of specialized training, information and technology initiatives in education and health, quality testing of pharmaceuticals and etc. The highly successful program, the so-called Phnom Penh Plan foe Development Management is a good example of the additional value obtained through subregional activities. The value derived from developing a common GMS approach to problem solving and developing foreign language skills.
4. Exchange of information and experience
GMS countries face common challenges such as the need to strengthen priority public health and basic education services. It is thus imperative that GMS countries share their experiences and approaches to address the problems, by way of improving access to education and health in remote areas, developing social security system, good practices and enhancing institutional links.
Another GMS Strategic Framework 2012-2022 has been adopted with focusing on activities that contribute to meeting the HRD goals through subregional programs on education and skills development and labor and health issues. One major accomplishment has been the Phnom Penh Plan for Development Management as mentioned earlier with the aim of capacity building among GMS government officials.
Economic development and environmental protection are complex and interconnected issues. Protecting the environment alone is not sufficient, development is necessary to lift the subregion out of poverty. Thus, sustainable development is the core and key of GMS success to ensure that development is equitable and benefits all segments of the society.
As GDP of GMS countries have grown rapidly in the past decades, real income per capita has more than tripled during the same period. Presently, income per capita in the GMS countries ranged from US$1,094 to US$5,977, enormous differences. In fact, these should provide a strong rationale for subregional cooperation, if not it could also create risk of unequal distribution of benefits of GMS HRD cooperation.
While poverty has been substantially reduced, balancing economic growth with environmental sustainability is still a major challenge for the GMS countries. As a consequence, along with accelerating economic growth, it is also imperative that conservation of the natural capital base for sustaining ecosystem services to maintain water flows for food production and energy security, health and general well-being are addressed.
In conclusion, the Strategic Framework for 2012 to2022 aims at increasing economic growth, reducing poverty and enhancing environmental sustainability across GMS. Its program will continue to focus on a broad range of sector and multi-sectoral priorities including support to HRD initiative, thus helping GMS integration while taking into account its potentially negative impact.
Economic corridors are important feature of the GMS economic cooperation program and also part of the AEC infrastructure cooperation. It is the development of economic corridors that pass through two or more countries in order to stimulate growth of investment and production facilities in various areas. The corridors, centered on a number of transport corridors, are planned to contribute to improving agriculture, industry, service and trade. For each corridor, there is a need for carefully planned investment in urban development, logistics and also taking into account of food and energy security and climate change concerns. This will require scaling up natural resource management including biodiversity and integrated water resource management.
GMS countries have identified three priority issues for cooperation:-
1. Biodiversity conservation and poverty and alleviation
2. Climate change adaptation
3. Capacity development:- greater knowledge, skills and awareness in environmental matters are needed throughout the GMS.
Characteristics of economic corridors:-
1. Create links to major markets
2. Extend the benefits of improved transport linkages to remote location and integrates them with more prosperous areas.
3. Open up investment opportunities
4. Promote synergies through clustering of projects
5. Provide demonstration effects
6. Facilitate prioritization of regional projects and coordination of national projects with regional implications
Under the GMS Core Agriculture Support Program, GMS countries have agreed to address the emerging regional challenges to agriculture development including trade liberalization, changing market demand, degradation of natural resources, the contribution of agriculture to climate change and etc.
Transport is one of the core program of GMS. Its strategy focuses on the development of priority roads, transport specifically by promoting the economic corridor, improving road safety, encouraging multimodal systems, particularly road and rail.
Pressured by geo-political uncertainties of energy supply and interdependence of global energy markets, GMS countries desperately need an integrated approach to delivering sustainable, secure and competitively priced energy. As such, GMS “Energy Road Map” has been adopted, with the aim of promoting environmentally, sustainable regional power trade planning, improving energy efficiency and promoting the renewable energy resources such as biogas, solar, wind, hydro, geothermal and clean fuels such as natural gas and promoting policies toward renewable energy development and energy efficiency.
The aim of GMS tourism cooperation is to develop and promote the Mekong as a single destination, offering the diversity of quality and high yielding subregional products that help to distribute the benefits more widely and equally and also contribute to poverty reduction, gender equality and empowerment of women and sustainable development while minimizing the adverse impact. To that purpose, the GMS Tourism Working Group was created to review its implementation.
- Transform the GMS connectivity or transport corridors into genuine economic corridors, institutional and policy reform and private sector engagement.
- Exploring emerging opportunities in a resurgent and dynamic Asia:- linking with China and India.
- Addressing global warming and climate change:- low carbon development path; mitigation and adaptation.
The strategic aim of GMS is to enhance competitiveness through various aspects of cooperation:-
1. Economic corridors
2. Transport and trade facilitation:- the GMS Cross-Border Transport Agreement
3. Core Environment Program (CEP)
4. Promoting GMS as a single tourist destination
5. Core Agriculture Support Program
6. Building capacity for development management and comprehensive HRD Strategy.