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    2007 Asian Development Bank

    All rights reserved. Published 2007.Printed in the Philippines.

    Cataloging-In-Publication Data

    Publication Stock No. 060107 Asian Development Bank (ADB).

    ADBs midterm review of the strategic framework of the Greater Mekong Subregion. 1. Greater Mekong Subregion 2. Strategic Framework

    The views expressed in this book are those of the authors and do not necessarily reflectthe views and policies of the Asian Development Bank (ADB) or its Board of Governorsor the governments they represent.

    ADB does not guarantee the accuracy of the data included in this publication and acceptsno responsibility for any consequence of their use.

    Use of the term country does not imply any judgment by the authors or ADB as to thelegal or other status of any territorial entity.

    The 10-year Strategic Framework of the Greater Mekong Subregion (GMSSF) Economic Cooperation Program(GMS Program) was endorsed by the heads of the GMS-member governments during their first summit meeting heldin Phnom Penh, Cambodia on 3 November 2002. Since then, the GMSSF has guided the implementation of the GMSProgram. In 2007, the GMSSF is halfway through its implementation period. At the same time, significant changesaffecting the GMS Program have been taking place in the regional and global environments. This Midterm Reviewof the GMSSF (i) assesses whether the GMSSF is still relevant and appropriate, considering the progress madeand the changing regional and global environments; and (ii) puts forward recommendations to improve its overallimpact. Dr. Filologo Pante, Jr., Senior Advisor and Regional Cooperation Specialist, with substantial experience in theMekong region, was commissioned to help the GMS countries and other stakeholders in the conduct of the MidtermReview and in the preparation of this document. This Midterm Review was endorsed by GMS senior officials duringthe Senior Officials Meeting held on 19 June 2007 and approved by the GMS Ministers at the 14th MinisterialMeeting held on 21 June 2007 at the Asian Development Banks Headquarters, Manila, Philippines.

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    Acronyms and Abbreviations

    ADB Asian Development Bank ACMECS AyeyawadyChao PhrayaMekong Economic Cooperation Strategy ASEAN Association of Southeast Asian Nations AMTA Agency for Coordinating Mekong Tourism Activities

    CASP core agriculture support programCBTA Cross-Border Transport AgreementCDC Communicable Diseases ControlCEP Core Environment ProgramEOC Environment Operations CenterEWEC EastWest Economic CorridorFDI foreign direct investmentFTA free trade agreementGDP gross domestic productGMS Greater Mekong SubregionGMSBF GMS Business ForumGMSSF GMS Strategic Framework

    HIV/AIDS human immunodeficiency virus/acquired immunodeficiency syndromeHRD human resource developmentICT information and communications technology IOM International Organization for MigrationLao PDR Lao Peoples Democratic RepublicMDG millennium development goalMOU memorandum of understandingMRC Mekong River CommissionMTCO Mekong Tourism Coordination OfficeMTF Mekong Tourism ForumNSEC NorthSouth Economic CorridorPOA plan of actionPPP Phnom Penh Plan for Development ManagementPRC Peoples Republic of ChinaROK Republic of KoreaREI regional economic integrationSEC Southern Economic CorridorSFATFI Strategic Framework for Action on Trade Facilitation and InvestmentSOM senior officials meetingSEF Subregional Energy ForumSIWG Subregional Investment Working GroupSTCF Subregional Telecommunications ForumSTF Subregional Transport Forum

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    TFWG Trade Facilitation Working GroupTSS GMS Tourism Sector Strategy TSSS GMS Transport Sector Strategy Study TWG Tourism Working GroupUNESCAP Economic and Social Commission for Asia and the PacificWGA GMS Working Group on AgricultureWGE GMS Working Group on EnvironmentWGHRD GMS Working Group on Human Resource DevelopmentWTO World Trade Organization

    NOTEIn this report, $ refers to US dollars.

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    viiIntroduction

    Significant progress has been madein pursuing the strategic thrustsand priority initiatives of the 10-

    year (20022012) GMS StrategicFramework (GMSSF) during

    the first half of its implementation period(20022007). The GMS Program (theProgram) has indeed accelerated, deliver-ing concrete results and contributing to theshared vision of a prosperous, integrated,and harmonious Mekong subregion. Thepragmatic, action-oriented, and results-focused approach of the Program enabledGMS countries to expedite the implemen-tation of high-priority subregional projectsand initiatives. It also mobilized an increas-ing amount of financial assistance fromdevelopment partners and other importantstakeholders.

    Since 1992, when the GMS Programstarted, poverty incidence in the GMScountries has declined significantly.Between 1990 and 2003, the proportionof people living on less than $1 a day fell from 46% to 33.8% in Cambodia,33% to 13.4% in the Peoples Republic of China, 52.7% to 28.8% in the Lao PeoplesDemocratic Republic, 10.1% to less than1% in Thailand, and 50.7% to 9.7% in VietNam. 1 This declining trend is expectedto continue after 2003, considering therobust economic growth of the GMS

    countries and other developments in thesubregion since then. The GMS Programhas contributed to this significant achieve-ment, although it has not been possible toquantify the precise impact of the Programdue to methodological difficulties andinsufficient data.

    GMSSF remains very much valid andserves as a good basis for moving forward

    Executive Summary

    in the next 5 years. It is comprehensiveand very relevant with respect to recentsubregional, regional, and internationaldevelopments as well as the formalexpansion of the GMS geography. The

    vision and goals of subregional economiccooperation articulated in the GMSSFcontinue to reflect the expectations of GMScountries on the role of the GMS Programin developing the subregion. GMSSFcomplements national development effortsof the GMS countries.

    Although the extent of implementationof the strategic thrusts of the GMSSF

    varies, they remain appropriate forpursuing the vision and goals of the GMSProgram. Accordingly, it is not necessary to make changes in the GMSSF itself.There are, nevertheless, opportunitiesfor fine-tuning the strategic thrusts of theGMSSF to maximize their developmentimpact and ensure sustainability. This willrequire some shifts in focus and areas of emphasis.

    The GMS Program has made very good progress in the hardware aspectsof cooperation involving the first strate-gic thrust of the GMSSF, but less so inthe software components of coopera-tion involving the four other thrusts of the GMSSF, especially in the measuresnecessary to enhance competitiveness and

    in activities addressing social and environ-mental issues in the GMS. This is notsurprising, as the initial phases of the GMSProgram had placed substantial emphasison the need to remove the physical barriersto subregional economic cooperation.

    Placing more emphasis on the soft- ware aspects of subregional cooperation will be essential to achieving the goals and

    1 Comparable data for Myanmar are not available at this time.

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    IntroductionAssessment

    Assessment

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    IntroductionAssessment

    and from markets, raises the returns thatfarm households can get for their goods,and may also enable family members tobe employed outside the household); (ii)by improving the access of the poor tobasic social services such as education andhealth services; and (iii) by increasing theaccess of the poor to final consumer goods,as these goods become more affordablebecause of reduced transport costs.

    Fujimura and Edmonds used aneconometric model to determine the impactof cross-border road infrastructure ontrade and FDI flows in the GMS (Fujimuraand Edmonds 2006). Using data on tradeflows across GMS countries and indicatorsof road infrastructure and trade policy measures, the study concluded, amongothers, that: (i) cross-border infrastructurehas a positive effect on trade in major goodson both exporter and importer sides of theborders; (ii) this positive effect increases

    when a general measure of domestic roadinfrastructure is included in the analysis(cross-border infrastructure and domesticroad infrastructure complement eachother); and (iii) while the results of theeffect of cross-border infrastructure onFDI are inconclusive, there is evidence thatFDI flows induce further exports from theFDI-sending country to the FDI-receiving

    country.Examining the mechanisms thatcould help in reducing poverty at thehousehold level, Menon conducted astudy of the socioeconomic impact of roadimprovement in rural areas in the Lao PDR,using household level data from the LaoExpenditure and Consumption Surveys(LECS) covering the periods 19971998and 20022003 (J. Menon 2005). Thestudy concluded that road improvementin rural areas can contribute to lowering

    poverty incidence, improving educationalparticipation of primary school-agechildren, and reducing the rate of illness.In particular, the study found that aboutone fourth of the reduction in poverty incidence in Lao PDRs rural populationfrom 42.5% in 19971998 to 37.6% in20022003 can be directly attributed tothe conversion of roads that are accessibleonly in the dry season into roads that areaccessible in all seasons.

    An ADB regional technical assistancecovering border provinces in Cambodia,Lao PDR, and Viet Nam conducted threecase studies reviewing the poverty impactof regional economic integration in theGMS.7 Although only preliminary reportsare available at this time, these studiesprovide insights into the impact of regionalintegration on poverty and other aspects of development in border areas in the GMS.The studies 8 found that poverty incidenceis higher in less integrated areascompared to that in more connectedareas. Standard of living and REI arepositively correlated, with people livingnearer formal border-crossing points andprovincial centers being better off thanthose who reside in remote nonborderareas. The key benefits of REI cited by thestudies were as follows:

    Increasing trade volume and activities:This has (i) improved consumer welfarethrough greater access to high quality products, including agricultural inputs,at competitive prices; (ii) expandedaccess to markets, thus providing anincentive for increasing production;and (iii) enhanced the living standardof the people in general.

    Increasing job opportunities acrossborders: Cross-border migration has

    7 RETA 6171, Technical Assistance for Reviewing the Poverty Impact of Regional Economic Integrationin the Greater Mekong Subregion, approved on 6 May 2004. The studies have been coordinated at theregional and country levels. At the country level, national research institutions (NRIs) conducted thecountry level research, analysis, and primary date collection. Participating NRIs are: Cambodia Develop-ment Resource Institute and National Institute of Statistics in Cambodia; National Economic ResearchInstitute in the Lao PDR; Thailand Development Research Institute in Thailand; and Central Institute forEconomic Management in Viet Nam. The Viet Nam study covered Quang Tri Province and Tay Ninh Prov-ince; the Lao PDR study covered Savannakhet Province and Saravan Province; and the Cambodia study covered Banteay Meanchey Province and Svay Rieng Province.

    8 The research teams used a combination of rapid pilot assessment and observation, key informant inter- views, focus group discussions, participatory assessment, consultation workshop, and small-scale house-hold survey in the conduct of the studies.

    Cross-bord

    infrastructu

    could benefit

    poor (i) by raishousehold inco

    through increa

    productivity

    resources tha

    own

    (ii) improving thaccess to ba

    social services;

    (iii) increasi

    their access to f

    consumer go

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    become an important coping strategy for the poor in border villages, beinga source of livelihood and a means of diversifying income for people whocross the borders to look for work.Remittances are used to supportfamily expenditures including thosefor education and health, and tohelp purchase agricultural inputs andimplements.

    Enabling common use of healthfacilities: The people in the borderareas are able to avail of higher qual-ity health services across the borders.This is exemplified by the large num-ber of Lao people living in border com-munities receiving medical care andtreatment in neighboring countries.

    Facilitating the acquisition of betterfarming techniques from neighboringcountries: Lao and Cambodian farmersat the borders are using more techno-logically advanced farming practicesacquired from traders and farmersacross the borders. This is helpingraise their productivity and income.

    At the same time, the studies highlightedthe negative side effects of REI that needto be addressed, including: (i) spreadof HIV/AIDS and other communicable

    diseases, (ii) drug trafficking, (iii) illegallabor migration and the related issues of human trafficking and child labor, (iv)environmental degradation, (v) increasein land prices that have led some farmersto sell their land and become landless,and (vi) increase in traffic accidents, thusexacerbating the relatively high mortality,disability, and damage to property due tosuch accidents. They also indicated thatadditional efforts are necessary to enhancethe efficacy of subregional measures in

    reducing poverty. Among others, thecapacity of the poor to benefit from suchmeasures is constrained by their low levelsof education, training, and skills. TheLao PDR study emphasized poverty reduction programs are required. Theprograms should focus on capacity building

    and vocational training for local people,especially for poor local people. Thestudies also expressed concern about theeffects of economic integration on incomedistribution, as the formal sector couldincreasingly crowd out the informal sector

    wherein most poor people are involved.

    3. Summing Up the Evidence

    Available information suggests thatsubregional cooperation and integrationis helping GMS countries reduce poverty and address related human developmentneeds through various mechanisms andchannels. However, the precise scale andscope of its contribution to poverty reduc-tion cannot be determined at this time, asa quantitative assessment of the poverty impact of subregional cooperation and in-tegration has not been possible. Neverthe-less, there is scope for enhancing and sus-taining the poverty impact of subregionalcooperation and integration.

    First, it would be a clear advantage if more emphasis were placed on pro-poorpolicies and programs side by side with theprovision of cross-border infrastructure toenable the poor to benefit from economiccooperation and integration. As pointedout in the studies cited above, the poor may

    not be able to benefit fully from subregionaleconomic integration unless their capacity to avail of economic opportunities isimproved. The completion of the mainroad artery of the EastWest EconomicCorridor (EWEC), for example, would nothave yielded benefits for the poor if thecomplementary feeder and farm-to-marketroads had not been provided. 9 Second, theinterests of vulnerable groups, such asethnic communities, the poor in remoterural areas, women, and children need to

    be fully addressed. It will be important tocontinue to find ways of integrating thepoor into the mainstream of economicdevelopment and prevent them frombeing crowded out in this process.Third, further measures are required tominimize and mitigate the adverse impact

    9 In the Lao PDR and Viet Nam, works on the main road arteries of the EastWest Economic Corridor havecatalyzed improvements in rural access roads in the corridor.

    Available

    information

    suggests subregional

    cooperation and

    integration help

    GMS countries

    reduce poverty

    though the precise

    scale and scope

    of its contribution

    cannot bedetermined

    at this time

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    IntroductionAssessment

    of subregional economic integration.Indeed, costs and benefits are involved insubregional cooperation and integration,but the experience so far has demonstratedthat the benefits of working togetherfar outweigh the negative externalities.Nevertheless, preemptive measures arenecessary to address the potential negativeside effects of subregional integration.

    All these concerns indicate that poverty reduction requires coordinated andcomplementary efforts at both the nationaland subregional levels.

    C. Strategic Thrusts:Progress, Issues, andChallenges

    The vision and goals of the GMS Programare to be realized through five strategicthrusts. This part of the Review assesses theprogress that has been made under eachstrategic thrust, highlighting key achieve-ments, major issues and challenges, andactions needed to improve their implemen-tation and enhance their effectiveness.

    1. Strengthening InfrastructureLinkages

    This strategic thrust of the GMSSFinvolves subregional cooperation in thetransport, energy, and telecommunicationssectors. In the transport sector, theprincipal objectives are (i) to developpriority transport corridors critical tolinking the subregion together andpromoting trade and investment; (ii)to reduce nonphysical barriers to themovement of people, goods, and services;and (iii) to formulate and coordinatestrategies to ensure that the transport

    corridors evolve into economic corridors,leading to agricultural diversification,industrialization, and the creation of employment opportunities. To realize theseobjectives, the GMS plan of action (POA)in the transport sector consists of threemajor programs, namely: (i) improvementof major transport linkages in the EastWest Economic Corridor (EWEC), NorthSouth Economic Corridor (NSEC), andSouthern Economic Corridor (SEC) (see

    map showing GMS corridors in Appendix5); (ii) formulation, negotiation, adoption,and implementation of the Cross-BorderTransport Agreement (CBTA) among GMScountries; and (iii) transformation of thethree corridors into full-fledged economiccorridors. The GMS Transport SectorStrategy Study (TSSS), adopted at the10th meeting of the Subregional TransportForum (STF) held in Vientiane in March2006, guides subregional cooperation inthe transport sector. The STF, which metin Bangkok on 8-9 May 2007, formulatedand agreed to adopt an action plan for theGMS transport sector covering the period2008-2012 based on the TSSS.

    The key achievements of subregionalcooperation in the transport sector are:

    Serving as a catalyst for developing transport links among GMScountries: GMS cooperation in thetransport sector has catalyzed thedevelopment of transport links in theGMS by (i) providing a forum and

    venue for open discussion of transportissues and exchange of information;(ii) establishing personal contactsand institutional network amongtransport officials and agencies of GMS countries; (iii) developing a

    common approach to cross-borderissues, primarily through the CBTA;and (iv) providing a framework forassistance to the GMS transport sectorfrom ADB and other developmentpartners.

    Developing priority transportcorridors: A major achievement inthe implementation of the GMSSF isthe greatly improved physical connec-tivity in the subregion exemplified

    by the near full completion of thetransport component of the threemain GMS corridors noted in para.45 above. (See maps showing theGMS Road Network in 1992, 2006,and 2015 in Appendix 6.) Benefitsare already being felt in terms of reduced cost and time of travel, as

    well as growth in cross-border tradeand increasing economic opportuni-ties around border areas.

    A maj

    achievement in implementation

    the GMSSF i

    greatly impro

    physical connect

    in the subregi

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    EastWest Economic Corridor(EWEC) : About 1,450 kilometers(km) long, this corridor is theonly direct and continuous landroute between the Indian Ocean(Andaman Sea) and the SouthChina Sea. This corridor has beencompleted, except for a 40 km roadsection in Myanmar, and is the firstGMS corridor to have reached thisstage. The Second InternationalMekong Bridge between Mukdahanin Thailand and Savannakhet inthe Lao PDR was inaugurated andopened on 20 December 2006. Aninitial impact assessment of thedevelopment impact of EWEC onSavannakhet Province (Rattanay Luanglatbandith 2006) foundsignificant benefits, such as (i)reduced travel time from theLaoViet Nam border of LaoBaoDansavanh to Savannakhet by busfrom about 12 hours to only about 3hours presently; (ii) increase in FDIand joint ventures in SavannakhetProvince, much of which has beeninfluenced by EWEC development;(iii) expansion in employment andincome-generating opportunities;and (iv) improvement of access

    of rural students to secondary schools.

    NorthSouth Economic Corridor(NSEC) : Three different routesalong the northsouth axis of thiscorridor are KunmingChiangRaiBangkok via the Lao PDR orMyanmar route, KunmingHanoiHaiphong route, and the Nanning-Hanoi route. The Mekong bridgebetween Houayxay on the Lao PDR

    side and Chiang Khong on the Thaiside remains to be the missing link along the first route of the North

    South corridor. In this regard,the Lao PDR and Thailand haveagreed on a site for the bridge.The governments of the PRC andThailand have further agreed toshare in financing the cost of thebridge on a 5050 basis. Overall,

    work on the transport links underthe two routes of the NSEC isprogressing well toward the targetcompletion date of 2010, withmany sections in the PRC, Lao PDR,Myanmar, Thailand, and Viet Namhaving been completed in the last23 years.

    Southern Economic Corridor(SEC) : The SEC is defined by three main road sub-corridorsconnecting major points inCambodia, Thailand, and VietNam. The three sub-corridors aremaking good progress towardrealizing the target completiondate of 2010, with many sectionsin the sub-corridors already completed. Benefit monitoringreports for completed sections of the sub-corridors indicate thatbenefits are already being realizedin terms of savings in travel time,

    lower travel costs for passengersand lower maintenance costsfor vehicles, increased volumeof trade, and generation of employment opportunities for thelocal population.

    Reducing nonphysical barriers: Another major achievement is theformulation, negotiation, conclu-sion, and initial implementation of the CBTA at selected border-crossing

    points. 10 The experience in the initialimplementation of the CBTA at theDansavanhLao Bao border-crossing

    10 The Cross-Border Transport Agreement (CBTA) covers all relevant aspects of cross-border transport facili-tation in one document, including (i) single-stop/single-window inspection; (ii) cross-border movementof persons; (iii) transit traffic regimes; (iv) eligibility requirements for vehicles making cross-bordersorties; (v) exchange of commercial traffic rights; and (vi) related infrastructure, such as road and bridgedesign standards, road signs, and signals. The Joint Committee of the CBTA, which met in Beijing on 20March 2007, set as a target the ratification or acceptance by all GMS countries of all the annexes andprotocols of the CBTA and commencement of the implementation of the national action plans of the CBTA by the time of the 3rd GMS Summit in 2008.

    Another major

    achievement is

    the formulation,

    negotiation,

    conclusion,

    and initial

    implementation of

    the CBTA at selected

    border-crossing points

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    IntroductionAssessment

    point has been positive, realizingsignificant results and providing

    valuable lessons to the other pilotborder-crossing points. Processingtime for cargo trucks crossing theborder has been reduced from 4 hoursto 7080 minutes and for passengercars, from 2 hours to 30 minutes.The processing time for cargo trucksis expected to be reduced further to30 minutes and for passenger cars, toaround 10 minutes or less. The CBTA is not only essential in maximizingthe benefits from improved physicalconnectivity. It is also symbolic of thepolitical will of the GMS countries toachieve their vision and goals. Success-ful implementation of the CBTA inthe pilot border-crossing points andsubsequently in the GMS as a wholeis, therefore, critically important.

    The following issues and challengesneed to be dealt with to maximize benefitsfrom GMS cooperation in the transportsector:

    Sustaining progress in physicalconnectivity: While significant prog-ress has been achieved in improvingphysical connectivity in the GMS,

    substantial transport infrastructureinvestments are still required tomake GMS corridors operational.

    Accordingly, continuing to identify and implement priority subregionaltransport projects based on the GMSTSSS is necessary.

    Addressing constraints to CBTA implementation: This requires (i)providing capacity-building inputsin the border-crossing points in

    the form of training, facilities, andequipment; (ii) institutionalizingand mainstreaming the work of the national transport facilitationcommittee in each GMS country; and(iii) facilitating the formulation andapproval of enabling laws needed tofully implement the CBTA.

    Transforming transport corridorsinto economic corridors: Establish-ing appropriate policy, regulatory,and institutional frameworks forcorridor development is necessary.Some efforts have been made in thisdirection for the EWEC, includingpreparing a pre-investment study forthe EWEC and establishing a GMSBF advisory committee on EWEC in2006. Much more needs to be done,however, to make operational thestrategy contained in the pre-invest-ment study for the EWEC. In addition,plans for the broader economic andsocial development of the otherpriority GMS corridors should beactively pursued. 11

    The objectives of the GMS Programin the energy sector are to: (i) promotethe development of regional power tradein the GMS to help in fully developingand utilizing the subregions energy potential; (ii) facilitate the developmentof grid interconnection infrastructurethrough the construction of transmissionlines that would interconnect the variousGMS power systems; and (iii) promoteprivate sector investments in GMS powerprojects. A fourth objective has been added

    following the steep increase in oil pricesin 20052006, i.e., to expand cooperationto include the development of alternativeand renewable sources of energy, energy efficiency, and security.

    The key achievements of subregionalcooperation in the energy sector are:

    Establishing policy and institu-tional frameworks for power trade: This was accomplished by formulat-ing and ratifying an Intergovernmen-

    tal Agreement on Regional PowerTrade, establishing a regional powertrade coordination committee tooversee the formulation and adoptionof regulatory, institutional, andcommercial frameworks for powertrade in the GMS, and the initiationof activities under the Memorandum

    11 A development study of the NorthSouth Economic Corridor (NSEC) is under way.

    Establishi

    appropriate poli

    regulatory, a

    institution

    framewor

    for corrid

    developme

    is necessary

    transform transp

    corridors in

    economic corrid

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    2Introduction 2Assessment

    The long-term goal of subregionalcooperation in the telecommunicationssector is to improve telecommunicationslinkages among the GMS countries,thereby facilitating communications andaccess to information, lowering transactioncosts, and enhancing competitivenessof the subregion as a whole. Its moreimmediate objectives are to: (i) developthe subregional telecommunicationsbackbone and the GMS informationsuperhighway network; (ii) promote policy and regulatory reforms and strengthencapacity in the sector to attract privatesector investments in the development of national telecommunications networks,as well as to facilitate the interconnectionof these networks; and (iii) reduce thedigital divide between developed and lessdeveloped areas and contribute to effortsto reduce poverty in GMS countries. TheSubregional Telecommunications Forum(STCF) is coordinating GMS cooperationin the telecommunications sector.

    The key achievements of subregionalcooperation in the telecommunicationssector are:

    Developing the GMS telecommu-nications backbone: The optical

    fiber interconnection of the telecom-munications systems of the GMScountries is at its final stages, withthe optical fiber infrastructure in thePRC, Thailand, and Viet Nam beingalready in place. The missing links inCambodia, Lao PDR, and Myanmar,

    which are presently being addressed with financial assistance from thePRC, are expected to be completedin 2008. At the same time, the GMScountries have been implementing

    their respective telecommunicationssector reform agenda and undertaking

    related capacity-building programs tocreate a favorable enabling environ-ment for private sector investments intelecommunications services and tofacilitate interconnection. 13

    Initiating development of the GMSinformation superhighway network (ISN) : The GMS ISN is expected toprovide a broadband platform amongGMS countries for voice, data, andInternet services for various applica-tions such as e-commerce, e-govern-ment, e-learning, and telemedi-cine. An ISN implementation groupcomposed of telecommunicationsoperators from the GMS countries

    was established in 2005 to promotethe development of ISN. An ISNSteering Committee composed of senior officials of telecommunica-tions agencies of GMS countries wasalso established in 2005 to coordi-nate and oversee ISN development.The work of the implementing groupled to the signing of a memorandumof understanding (MOU) for thePlanning and Construction of GMSInformation Superhighway Network at the 2nd GMS Summit.

    The issues and challenges that needto be addressed to strengthen subregionalcooperation in the telecommunicationssector are as follows: 14

    Formulating and adopting a tele-communications development planand strategy, with a corresponding POA: A Telecommunications SectorStudy (ADB 1997) laid the ground-

    work for the general direction of GMScooperation in this sector in the early

    years of the program, but the focusof the studys implementation has

    13 The Asian Development Bank (ADB) has provided technical assistance (RETA 6004) to Cambodia, LaoPDR, and Viet Nam for GMS Telecommunications Sector Policy Formulation and Capacity Building.

    14 The STCF met in Bangkok, Thailand on 29-30 May 2007 and considered some of these issues and chal-lenges. The meeting agreed to develop a sector strategy and action plan containing measures to: (i)promote ICT applications for development; (ii) develop optimal institutional arrangements for coop-eration; (iii) build capacity for sector operation; (iv) implement policy reforms and enhance privateinvestment in the sector; and (v) further enhance the GMS ISN. Subregional cooperation in telecommu-nications could be renamed subregional cooperation in information and communications technology (ICT) in line with the thrust toward the development of an information superhighway network (ISN).

    The long-term g

    of subregion

    cooperation in

    telecommunicati

    sector is to impr

    telecommunicati

    linkages amo

    the GMS count

    thereby facilitat

    communicatio

    and access

    informatio

    lowering transact

    costs, and enhanc

    competitiven

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    Midterm Review of the Greater Mekong Subregion Strategic Framework 20022012

    been mainly on completing the fiberoptic links among GMS countries andestablishing appropriate policy andregulatory frameworks. A GMS tele-communications development planand strategy are needed to guidefuture cooperative efforts for devel-oping the telecommunications sectorin the GMS.

    Promoting information andcommunications technology (ICT)in rural and remote areas of theGMS: All GMS countries agree thatpromoting ICT in rural and remoteareas of the GMS would help in theirefforts to reduce poverty reductionand narrow the digital divide intheir respective countries. It wouldbe necessary to formulate and agreeon a concrete work program withspecific activities and time frames toachieve practical results.

    Reviewing the roles of the STCF,Implementing Group, and Steering Committee: The possibility of mergingthe implementing group and thesteering committee could be lookedinto, as the STCF itself could performthe role of the steering committee

    in coordinating and mobilizingresources. Advantages may also begained by having both public andprivate sector representatives in theimplementing group. Alternatively,the steering committeewith theISN being the core program for GMStelecommunications developmentcould replace the STCF.

    Clarifying the role of developmentpartners in the telecommunica-

    tions sector: Due to the commercialcharacter of activities in the telecom-munications sector, most developmentpartners do not give high priority to thesector. On the other hand, the privatesector is still hesitant to make majortelecommunications investments inthe GMS, especially those addressingthe missing links in Cambodia, LaoPDR, and Myanmar. In this regard,the development partners may still

    have a role to play in supportingactivities in the telecommunicationssector which have subregional publicgoods elements, such as facilitatinginterconnection of national systems,harmonizing standards, establish-ing suitable policy and regulatory frameworks, expanding services torural and remote areas in the GMS,and building capacity.

    2. Facilitating Cross-Border Trade,Investment, and Tourism

    This strategic thrust of the GMSSFinvolves promoting and facilitating intra-GMS (i.e., among GMS countries) andextra-GMS (the GMS vis--vis rest of the

    world) trade, investment, and tourism. TheGMSSF subsumed subregional coopera-tion in agriculture under the first strategicthrust, i.e., in the context of subregionalinfrastructure linkages and development.However, as subregional cooperation inagriculture is expected to help reducepoverty in the GMS by promoting sustain-able livelihoods, food security, and agricul-tural trade, the discussion of the progressin this area of cooperation is taken upunder the strategic thrust involving tradeand investment promotion.

    Cooperation in trade facilitation isaimed at reducing or removing barriers tothe smooth and efficient flow of people,goods, and services across borders, and thedevelopment of an adequate and efficientlogistics system. In the area of investmentfacilitation, measures include strengtheningthe institutional and policy frameworksto promote investment, and cooperationamong investment promotion agencies inthe subregion. The GMS Trade FacilitationWorking Group (TFWG) and the GMS

    Subregional Investment Working Group(SIWG) are coordinating GMS activitiesin trade and investment facilitation.To energize GMS cooperation on tradeand investment, the TFWG formulateda Strategic Framework for Action onTrade Facilitation and Investment (SFATFI) in 2004. The SFATFI, which wassubsequently endorsed at the 2nd SecondGMS Summit, defined the objectives,guiding principles, strategic thrusts, and

    Cooperation in

    trade facilitation is

    aimed at reducing or removing barriers

    to the smooth and

    efficient flow of

    people, goods, and

    services across

    borders, and the

    development of

    an adequate and

    efficient logistics

    system

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    priority areas for facilitating trade andinvestment in the GMS.

    The following issues and challengesneed to be addressed to strengthen theeffectiveness of subregional cooperationin trade and investment:

    Expediting implementation of theSFATFI: In view of the importanceof expanding subregional trade andinvestment to achieve GMSSFs visionand goals, GMS countries emphasizedthe need to expedite the implementa-tion of the SFATFI during the con-sultations conducted for the Review.In this regard, the first meeting of the GMS Heads of Customs Adminis-tration was held in Bangkok in Sep-tember 2006. Organized by the RoyalThai Government, the World Customs

    Administration, and ADB, the meetingagreed on a set of priority medium-term issues to be dealt with as partof a common action plan, includingthe status of customs modernization,challenges, and progress made to dateand related capacity-building activi-ties. The 5th meeting of the TFWG

    was held in May 2007 to fast-track theimplementation of SFATFI.

    Preparing a strategic framework for investment promotion andfacilitation: Although the title of SFATFI includes investment, its focusis mainly on trade facilitation issuesrather than on investment promotion.Of the four priority areas under theSFATFI, only the mobility of businesspeople directly concerns investmentpromotion. So far, there appears tobe no clear consensus on the priority areas that the SIWG should focus

    on, except for those centered on theGMSBF and a proposed regionalguarantee facility. The SIWG shouldconsider preparing a strategicframework and a concrete POA topromote and facilitate investment inthe GMS, in close collaboration withthe private sector through the GMSBF and taking into full account theneed for coordination and synergy

    with the SFATFI.

    Improving coordination betweenTFWG and SIWG: There was a sug-gestion to merge the two workinggroups, as trade and investment issuesare closely interrelated. This has to beconsidered carefully, as some GMScountries have reservations aboutmerging the two working groups forthe reason that different ministriesor agencies are responsible for thetwo areas. On the other hand, thereis clearly a need for close interactionbetween these two groups. The possi-bility of synchronizing their meetingscould be looked into.

    Ensuring coordination betweenSFATFI and CBTA: There are activi-ties of common interest to CBTA andSFATFI, specifically on customsadministration and quarantine inspec-tion. CBTA deals with facilitation of customs and immigration proceduresat the border-crossing points, whilethe SFATFI deals with the more gen-eral need of facilitating customs pro-cedures and requirements as a whole.The two sets of activities should beclosely coordinated and integratedto the extent possible. More spe-cifically, key officials involved in the

    CBTA (e.g., those participating in thenational transport facilitation com-mittees or NTFCs) should be invitedto the meetings of the TFWG and vice

    versa. The TFWG and NTFCs couldalso exchange reports regularly toupdate each other on related activi-ties and to highlight areas that needto be acted upon jointly.

    The primary objective of subregionalcooperation in the tourism sector is as

    follows: Develop and promote the Mekongas a single destination, offering a diversity of good quality and high-yielding subregionalproducts that help distribute the benefitsof tourism more widely; add to the tourismdevelopment efforts of each GMS country;and contribute to poverty reduction,gender equality and empowerment of

    women, and sustainable development, while minimizing any adverse impacts.The following programs were initiated in

    In view of

    importan

    of expandi

    subregional tra

    and investmen

    achieve GMS

    vision and go

    there is a ne

    to expedite

    implementation

    the SFA

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    2005 to broaden the thrust of subregionalcooperation in the tourism sector: (i)marketing and product development, (ii)human resource development (HRD),(iii) heritage conservation and socialimpact management, (iv) pro-poortourism development, (v) private sectorparticipation, (vi) facilitating the movementof tourists, and (vii) development of tourism-related infrastructure.

    The key achievements of subregionalcooperation in the tourism sector are asfollows:

    Putting GMS on the global tourismmap: Subregional cooperation in thetourism sector has helped put theGMS firmly on the worlds tourismmap, with the job of positioning theGMS in the eyes of the internationalindustry having been completed. 15 Spearheaded by the TWG, a substan-tial subregional cooperation agendahas been pursued since 1993. Thisincluded promotional campaignsexemplified by the Jewels of theMekong project, started in 1996,and the GMS Destination MarketingProgram, initiated in 1997. A principalcomponent of the latter program is theMekong Tourism Forum (MTF), held

    annually from 19962005 in collabo-ration with the Pacific Asia Travel Association with financial assistancefrom ADB and the United NationsEconomic and Social Commission for

    Asia and the Pacific (UNESCAP).

    Building close alliances, strength-ening ownership, and generating high-level support: Subregionalcooperation in the GMS tourismsector provides a good example of

    close collaboration among many partners that has been generally sustained from the beginning of theprogram. The TWG has been oneof the most active sector groupingsunder the GMS Program, having itsown secretariat (Agency for Coordi-nating Mekong Tourism Activities

    or AMTA) which was establishedand operated using the resources of the Tourism Authority of Thailandand small contributions from GMScountries. To strengthen ownershipfurther, the Mekong Tourism Coordi-nation Office (MTCO) took over

    AMTA in 2005, with initial fundingfor its activities coming from financialcontributions from each GMS country.The French government also agreedto second a tourism official to serveas project coordinator for MTCO to

    work on developing priority projectsunder the TSSS starting July 2007.Progress in subregional cooperationin tourism has been greatly facilitatedby the TWGs ability to generate high-level support through the conductof tourism ministerial and seniorofficials meetings (SOMs).

    Implementing the GMS TourismSector Strategy Study: GMS countrieshave been working on varioustourism projects in the last few years.Cambodia is establishing a tourisminstitute in Phnom Penh. The Lao PDR has organized a training workshopon heritage management. Viet Namhas developed tourism occupationalstandards. Thailand has improved

    tourism facilities in the EmeraldTriangle and cooperated with theFrench government in developing a

    virtual presentation on GMS culturalheritage sites, namely: Angkor Wat inCambodia, Luang Phrabang in the LaoPDR, Bagan in Myanmar, Sukhothaiin Thailand, Hue in Viet Nam, andGuilin and Lijang in the PRC. YunnanProvince has improved navigation onthe Mekong River for cruise tourismbetween Jing Hong and Thailand

    in the Golden Quadrangle TourismZone. Cambodia and Thailand arecooperating with each other indeveloping a tourism route along theSouthern Tourism Corridor, linkingPattaya and Koh Chang in Thailand

    with Sihanoukville in Cambodia andPhu Quoc in Viet Nam.

    15 ADB. Summary of Proceedings of the 15th Meeting of the Tourism Working Group. March 2004.

    Subregional

    cooperation

    in the tourism sector

    has helped put the

    GMS firmly on the

    worlds tourism map

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    The following issues and challengesneed to be addressed to ensure that thethrust in subregional cooperation in thetourism sector remains on track: 16

    Prioritizing proposed projects:The TSS identified 29 projects, 13of which are of a spatial nature deal-ing with the planning and develop-ment of priority tourism zones (e.g.,Mekong River Tourism Corridor,Golden Quadrangle Tourism Corridor,EastWest Tourism Corridor) and 16are thematic activities (e.g., trainingand capacity building, pro-poor tour-ism, GMS visa) dealing with specificGMS-wide interventions. Consideringstaff, institutional, and financial con-straints, implementing all proposed29 projects at the same time may notbe a practicable approach. Therefore,prioritizing the proposed projects andpreparing an action plan based on theidentified priorities will be necessary.

    Sustaining, restructuring, andstreamlining the operations of MTCO: While the establishmentof MTCO is considered a step in theright direction and has been a welcomeinitiative, how to fund and manage

    its operations over the longer termis a major concern of GMS countries.The initial operational expenses of MTCO have been financed fromcontributions from each GMS country.How long this funding arrangementcan be sustained is not clear. Waysand means need to be found forMTCO to raise funds from the privatesector and make its operations self-financing. To successfully developand market the GMS as a single

    destination, MTCO should streamlineits administrative and communicationprocedures, and review its marketingand development plans, based on theGMS Tourism Cooperation Manualproposed by Thailand at the 19th

    Meeting of the TWG held in Ho ChiMinh City, Viet Nam.

    Facilitating travel GMS-wide visa:Facilitating travel to and within GMShas been in the agenda of GMS coop-eration in tourism development sinceits inception. A major activity initiatedunder the auspices of the AyeyawadyChao PhrayaMekong EconomicCooperation Strategy (ACMECS), incoordination with the GMS Program,is the development and introductionof a GMS-wide visa for nationals fromoutside the subregion. A basic agree-ment on the concept, objectives, andimplementation principles of a single

    visa scheme was reached during themeeting of the Working Group onthe ACMECS Single Visa Scheme(the Scheme) in January 2005. Thescheme was launched in November2005, with Cambodia and Thailandsigning an MOU to implement thescheme. It was scheduled for pilot-testing in the last quarter of 2006, butthis has been delayed because of somepending issues. MTCO should monitorclosely the progress of the discussionsbetween Cambodia and Thailand onthe scheme and assist in resolving

    outstanding issues, so that pilot-test-ing could start as soon as possible.

    Energizing the annual Mekong tourism event: The MTF heldannually from 1996 to 2005 had beenan important feature of GMS tourismpromotion and marketing efforts.However, the MTF seemed to havelost steam in recent years. Accord-ingly, the Pacific Asia Travel Associa-tion recommended that the concept

    and approach to the organization of the MTF be rethought, and the GMScountries agreed that some alterna-tive form should be continued andreenergized. In this regard, the 1stMekong Tourism Investment Summit

    16 The TWG met in Ho Chi Minh City, Viet Nam on 29 March 2007 and considered some of these issues andchallenges. It reviewed the achievements of the MTCO since its establishment in 2006 and requested itsDirector to prepare a GMS tourism marketing plan and a GMS tourism cooperation manual. It also agreedto extend financial support to MTCO for its second year of operations and to proceed with the prioritiza-tion of the projects listed in the TSS.

    Considering st

    institutiona

    and financi

    constraint

    prioritizing t

    proposed proj

    in the TSS a

    preparing an act

    plan based on

    identified priori

    will be neces

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    was held back-to-back with the 17thTWG meeting in March 2006. Amongthe suggestions that the TWG couldrevisit to reenergize the annual eventare: (i) making the focus of the forumissue-oriented and more responsiveto the interests of the private sector,(ii) using the format of the ASEANTourism Forum, (iii) synchronizingthe timing of the forum with a majorregional or international event (e.g.,GMS ministerial or summit meeting),and (iv) getting more support fromnational tourism organizations.

    Subregional cooperation in agricul-ture was not part of the GMS Program

    when it was launched in 1992. Over time,the GMS countries realized the need toinclude agriculture as one of the areasof cooperation in the program. Accord-ingly, the GMS countries took major stepsto establish and implement a program of cooperation in agriculture, starting withthe 10th GMS Ministerial Conference in2001. GMS cooperation in agriculture

    was affirmed by subsequent GMS ministe-rial conferences and underscored by theGMS leaders during their first and secondsummit meetings, with agriculture beingincluded as one of the sectors of coopera-

    tion in the GMSSF. The GMS WorkingGroup on Agriculture (WGA), establishedin 2003, formulated a strategic framework for subregional cooperation in agricultureand a core agriculture support program(CASP) covering 20062010. GMS

    Agriculture Ministers endorsed the CASPduring their meeting in Beijing in April2007. CASP is composed of five programcomponents, namely: (i) facilitating cross-border agricultural trade and investment, 17 (ii) promoting publicprivate partnership

    in sharing agricultural information, (iii)enhancing capacity in agricultural scienceand technology, (iv) establishing emergency response mechanisms for agricultural andnatural resource crisis situations, and (v)strengthening institutional linkages andmechanisms for cooperation.

    The main challenge in this area of cooperation is the effective implementa-tion of the CASP. Another challenge isfor the WGA to establish linkages withother GMS forums and working groups,as the CASP has a direct interface andrelations with the other sectors and areasof cooperation in the GMS such as thosein trade (cross-border trade in agriculturalproducts, biosafety, and food standards),transport (cross-border facilitation of themovement of agricultural goods, especially perishable goods, and of quarantineinspection of live animals in line with theCBTA; need for support in terms of logisticssuch as warehousing and refrigeration),energy (renewable energy, biofuel, andrural electrification), telecommunications(application of ICT for agricultural supply chain management, capacity building,research and extension services), andHRD (impact of transboundary animaland plant diseases on the health of theGMS population, capacity building, andtraining in agriculture-related skills).

    3. Enhancing Private Sector Partici-pation and Competitiveness

    This strategic thrust of the GMSSF involvesmeasures to increase the participation of

    the private sector in GMS infrastructureprojects and to enhance its competitive-ness by (i) lowering production and distri-bution costs through efficient utilities andinfrastructure support, (ii) improving skillsof the labor force, and (iii) improving thepolicy and regulatory environments forprivate sector investments in the GMS.

    The critical role of the private sector asan engine of growth in GMS developmenthad been recognized from the initialstages of the GMS Program. Therefore,

    efforts were taken early on to initiate andexpand the participation of the chambersof commerce of GMS countries in theProgram. Road shows were conductedin Japan, Republic of Korea (ROK),and Europe to promote private sectorinvestments in GMS countries. The former

    17 Contract farming is one of the priority projects under the Core Agriculture Support Program (CASP), asthis has the potential to provide substantial benefits to small farmers.

    The critical role of

    the private sector as

    an engine of growth

    in GMS development

    had been recognized

    from the initial

    stages of the GMS

    Program

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    activity was constrained by the weaknessof the private sector in Cambodia, Lao PDR,Myanmar, and Viet Nam, which were in themidst of transition from centrally plannedto market-based economies, while theroad shows lacked close follow-throughactions. Outside of the active participationof the private sector in tourism promotionand development, as well as in a numberof GMS power and telecommunicationsprojects, the scope for increasing andenhancing private sector participation inGMS development remains significant.

    In more recent years, initiatives havebeen taken to energize the promotion of private sector participation in the GMS,the most noteworthy of which were theestablishment of the GMS Business Forum(GMSBF) in 2000 and the adoption of SFATFI in 2005. GMSBF is an independent,nongovernment organization and jointinitiative of the chambers of commerce of the six GMS countries. It is an importantelement in integrating the role of the privatesector into the GMS Program and has thepotential to serve a key role in promoting,facilitating, and catalyzing cross-borderinvestment, as well as investment fromthird countries into the GMS.

    GMSBF has organized six fee-basedconferences, which have generated

    revenues to help finance its operations.Sponsored by regional corporates, theconferences were focused on such key areas as EWEC development, miningopportunities in the Lao PDR, financing of small and medium scale enterprises, andhigh-value agricultural products. It was alsoone of the principal organizers of the HighLevel PublicPrivate Sector ConsultationMeeting in September 2004. GMSBFhas set up a GMS website and compiled abusiness handbook and directory of small

    and medium enterprises in the GMS. In2006, the board of GMSBF was expandedto include corporates. The initiatives thathave been taken to strengthen GMSBFneed to be maintained and accelerated.It will take some time before GMSBFcould become something like the ASEANChamber of Commerce and Industry, asthe private sector in some GMS countriesstill need substantial strengthening.Nevertheless, there is sufficient rationale

    and scope for enhancing GMSBFs rolein the GMS Program. The followingsuggestions could be considered:

    While continuing to organize road

    shows and well-targeted private sectorforums and conferences, GMSBFcould further strengthen its advocacy role for policy and regulatory reformsto the extent possible. The latteractivity complements the first, as theadvocacy role provides GMSBF witha means to follow up the recommen-dations and results of the forums andconferences that it organizes.

    The possibility of regularizing themembership of GMSBF in TFWG andSIWG should be examined, thus insti-tutionalizing publicprivate coopera-tion in these key areas. This will notonly provide a venue for GMSBF forfollowing up on the actions needed;it will also help the working groupsclarify the real world problems thatthe private sector faces in the GMS,as well as in identifying practical andrealistic approaches.

    The GMSBF needs to continuemobilizing funds from the privatesector and establish mechanisms tomake its operations self-sustaining

    over the longer term eventually. Sofar, GMSBF operations have beensupported by ESCAP and ADB. Suchsupport is increasingly being supple-mented by income from the organiza-tion of fee-based conferences.

    A regional guarantee facility hasbeen proposed to promote private sectorinvestments in the GMS. It was discussedduring the GMSBF held in conjunction

    with the Second GMS Summit. It was also

    discussed at the Tokyo Mekong Develop-ment Forum and at the 5th meeting of the SIWG in 2005. The proposed GMSInvestment and Trade Guarantee Facility

    would issue guarantees and risk mitiga-tion services to investors, contractors,exporters, and traders operating in theGMS. It is envisioned as a mechanism forreducing country risks, thereby attractingmore foreign investments into the GMS. It

    will be necessary to expedite action on the

    In more rec

    years, initiati

    have been tak

    to energize t

    promotion of priv

    sector participat

    in the GMS,

    most notewor

    of which were

    establishment of

    GMS Business F

    (GMSBF) in 2

    and the adoption

    SFATFI in 2

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    proposed facility, as this facility has thepotential to overcome a major constraintin private financing of commercial andinfrastructure projects in the GMS.

    4. Developing Human Resources

    This strategic thrust of GMSSF isexpected to contribute to the realization of the HRD goals of GMS countries throughsubregional programs that address issuesin education and skills development,labor, and health. Along this line, theemphasis is on programs and projects that(i) have cross-border implications, (ii)provide economies of scale, (iii) facilitatecross-country exchange of experience andinformation, and (iv) have region-wideimpact on public welfare. Activities in thesubregional program on HRD have mainly covered the following areas: (i) capacity building for development management;(ii) prevention and control of communi-cable diseases, particularly HIV/AIDS andmalaria; (iii) health and education needsof ethnic minorities; and (iv) prevention of the trafficking of women and children, andpromotion of safe migration in the GMS. A GMS working group on HRD (WGHRD)established in 1996 is coordinating GMScooperation in HRD.

    Major accomplishments and activitiesin subregional cooperation in HRD are thefollowing:

    Phnom Penh Plan for developmentmanagement (PPP): PPP hasdeveloped and implemented astrong program to build capacity among GMS government officials,particularly to strengthen theirmanagement capacities in support of regional economic integration (REI)

    and transition toward more openeconomies. Besides learning a broadrange of analytical, managerial, andleadership skills, around 900 civilservants trained under PPP alsohad the opportunity to develop aprofessional network and be exposedto the latest viewpoints on key development management issues. PPPhas also provided opportunities for

    continuous learning and networkingamong GMS development managers.The relative success of the PPP hasbeen manifested in the continued as

    well as increased financial supportfrom various sources. Phase I had abudget of $1.15 million financed by

    ADB and the Government of NewZealand. The program was able tomobilized $4.1 million for phase II,

    with additional funding coming fromthe governments of the PRC andFrance.

    Prevention and control of communicable diseases in the GMS: Nearly half of the 17 projects that havebeen implemented under the GMScooperation program on HRD havebeen for the prevention and controlof HIV/AIDS. In this regard, a projecton ICT and HIV/AIDS PreventiveEducation in the Cross-Border Areasof the GMS, which was completedin 2005, developed ICT learningmaterials for HIV/AIDS preventiveeducation in local languages. It alsohelped in (i) building capacity of teachers, health workers, and otherstakeholders on the use of ICT for HIV/

    AIDS preventive education; and (ii)

    delivering ICT-based interventions toisolated, marginalized, and vulnerablepopulations. A follow-up projecttargeting ethnic minority groupsin Cambodia, Lao PDR, Thailand,and Yunnan Province in the PRC isongoing. Moreover, a major RegionalCommunicable Diseases Control (CDC)Project covering Cambodia, Lao PDR,and Viet Nam started implementationin 2006. The action plan for thefirst year of operation, which is

    focused initially on strengtheningsurveillance and response to thethreat of the avian influenza (avianflu) epidemic, is being implemented.Several of PRCs activities in thisarea of cooperation are noteworthy,including (i) implementation of amalaria control program in the borderareas of the PRC and Myanmar from2005 onwards, under which a Pilot

    PPP has developed

    and implemented

    a strong program

    to build capacity

    among GMS government officials,

    particularly to

    strengthen their

    management

    capacities in support

    of regional economic

    integration (REI)

    and transition

    toward more open

    economies

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    Programme on Malaria Preventionand Control aimed at regularizinginformation exchange and capacity building, was initiated in May 2006;and (ii) launching of an HIV/AIDSprogram which covered the PRC andMyanmar initially and, subsequently,the Lao PDR and Viet Nam.

    The following issues and challengesneed to be addressed to strengthen theeffectiveness of subregional cooperationin HRD: 18

    Clarifying strategic and programfocus of subregional coopera-tion in HRD: Although ongoing andpipeline projects under the WGHRDhave addressed key HRD concerns inthe GMS, program development andimplementation has been essentially project-based and lacked a clearly defined strategic framework. Formulat-ing and agreeing on a comprehen-sive framework for GMS cooperationin HRD has not been easy becauseof the complexity and diversity of education, health, and labor issues inthe subregion. Nevertheless, formulat-ing a GMS strategic framework andconcrete plan of action (POA) for

    cooperation in HRD could guide andhelp make subregional cooperationin HRD more effective, as well asstrengthen mechanisms for coordina-tion with other related subregionaland regional initiatives.

    Strengthening institutional arrange-ments and support to the WGHRD:The WGHRD has made an effortto firm up its role in coordinatingthe GMS Program in HRD, but

    these efforts have been met withmany difficulties. First, there is nonatural home or champion for GMSHRD concerns, as there are threeministries or groups of ministriesinvolved in WGHRD, namely: thosein education and training, health,and labor. Second, representationof these ministries in WGHRD haschanged frequently, thus leading toa lack of continuity. The institutionalarrangements in the subregionalprogram on HRD should be reviewedto improve their contribution to theHRD thrust of GMSSF. The possibility of restructuring WGHRD along thefollowing lines could be considered:(i) establish three subgroups underthe umbrella of WGHRD (educationand skills development, health, andlabor); or (ii) narrow down thescope of WGHRDs work to educationand labor, while establishing theproposed GMS health forum. 19 Giventhe growing importance of laborissues in the GMS for both sendingand receiving countries, it may be

    worthwhile to consider having asubgroup dealing with such issues.The possibility of other developingpartners providing secretariat support

    to some subgroups could also belooked into.

    Pursuing cooperation in laborissues: Demographic trends in theGMS, as well as changing economicstructures and evolving labor marketsin GMS countries, have increasedthe importance of addressing labor-related issues, such as labor migration,labor standards, human trafficking,skills competencies and standards,

    18 The WGHRD met in Phnom Penh, Cambodia on 9-11 May 2007 and considered some of these issues andchallenges. Officially designated WGHRD focal persons from the GMS countries, who are expected toprovide continuity and more effective coordination, attended the meeting for the first time. The WGHRDdecided to proceed with the preparation of a strategic framework for HRD cooperation in the GMS and amedium-term action plan with ADB assistance.

    19 A Regional Workshop on Communicable Diseases Surveillance and Response, held in Guilin, Guangxi Autonomous Region, PRC on 2931 August 2005, proposed the establishment of a GMS health forumthat would serve as a key vehicle for promoting and strengthening subregional cooperation in the healthsector. The initial focus of the proposed forum would be on communicable diseases control, but the forumcould also take up other health-related cross border issues.

    Although ongo

    and pipeline proj

    under the WGH

    have addressed

    HRD concern

    the GMS, prog

    development a

    implementati

    has been essenti

    project-based a

    lacked a clea

    defined strate

    framewo

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    and protection of migrant workers,through subregional cooperation. 20 Increased physical connectivity in thesubregion has further made the task of addressing these issues on a coopera-tive basis more urgent. Subregionalcooperation on labor issues, therefore,needs to be emphasized more, withthe focus being on training andcapacity building activities involvingpractical skills, entrepreneurship andSME development.

    5. Protecting the Environment andPromoting Sustainable Use ofShared Natural Resources

    This strategic thrust of the GMSSF isdirected toward ensuring that environ-mental concerns are adequately addressedin cross-border initiatives and properly integrated into the subregions economicdevelopment efforts. To achieve this goal,a number of subregional program activi-ties supported by an ADB regional techni-cal assistance were implemented from19942004, including the (i) SubregionalEnvironmental Information and Monitor-ing System (SEMIS) phases I and II,(ii) Strategic Environment Framework phase I, (iii) Subregional Environmental

    Training and Institutional Strengthen-ing (SETIS), (iv) Poverty Reduction andEnvironmental Management in RemoteGMS Watersheds, and (v) Managementand Protection of Critical Wetlands in theLower Mekong Basin. The GMS WorkingGroup on Environment (WGE) spearheadsand coordinates GMS cooperation inenvironment.

    In 2005, GMS countries launchedthe 10-year Core Environmental Program(CEP) as the central program to address

    the subregions environmental challenges with a strong mandate being given by theGMS Environment Ministers Meeting inShanghai in May 2005 and subsequently by the GMS Leaders at the 2nd GMS

    Summit. The CEP aims to: (i) secure criticalecosystems and environmental quality inthe GMS economic corridors; (ii) ensurethat investments in key sectors such ashydropower, transport, and tourism aresustainable; (iii) conserve biodiversity inprotected areas and corridors; (iv) defineand implement sustainable financingstrategies and market mechanisms toconserve the natural systems of the GMS;(v) integrate environmental considerationsinto national and subregional planning,and develop and apply environmentalindicators to measure progress toward asustainable path to development; and (vi)establish a secretariat to provide full-timesupport to the GMS WGE in implementingthe CEP.

    Major progress has been achieved inthis area of cooperation in terms of layingthe foundation for implementing a moreeffective and comprehensive agenda forthe sustainable development of the GMS.More specifically, the key achievements of subregional cooperation in environmentalprotection and management are:

    Raising awareness and initiating asystematic subregional approach:GMS cooperation in environmentconcerns can be credited not only

    with raising the awareness of GMScountries on the urgency of environ-mental issues and challenges inthe subregion, but also with theneed to jointly address subregionalenvironmental concerns based onclose cooperation and collaboration.GMS countries share many naturalresources and sensitive ecosystems,and the environmental impact of development in one area extendsbeyond national boundaries. Hence, a

    subregional approach to environmen-tal conservation and management isimperative. The GMS Program alsoenabled GMS countries to initiate andpursue subregional cooperation initia-

    20 The World Bank has completed the first phase of a GMS Labor Migration Program. This aims to improveknowledge of labor migration issues in the GMS, raise awareness of these issues at the highest levelsof policy making, and strengthen the capacity of governments and development partners to refine andimplement a regional system to facilitate and regulate labor migration (World Bank 2006b). In thisregard, the World Bank has identified labor migration as one of the areas it would support under itsproposed strategy of assistance to the Mekong subregion (World Bank 2006a).

    In 2005, GMS

    countries launched

    the 10-year Core

    Environmental

    Program (CEP)

    as the central

    program to address

    the subregions

    environmentchallenges with a

    strong mandate

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    tives in environment on a systematicand more coordinated basis.

    Developing alliances and partner-ships: Subregional cooperation onenvironmental concerns in the GMSprovides another good example of generally close collaboration amongnational environmental agencies andregional and international organiza-tions. Such a tradition of partnership

    was developed from the start of thesubregional cooperation program andhas been generally sustained sincethen. In this regard, institutions suchas the United Nations EnvironmentProgramme, Mekong River Commis-sion (MRC), International Union forthe Conservation of Nature (IUCN),World Wildlife Fund (WWF), and ADBhave worked closely together withthe environmental agencies of GMScountries on a number of subregionalprojects that the WGE implemented.

    Launching and mobilizing resourcesfor the CEP: Robust economic growthand expanding subregional invest-ments in such sectors as transport,energy, and tourism have accentuatedthe need to ensure that current and

    planned activities in the GMS do not jeopardize the sustainable develop-ment of the subregion. Accordingly, amore comprehensive and integratedapproach to environmental conser-

    vation and management in the GMSin the form of the CEP was adoptedin 2005 and implemented in 2006.The Environment Operations Center(EOC) was established in Bangkok in

    April 2006 to serve as the secretariatof the WGE to implement the CEP.

    An important feature of the CEP isthe mobilization of funding for itsimplementation. The CEP experiencein putting together a comprehensiveand integrated package includingfinancing for its implementation isnoteworthy. Implementation of theCEP for the first 3 years of operationis estimated to cost $36.11 millionand is being financed from varioussources.

    The following issues and challengesneed to be addressed to strengthen thethrust of subregional cooperation inenvironment in the GMS:

    Closely monitoring and evaluat-ing CEP implementation: The mainchallenge for the CEP is to ensureits effective implementation and todemonstrate concrete results fromthe program. Compared with othersubregional environmental programsprepared in the past, CEP implemen-tation should readily lend itself toclose monitoring, as it was preparedusing a results-oriented framework.The establishment of the EOC shouldalso facilitate the continuing WGEmonitoring of CEP implementation.The plan to prepare a GMS WGEannual report is an excellent ideafor tracking and reporting progress,as well as for sharing information.It could also serve as a model forthe other GMS forums and workinggroups to consider.

    Clarifying the allocation and use of resources: The financing plan for theCEP did not contain an allocation of the total CEP budget into the five CEP

    components; hence, there have beenquestions about how the CEP budgetshould be allocated into its differentcomponents. Furthermore, during theGMS Senior Officials Meeting (SOM)in Vientiane on 910 November 2006,the SOM noted that the effective andtransparent use of resources providedby donors for the implementationof the Core Environment Programshould always be observed to achievemaximum impact. The financing

    aspects of CEP was subsequently discussed at a meeting of the WGE inDecember 2006, at which time EOCpresented the CEP budget alloca-tion by component, commitments,and budget forecast for the remain-ing years of phase I of the CEP. Suchreporting is a good practice and shouldbe adopted as a standard of the year-end agenda of WGE meetings.

    The main challe

    for the CEP i

    ensure its effec

    implementati

    and to demonstr

    concrete results f

    the progra

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    Expanding and deepening engage-ment with civil society: Althoughthere has been some improvementin the manner and extent to whichthe GMS environmental program hasengaged civil society, there is still aneed to widen and deepen civil societysparticipation in the design, implemen-tation, monitoring, and evaluationof GMS initiatives to safeguard theenvironment and promote sustainabledevelopment. Besides improving andexpanding information disseminationapproaches to the public and practic-ing participatory approaches, it wouldbe good to show concrete actions andresults that are indicative of the politi-cal will of GMS countries to addressmajor environmental concerns in thesubregion.

    D. Crosscutting Issues andChallenges in GMSSFImplementation

    Issues and challenges affect the implemen-tation of the GMSSF as a whole, in additionto those specific to each of the five strate-gic thrusts. Effective implementation of the GMSSF will require such crosscuttingissues and challenges to be addressed. Thispart of the Review discusses these crosscut-ting concerns and indicates possible waysof dealing with them.

    1. Recognizing Different Levels ofDevelopment of GMS Countries

    The uneven level of development amongGMS countries provides an impetus tosubregional cooperation, as this offersmany opportunities for economic comple-

    mentarities among them. At the sametime, such varying levels of develop-ment constrain the pace of cooperationbecause some GMS countries still lack thecapacity (in terms of expertise and skills,institutions, equipment, and facilities)to implement subregional programs andprojects. Lack of capacity may also make itdifficult for these countries to benefit fully from subregional cooperation. This impliesthat (i) sufficient flexibility has to be built

    into the work programs for implement-ing subregional measures and activities,taking into account existing capacities forimplementation; (ii) continuing efforts arerequired to build capacity in GMS countriesrequiring such assistance (e.g., throughinclusion of capacity-building componentsin ongoing subregional programs andprojects, and sustained implementationof institutional strengthening programs);and (iii) more attention is needed toensure that the GMS Program propor-tionately benefits small players, especially in the areas of social and environmentaldevelopment, institution and capacity building, and skills development. Indeed,the key objectives of subregional coopera-tion are (i) directly, to help less developedGMS countries benefit fully from regionaleconomic dynamics and further integratetheir economies with the global economy;and (ii) indirectly, to assist other develop-ing countries and enable them to contrib-ute to regional integration. Giving specialattention to the less developed GMScountries will enable them to benefit fromand contribute to subregional cooperationand integration.

    2. Promoting Greater Ownershipand Broad-Based Participation

    The sustainability of the GMS Program will ultimately depend on the ownershipof the Program by the GMS countries.Ownership has two aspects. The first refersto the management of the Program by theGMS countries themselves. Due to lack of capacity and resources, GMS countrieshave sought ADB assistance to provide thenecessary technical and secretariat supportfor monitoring and coordinating activitiesunder the Program. The GMS countries feel

    that ADB should continue to perform thisrole. Indeed, among a variety of regionalcooperation mechanisms, GMS countriesbelieve that a key advantage of the GMSProgram is the close involvement of ADBthat has helped in ensuring continuity andcumulative progress toward the vision andgoals of GMSSF. In their view, ADB hasperformed a unique and irreplaceable roleas catalyst, honest broker, advisor, andfinancier. Another concern in this regard is

    More attention

    is needed to

    ensure that the

    GMS Program

    proportionately

    benefits small

    players, especially in

    the areas of social

    and environmental

    development,

    institution and

    capacity building,

    and skills

    development

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    that building the capacity of less developedGMS countries takes time, and askingthem to take on new subregion-wideresponsibilities is not advisable unless they feel able and comfortable to do so. In any case, GMS countries could assume moreresponsibility for directing and coordinat-ing the work of GMS forums and workinggroups wherever there is willingness andcapacity, as well as consensus, among theGMS countries.

    The second aspect of ownership in- volves the commitment and involvementof various levels of government and civilsociety to the goals and objectives of theGMS Program. GMS governments at thehighest level no doubt own the Program.This has been aptly manifested and con-firmed by the high-level meetings of theGMS2 summit meetings and 13 ministe-rial meetings so far. However, the extentof knowledge and understanding of therole and importance of the GMS Programdeclines as one goes down the bureaucra-cy, as one moves from central to line minis-tries, and as one moves from the central tothe local authorities. Therefore, enhancingcoordination among government agenciesin the GMS countries at both the nationaland local levels is necessary. Furthermore,there is a need to broaden the participation

    and support of civil societyespecially lo-cal communitiesto the GMS Program,and thus make it more inclusive.

    3. Enhancing Resource Mobiliza-tion and Donor Coordination

    The estimated requirements for financ-ing major GMS infrastructure projects inthe next 10 years (around $30 billion)far exceed the amount that can be madeavailable so far from GMS governments

    and multilateral, as well as bilateral,sources of development assistance. Accord-ingly, resource mobilization remains amajor challenge to the implementation of the GMSSF.

    There have been additional resourcesfor the GMS Program in the form of private sector investments, particularly intwo hydropower projects in the Lao PDR cited 33 above. Moreover, the number of GMS development partners is now largercompared to that in the early years of theGMS Program. These development partnershave made important contributions toGMS development not only financially,but also in terms of their professionaland technical expertise in various areasof GMS cooperation. Australia, France,Japan, the Netherlands, New Zealand,Sweden, the PRC, Thailand, and Viet Namare now key bilateral partners, with thelatter three countries providing assistancein the spirit of southsouth cooperation.The multilateral partners include theWorld Bank, several UN agencies such asUNESCAP, World Health Organization,United Nations Development Programme,United Nations Environment Programme,and many other UN specialized agencies.

    As of December 2006, financing forpriority GMS projects amounting to $6.9billion has been mobilized for GMS projects,

    with the amount mobilized increasing by 60% between 19941999 and 20002006(Table 2). 21 Of the total amount mobilized,GMS countries contributed 31.7%; ADB,

    28.8%; and cofinancing sources, 39.5%.Financing for technical assistance projectsmore than doubled between 19941999and 20002006, with the amount of cofinancing increasing four times betweenthese periods. More than 90% of suchcofinancing was for advisory technicalassistance projects, the focus of which wasin capacity building and policy support.

    To help mobilize resources, coordi-nation among development partners hasbeen strengthened and institutionalized.

    The formulation and adoption of the GMSSF in 2002 were intended to help in thisprocess. Other measures taken included:(i) initiation of the development partnersmeeting in 2002 as part of GMS ministe-

    21 It should be noted that these financial resources were those mobilized directly through the GMS Program with the participation of ADB. They do not include funding for GMS-related projects that have been indi-rectly mobilized and induced by the program, such as those funded by GMS governments either by them-selves or together with other official sources. Financing for these projects is estimated at $2 billion.

    There is a ne

    to broaden t

    participation a

    support of c

    societyespec

    local communitie

    to the GMS Progr

    and thus make

    more inclus

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    Table : Resources Mobilized for GMS Programs and Projects as of 31 December 00(in million dollars)

    A. Loan-funded Projects, by Sector

    19921999 20002006 19922006

    SECTOR ADB Govt. Co-Fin Total ADB Govt. Co-Fin Total ADB Govt. Co-Fin Total

    Energy 112.0 36.6 234.0 382.6 166.3 61.4 1,350.3 1,578.0 278.3 98.0 1,584.3 1,960.6Tourism 35.0 12.1 47.1 35.0 12.1 47.1Health 30.0 7.8 0.9 38.7 30.0 7.8 0.9 38.7Transportation 712.0 1,086.3 435.0 2,233.3 866.0 978.3 648.2 2,492.5 1,578.0 2,064.6 1,083.2 4,725.8

    Total 824.0 1,122.9 669.0 2,615.9 1,097.3 1,059.6 1,999.4 4,156.3 1,921.3 2,182.5 2,668.4 6,772.2

    B. Technical Assistance Projects, by Type

    19921999 20002006 19922006

    TYPE ADB Govt. Co-Fin Total ADB Govt. Co-Fin Total ADB Govt. Co-Fin TotalCore 8.6 0.3 0.9 9.8 5.3 1.2 6.5 13.9 1.5 0.9 16.3PPTAa 10.5 0.9 3.8 15.2 15.3 2.8 0.4 18.5 25.9 3.7 4.2 33.7ADTAb 9.4 4.3 7.4 21.0 24.1 6.0 53.8 83.9 33.5 10.3 61.2 104.9

    Total 28.5 5.5 12.1 46.0 44.7 10.0 54.2 108.9 73.2 15.5 66.3 15a Project Preparatory Technical Assistanceb Advisory Technical Assistance

    C. Loan-funded and Technical Assistance Projects

    19921999 20002006 19922006

    ADB Govt. Co-Fin Total ADB Govt. Co-Fin Total ADB Govt. Co-Fin Total1. LFPsc 824.0 1,122.9 669.0 2,615.9 1,097.3 1,059.6 1,999.4 4,156.3 1,921.3 2,182.5 2,668.4 6,772.22. TAPsd 28.5 5.5 12.1 46.0 44.7 10.0 54.2 108.9 73.2 15.5 66.3 154.9

    Total 852.5 1,128.4 681.1 2,661.9 1,142.0 1,069.6 2,053.6 4,265.2 1,994.5 2,197.9 2,734.7 6,927.1

    c Loan-Funded Projectsd Technical Assistance ProjectsSource: Southeast Asia Regional Department, Asian Development Bank

    rial conferences to engage developmentassistance agencies as active partners inthe GMS Program; (ii) preparation anddissemination of a web-based GMS devel-opment matrix to provide a unified sourceof information on GMS projects, help pro-mote coordinated planning, and serve asa tool for mobilizing resources; and (iii)conduct of Mekong Development Forumin Paris (June 2004), Tokyo (July 2005),New Delhi (November 2005), Singapore(March 2006), and Stockholm (April

    2006) to promote support for GMS devel-opment.

    In the future, other means of expand-ing official and private resources for GMSprojects need to be explored. Previousproposals that could be revisited include:(i) setting up a GMS development or infra-structure fund whose capital could comefrom contributions from governments andmultilateral and bilateral development

    institutions; and (ii) establishing a subre-gional guarantee mechanism to promoteGMS trade and investment.

    4. Linking Up More Closely withOther Regional Initiatives

    Several other subregional initiativesinvolving a number of GMS countriescover many matters that the GMSProgram is addressing, including thoseunder ASEAN. Avoiding duplication

    and ensuring complementarity among various subregional initiatives have been acontinuing concern of the GMS countries.Steps have been taken to ensure closecoordination and to avoid duplication of related initiatives, including (i) increasingcommunication and exchange of informa-tion with these initiatives; (ii) posting up-to-date information on the GMS Programon its website; (iii) inviting representatives

    Other means

    of expanding official and private

    resources for GMS

    projects need to be

    explored

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    of related initiatives to GMS meetings andconferences; and (iv) attending meetingsunder the auspices of related initiatives

    whenever possible. These efforts need tobe continued and intensified.

    In many GMS countries, a singleagency has been made primarily respon-sible for coordinating all subregionalinitiatives. This has reduced the risk of duplication, as the officials concernedare fully aware of what each subregionalinitiative is undertaking, although this hasalso increased the burden on limited staff resources. Interagency committees havealso been established to ensure close coordi-nation and to avoid duplication amongongoing subregional initiatives. Supportedby ADB technical assistance, Viet Nam iscarrying out measures to improve coordi-nation among all regional programs whereit is involved. Nevertheless, some concernscontinue about overlapping activities of ongoing subregional initiatives. The GMSSF was envisioned to be a means to facili-tate collaboration and to assist in avoidingduplication of efforts among various initia-tives. However, continuing efforts shouldbe exerted to ensure that the GMSSF isseen as the backbone program for GMSdevelopment.

    Coordination with ASEAN is critically

    important as (i) all GMS countries, exceptthe PRC, are now members of ASEAN;and (ii) there is a substantial scope forcomplementarity between ASEAN andthe GMS Program. Although the GMSPrograms linkage with the ASEANSecretariat has expanded over the years,there is scope for strengthening thealliance between the GMS and ASEAN.The GMS Program complements the rule-based ASEAN initiatives through, amongothers, helping improve connectivity

    among GMS countries that are alsomembers of ASEAN; facilitating the freermovement of people and goods amongGMS countries through the CBTA; helpingbuild capacity in Cambodia, Lao PDR,Myanmar, and Viet Nam; and serving as agateway of ASEAN to the PRC. Agreements

    covering various areas of cooperation havebeen signed in ASEAN. GMS has jump-started the implementation of some of these agreements on a pilot basis and isthereby paving the way for their widerimplementation.

    Although the GMS Programs linkage with the MRC has improved in recent years,there still seems to be a concern that someGMS activities duplicate responsibilitiesthat have been mandated to the MRC,particularly those impinging on Mekongbasin development. Moreover, since only four GMS countries in the lower Mekongbasin are members of the MRC, 22 closerlinkage between the MRC and the GMSProgram is necessary, so that a basin-wide

    view of Mekong development, i.e., upstreamand downstream, can be made operational.Under the partnership arrangementbetween ADB and the MRC signed in March2000, both parties agreed to take measuresto better and more effectively coordinateactivities covering the GMS Program. Thefull implementation of the provisions of thepartnership arrangement will help ensurethat activities under the GMS P


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