Pre-UNCTAD XII Civil Society Forum
Conference
Bhoj Raj Khanal, Mekong Institute, Thailand
6-7 March 2008, Hanoi, Vietnam
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Theme
Harnessing Knowledge for Development to Enhance Productive
Capacity, Trade and Investment
How can Asian countries harp on global knowledge pool for devising an effective
developmental strategy that can bridge the development gaps?
What are the perceived systemic failures come in the way of harnessing the
positive forces of globalisation?
How foreign direct investment could be exploited for facilitating knowledge
transfer and productive investment?
How to create enabling policy and regulatory frameworks for the development of
small and medium-sized enterprises (SMEs) and for attracting FDI?
2
Background of Trade and Development in
Asian Countries
• With the economic growth of two trade giants
India and China and its relation with global
trade have been changed.
• Economic emergence is facilitated by
liberalization trade. The linkages with private
agencies have stimulated regional supply
networks.
• ASEAN economies will emerge as a growth
bridge between the giant markets between India
and China.
3
Population and Trade
(Macro level economies)
East Asia leads total economic activities by almost double.
South East Asia is intermediate in economic activities.
South Asia is low in terms of economic activities.
Population
Imports
East and
Central Asia
South Asia
Population
Southeast
Asia
East and
Central Asia
South Asia
Southeast
Asia
Trade
Source: Zhai, Verbiest, Ronald-host
4
Global Per Capita GDP Growth
-1
0
1
2
3
4
5
6
7
8
PRC
Sri Lanka
Philippines
Thailand
On a global scenario, Asian
continues represent
superior growth.
Viet Nam
Hong Kong, China
Malaysia
India
Korea
Bangladesh, India,
Malaysia, Philippines,
Vietnam will experience per
capita income stagnant as
of high population growth
rate.
Indonesia
Bangladesh
Taipei,China
Singapore
Australia, NZ
United States
Latin America
Rest of World
Europe 17
Japan
Real GDP/Cap
Source: Zhai, Verbiest, Ronald-host
Pop
While Japan will sees
increment because of
shrinking population.
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Discussion Points
Asian regional integration and opportunities for
Trade
Regional trade and integration offer Asia great potential for
more rapid and sustained growth. Indeed, much of Asia’s
benefits from global trade liberalization can be realized by
regional initiative alone.
Structural barriers to trade are now more important than tariffs.
Policies and investments that facilitate trade can accelerate
regional growth dramatically.
Regional integration can promote Asian economic
convergence, raising average growth rates and benefiting
poorer countries.
Geographic diversification/new markets (populous countries, better
connectivity)
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GMS Governments Commitments on Road
Infrastructures
1992
2006
Source: Asian Development Bank
2015
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Trade and Development in the GMS
Trade Facilitation
• Trade facilitation is related to as the “plumbing of
international trade” and focuses on the efficient
implementation of trade laws, rules and regulations.
• In narrow sense, trade facilitation may be defined as
the systematic rationalization of procedures and
documentation for international trade.
• In wider sense, trade facilitation covers all the
regulatory measures that affect direct to the flow of
imports, exports, transit etc.
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GMS Economic Corridors
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Source: Asian Development Bank
GMS Border
Crossing
Points
FULL
IMPLEMENTATION
BY 2009
Source: Asian
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Development Bank
Why Trade Facilitation is Important (GMS
perspectives)?
GMS Perspective
Movement of goods and people
Exports from the seven GMS economies (Including two provinces of
China) rose from $26.2 billion in 1990 to $153 billion in 2005 - at a
compound annual rate of 12.3%, twice as fast as the rise in world
exports.
Trade openness increased in all regions
Share of intra-regional to total GMS trade grew from just over 5% in
1992 to over 12% in 2002, and continues to be on the rise
Marked change in commodity structure of exports
The GMS proximity with the rapidly growing markets in China and
India.
Source: ADB Key Indicators of Developing Asian and Pacific Countries
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Socio-economic Impacts of Rubber Plantation in Lao PDR
Luang Nam Tha
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Some Photos Luang Nam Tha, Lao PDR
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Focus of GMS Cross Border Transport
Agreement
• Facilitation of border crossing formalities (single window and single
stop customs inspection, coordinating of hours of operation)
• Facilitate cross-border movement of people (multi-entry visa,
recognition of driver license)
• Facilitate cross-border movement of goods (regional transit regime)
• Exchange of traffic rights
• Set requirements for admittance of road vehicles
• Pilots implementation focus on selected GMS border crossings
Who will get the most benefits?
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Who will get the benefits?
Few examples
• Extensive rubber plantation clearing the natural forests in Lao
PDR (displacing minorities along with North south economic
corridors and East west economic corridors)
• Investors from China, Thailand and Vietnam
• 16000 ha of lands (mostly forest land) are cleared and planted in
Luang Nam tha province alone
• Bio fuel jatropa planting in EWEC (9000 ha in Savanakhet
province only)
• Issues of biodiversity, foreign investors
• Economic corridors initial studies shows that there are
replacements of SMEs by international trade
• Shrinking the volume of community trade and diverting them in
other service sectors
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Who will get the benefits?
Few examples
• Infrastructure in the name of trade (specially road
networks) has replaced marginalized people who do not
have land certificates
• If they have it, they are forced to sell their land to elite
people (Phitsanulok, Thailand)
• It is Indo China junction of Thailand (NSEC and EWEC)
and Cambodia (Southern Economic Corridors)
• People living these areas have got no compensation, if govt
provide it, very less as compared to market price and have
to wait years to get so called “compensation”
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Who will get the benefits?
Few examples
Contract farming (in the name of trade)
• Investors from Thailand have heavily invested in Myanmar
(Myawaddy, Myalaymine) and Lao PDR (Savanakhet province)
• Should follow all technology (inputs)
FDI is increasing in the GMS but what cost?
• Seems new economic colonization
• Impact on local economy and communities
Government perception on Trade in the GMS
• Only export to the East Asia, EU and USA
• What about internal trade and intra regional trade within the GMS
countries to boost local economy
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Scenario of Regional Growth and Trade:
GMS Perspectives
• Trade can play a major role in the development of the
region.
• South East Asia is ahead in openness than other region
for regional liberalization and trade facilitation.
• More regional cooperation and treaties have been in
place in South East Asia (ASEAN FT, ASEAN PRC,
GMS CBTA, Bilateral Agreements etc)
• Vietnam, Cambodia, Myanmar and Laos (CLMV) can
be pillars for Asian Growth so trade giants India and
China have more interest on these region.
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Other positive scenario for Trade Growth in
the GMS
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FDI is increasing
Consistent on aid receiving
Effective regional cooperation exits
Human resources
Private sector involvement in development
National capital market and potentiality of
regional capital market development
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Challenges: Poverty Reduction and
Harnessing Benefits from trade
• Administrative reform will be the barrier
• Lack of employment based education
• Some countries have not established national capital market
development
• Lack of pro-poor based trade liberalization which could lead the
majority of people in marginalized groups
• Retention of Human resources
• Regional growth rate and living standards remain uneven
• Modest progress towards improving regional trade efficiency
will have great implication on trade
• Lose negotiation and bargaining power
• Environmental degradation
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Challenges: Poverty Reduction and
Harnessing Benefits from trade
• Increased influence of transnational cooperation will lead to the
influence in policy decision and domestic economy
• Loss of employment opportunities for locals by replacing
technology (harm for labour intensive technology)
• Exploitation of marginalized people’s resources and their
displacement
• Drag small and medium farmers in the vulnerable groups
• Threat to SMEs development because of bigger investors
• Cause of loss of livelihood, employment and businesses
• Inequality in terms of gender (biases)
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Conclusions
1.
Growth prospects for the GMS are quite positive, and
trade can play a central role.
2.
Regionalism and trade facilitation should be very high
priorities for the region.
3.
Asian trade can increase in nearly all directions including
GMS which is getting one of the highest growth rates.
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Conclusions
4. ASEAN generally, and the Greater Mekong Subregion in particular, will contribute to Asian regional
convergence:
–
–
–
because of geographic reason (location) this region
can act as a “growth bridge” between South and East
Asia, facilitating regional trade
GMS includes some of Asia’s lowest income
economies, and these are among the most appropriate
for infrastructure to promote regional integration.
Myanmar, Laos, Cambodia, and Vietnam have
become attracting destinations for India, China and
other developed Asian Countries.
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Measures to adopt harnessing the tread benefits from
Trade Facilitation and Investment
• Institutional development and policy reforms to
attract the investment (domestic and FDI)
• Cooperation on trade related infrastructure
development
• Strengthening National Capital Market Development
and conceptualizing Regional Capital Market
Development
• Human resources development especially labour
productivity enhancement
• Establish a regional mechanism for information
sharing among GMS countries
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Measures to adopt harnessing the tread benefits
from Trade Facilitation and Investment
• Capacity building programs in the area of risk assessment and
management for trade components
• Preparation of national action plans that focus on provincial,
domestic, regional and global trade facilitation
• Give emphasis on micro and meso level economy.
• Public, private sector partnership for community development
• Conduct regular research on trade and its impacts on local
communities
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Thank you very much!
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