Greater Mekong Subregion Economic Cooperation

Program

Eighth Economic Corridors Forum

Strengthening Connectivity and
Enhancing Competitiveness
4 August 2016
Phnom Penh, Cambodia
Session 6: Enhancing Economic
Competitiveness by Improving Trade Logistics
Service Provision

Scope of Presentation

Motivation, Overview, and Geography of

study
Recognizing Realities
Confronting Challenges
Multidimensional Approach
Links with ongoing parallel studies
Initial impressions
Indicative directions
Ultimate objectives
Issues for guidance
2

Motivation
Logistics Performance Index 2016
2016

2014

2012

2010

Rank

Score Rank

Score Rank

Score Rank

Score

73

2.80

83

2.74

101

2.56

129

2.37

Peoples Republic 27
of China

3.66

28

3.53

26

3.52

27

3.49

Lao PDR

152

2.07

131

2.39

109

2.50

118

2.46

Myanmar

113

2.46

145

2.25

129

2.37

133

2.33

Thailand

45

3.26

35

3.43

38

3.18

35

3.29

Viet Nam

64

2.98

48

3.15

53

3.00

53

2.96

Cambodia

Overview
Requested by GMS Ministers in 2015
Focused on GMS Economic Corridors
Guidance sought from ECF

Final report to be presented to 2016 GMS

Ministerial Conference

Geography
EWEC + NSEC + SEC

Recognizing Realities
Non-Physical Barriers present the most
insurmountable obstacles
Because of these non-physical barriers, new
roads and bridges have not done as much as
they might to improve market access
Consequently, transport is more costly than it
might otherwise be.

Confronting Challenges
Encouraging a more modern and efficient door to
door transport system such as that offered by Multi
Modal Transport will go a long way towards
alleviating rural poverty, enhanced trade and improve
the foreign exchange earnings of developing
countries and countries in transition

-- UNCTAD

Multidimensional Approach

Policy and regulatory environment

Soft and hard infrastructure

WTO, WCO, Bilateral and trilateral agreements

ASEAN, ASEAN-PRC FTA
CBTA

Updating a baseline report presented to Fourth ECF

Identifying opportunities to adopt new technologies

Operational Factors

How to reduce empty backhauls

How to liberalize access to GMS corridors and seaports
Significantly reduce transshipment
8

Parallel Studies
ECF
Corridor alignment

GMS Infrastructure Development

Development of Economic
Clusters/Special Economic Zones
Related
Greater Mekong Railway Association
Transport and Trade Facilitation
9

Initial Impressions

Overland transport is becoming more than just a niche market:

Maritime transport continues to dominate, but increased seaport
congestion, time-sensitive high-technology products, and demand for
perishables in PRC is forcing more traffic overland
Overland transport is becoming increasingly competitive with air freight

Many challenges, few easy solutions:

Agreements by central governments are undermined locally
Discriminatory practices are reciprocated
Inadequate funding for infrastructure maintenance
Enforcement of axle load factors haphazard

Some opportunities to overcome weak trade logistics services:

Improve value-added activities prior to export
Eliminate wherever possible the time-consuming, costly process of
trans-loading cargo from one vehicle to another
Introduce schedules for vehicle processing to reduce congestion in
seaports and at border crossing points
10

Indicative Directions

Policy and Regulatory:

Implement ASEAN commitments and undertakings pertaining to
trade logistics and WTO commitments to facilitate trade
Liberalize access to GMS corridors and seaports

Harmonize ASEAN and PRC standards fully

Make Time Release Studies public

Soft and hard infrastructure:

Address missing links in physical infrastructure
Increase funding for road maintenance
Use existing infrastructure more efficiently
Advance single window systems and digital logistics

Operations
Implement trailer swaps to minimize unnecessary cargo handling
Implement single-stop inspections and adopt risk management at all
GMS border crossing points (BCPs)
Extend operating hours at most-heavily-trafficked BCPs

11

Alternative Suggestions
Trailer swapping at borders as an intermediate solutions
Reduces border handling costs and times and costs to
operators
Reduces vehicle weight by 3 tons if integral trailers are used
Allow approved foreign vehicles to run to ICDs/Dry ports on
corridors under local customs broker/ICD operator/AEO guarantee

Permit foreign vehicles to transit to regional seaports such as Laem

Chabang under shipping/customs agent or AEO guarantee
Allow AEOs and approved customs agents to provide guarantees
for designated foreign-registered vehicles under their responsibility

12

Alternative Suggestions
Foreign visiting trucks to have 2 drivers with FRETA
approved training certificate for international
operations
Foreign visiting trucks to have a local representative
agent nominated on paperwork to sort out any
problems

Age limit on foreign visiting trucks set to 10 years

Foreign visiting trucks to carry portable GPS units
while in country
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Ultimate Objectives

Enhance economic corridor development to reduce

the cost of transport regionally
Reduce loss and damage of goods in transit
Minimize the time spent in transit and increase
reliability of logistics
Develop value-adding activities to expand
employment along and around economic corridors
Attract increased foreign investment into valueadded activities
Minimize investments in unnecessary infrastructure

14

More regional integration reduces

redundant infrastructure investments

Step1:
Manual
transshipments

Step 2:
Exchange of
containers

Step 3:
Exchange of
trailers

Step 4:
Free flow of
trucks

Regional cooperation and integration

Investment in redundant physical infrastructure

15

Step 1: The North South Economic Corridor

(2012)

16

More regional integration reduces

redundant infrastructure investments

Step1:
Manual
transshipments

Step 2:
Exchange of
containers

Step 3:
Exchange of
trailers

Step 4:
Free flow of
trucks

Regional cooperation and integration

Investment in redundant physical infrastructure

17

Step 2: Lang Son/Piangxai border (2016)

18

More regional integration reduces

redundant infrastructure investments

Step1:
Manual
transshipments

Step 2:
Exchange of
containers

Step 3:
Exchange of
trailers

Step 4:
Free flow of
trucks

Regional cooperation and integration

Investment in redundant physical infrastructure

19

Step 3: Pianxiang (2011)

20

More regional integration reduces

redundant infrastructure investments

Step1:
Manual
transshipments

Step 2:
Exchange of
containers

Step 3:
Exchange of
trailers

Step 4:
Free flow of
trucks

Regional cooperation and integration

Investment in redundant physical infrastructure

21

Step 4: GMS (2016)

22

Issues for Guidance

Is there general agreement that vehicles from all GMS countries

should be able to travel freely within the region?
Can we contemplate allowing a vehicle from one GMS country to
serve customers within the territory of another GMS country?
How can GMS improve road maintenance management and
funding and enforce vehicle weight limits?
What is GMS doing to implement provisions of the WTOs Trade
Facilitation Agreement?
What sort of multimodal initiatives can help to optimize trade
logistics service provision?
What measures are needed to help cope with the growing pains
associated with creating conditions for increased overland trade
flows?
How to create additional opportunity for private sector
investment in seaports and logistics facilities?
23