The current state of infrastructure in the Lower Mekong

Definition

Infrastructure refers to the underlying physical facilities and structures that enable countries and regions to function. Here we include transport systems (roads, bridges, railways, seaports and airports), telecommunications, energy production and transmission, water and waste management.

In the last two decades, the Lower Mekong countries—particularly Vietnam, Cambodia and Laos—have seen dramatic improvements to, and expansion of, their infrastructure, with the ADB reporting US$11 billion spent on priority infrastructure projects since 1992.³

Source:
Asian Development Bank. Project Records (Status: Approved). Created by ODI December 2015. Licensed under CC BY-SA 4.0.

The World Economic Forum’s Global Competitiveness report 2016–2017 gives context for the state of infrastructure in the Lower Mekong. Thailand ranked highest for overall infrastructure, 49th out of 138 countries, while Cambodia was 106th and Laos 108th (there is no data on Myanmar).⁴ (As a point of comparison, the highest rankings in the region belong to Singapore in 2nd place and Malaysia in 24th place.) Thailand’s transport infrastructure ranking of 37th placed it with developed economies such as Ireland (35th) and Norway (39th).⁵

From 2005 to 2015, 163 of the ADB’s 270 projects in Lower Mekong countries were for sectors related to infrastructure—Energy, Information and Communication Technology, Transport, Water and Other Urban Infrastructure. In addition, the World Bank has provided funding for over 100 infrastructure-related projects in LM countries since 2005,⁶ and the ASEAN Infrastructure Fund has approved three projects in Vietnam, Laos and Myanmar since 2013.⁷

Infrastructure development plans and financing

The Greater Mekong Subregion Economic Cooperation Program includes significant upgrades to regional infrastructure, focusing on increased competitiveness, improved cooperation, and enhanced community across the region. The program is following a 10-year Strategic Framework 2012–2022. A Regional Investment Framework (RIF) operationalizes the Strategic Framework by identifying priority investment and technical assistance projects through to 2022. There are more than 200 projects across 10 sectors with an estimated investment of over $50 billion, with 92 high-priority projects in 2014–2018.⁸

GMS transport initiatives work on priority transport corridors in the region. These transport corridors form the base of three key GMS economic corridors: the North–South Economic Corridor, the East–West Economic Corridor (which will eventually reach from the Andaman Sea across to Vietnam), and the Southern Economic Corridor. (These economic corridors are investment areas, usually beside main roads, that connect areas of economic activity.) At the end of 2016, it was announced that Myanmar’s capital city Nay Pyi Taw, Yangon and Mandalay cities and Yangon port will all become part of the GMS economic corridor network. Vientiane in Laos will also be incorporated.⁹

The Master Plan for ASEAN Connectivity (MPAC), adopted in 2010, integrated this approach within a broader ASEAN-wide plan with a strong focus on infrastructure development. By the end of 2015, however, only an estimated 65% of the original plan had been achieved. In September 2016, ASEAN leaders adopted the Master Plan on ASEAN Connectivity 2025 (MPAC 2025). Unfinished initiatives from MPAC 2010 were evaluated and incorporated in the MPAC 2025. The new plan focuses on five key areas: sustainable infrastructure, digital innovation, seamless logistics, regulatory excellence and people mobility.¹⁰

While the ADB estimates that US$8.2 trillion is required to meet Asia’s total infrastructure needs between 2010 and 2020, together the five lower Mekong countries account for around 3.6 percent of these projections at US$29.9 billion. The most developed economy in the region (Thailand) is also estimated to have the largest need for infrastructure funding, and most of that (72 percent) for new infrastructure projects.¹¹

While the ADB has been driving connectivity and infrastructure development in the region since the formation of the GMS, Japan and China are also heavily involved in funding infrastructure projects. Among members of the Development Assistance Committee (DAC) of the Organization for Economic Co-operation and Development (OECD), Japan has been the largest donor to Cambodia, Laos, Thailand and Vietnam, and the second-largest in Myanmar.¹²

China’s overseas aid and investment is enormous, especially in Cambodia, Laos and Myanmar, but not as transparent or easily quantified as that from other countries. You can find ODM’s dataset of Chinese financial aid projects here. Much of this investment is supported by finance from the China Development Bank and Export-Import Bank of China.¹³ In addition, the new Asian Infrastructure Investment Bank (AIIB) originally proposed by China is now operational and making loans.¹⁴ All five Mekong countries are members of the AIIB. China has also established the Silk Road Fund, which is set to inject another US$40 billion specifically for infrastructure projects within the “One Belt One Road” route it has proposed.¹⁵

Challenges in infrastructure development

While infrastructure development is central to increasing trade and investment and expanding tourism, it may also be at odds with efforts to combat climate change and effectively manage environmental resources. The expansion of roads has enabled deforestation through illegal logging and migration, and is also related to land conversion as deforested areas are opened up and converted to agricultural projects or other purposes.

The expansion of power-generation facilities based on large hydropower dams and coal-fired power plants are also disruptive to local environments and communities, as well as contributing significantly to greenhouse gases. Despite statements on prioritizing reusable and sustainable energy sources, the ADB highlights the region’s large fossil fuel reserves as an untapped resource.¹⁶

Major infrastructure projects, such as hydropower dams and railways also displace large numbers of people. Over 1,000 families are being displaced by the 400 MW Lower Sesan II dam being constructed in northern Cambodia, for example.¹⁷

According to the ADB, 42.4 percent of the infrastructure funding needed by 2020 across the Lower Mekong is for maintenance of existing infrastructure. It can be imagined that building more infrastructure means more maintenance costs in the future, and it is unclear how this will be covered by the developing economies.

While some building standards exist within and across the Lower Mekong countries (for example the “Road and bridge design and construction standards and specifications” that are part of the Cross-Border Transport Agreement),¹⁸ how these standards are inspected and enforced nationally is unclear.

Neak Loeung bridge, Cambodia, part of the transport corridor between Phnom Penh and Ho Chi Minh City.
Photo: Nesnad, WikiMedia Commons, 15 April 2015.
Licensed under CC-BY-SA-2.0 Generic.

The GMS Cross-Border Transport Agreement—ratified in 2003—sets out the need to complement existing physical infrastructure with procedures and systems within each country to allow for the free flow of goods and transport throughout the region.¹⁹ Without each country addressing these internal processes in all infrastructure sectors, it is doubtful that they can achieve the goals of inclusive and sustainable economic and social growth.

Created by ODI 3 March 2015. Licensed under CC BY-SA 4.0.

While the ADB and most Lower Mekong governments have lauded the GMS Program’s infrastructure investment as reducing poverty levels, others argue that measuring economic and monetary gains does not tell the whole story. In particular, while indicators such as GDP per capita have increased, wage gaps and financial inequality have also increased, and some sectors of society are worse off now than in the past.²⁰

References

1. Asian Development Bank. “Overview of the Greater Mekong Subregion.” Accessed 15 December 2015. http://www.adb.org/countries/gms/overview
2. ASEAN 2016. “ASEAN leaders adopt Master Plan for Connectivity 2025”. http://asean.org/asean-leaders-adopt-master-plan-on-connectivity-2025/ accessed 27 May 2017.
3. Asian Development Bank. “Overview of the Greater Mekong Subregion.” Accessed 28 May 2017. http://www.adb.org/countries/gms/overview
4. World Economic Forum. Global Competitiveness Index 2016–2017. http://reports.weforum.org/global-competitiveness-index/competitiveness-rankings/#series=GCI.A.02 accessed 27 May 2017.
5. Ibid
6. World Bank. “Projects and operations.” Search: Cambodia; Lao People’s Democratic Republic; Myanmar; Thailand; Vietnam; Accessed 27 May 2017. http://www.worldbank.org/projects/search?lang=en&searchTerm=&regionname_exact=East%20Asia%20and%20Pacific
7. Asian Development Bank. “ASEAN Infrastructure Fund Projects.” Accessed 27 May 2017. http://www.adb.org/site/aif/projects
8. Asian Development Bank 2015. “Greater Mekong Region Economic Cooperation Program”, https://www.adb.org/sites/default/files/publication/29387/gms-ecp-overview-2015.pdf accessed 27 May 2017.
9. Asian Development Bank 2016. “Expanded Road Networks to Link Mekong Capitals, Boost Investment”. https://www.adb.org/news/expanded-road-networks-link-mekong-capitals-boost-investment Accessed 28 May 2017.
10. ASEAN. “ASEAN Leaders adopt Master Plan on Connectivity 2025”. http://asean.org/asean-leaders-adopt-master-plan-on-connectivity-2025/ accessed 27 May 2017.
11. Bhattacharyay, B. 2010. “Estimating demand for infrastructure in energy, transport, telecommunications, water and sanitation in Asia and the Pacific: 2010-2020.” ADBI Working Paper 248. Accessed 19 June 2015. http://www.adb.org/sites/default/files/publication/156103/adbi-wp248.pdf. This study uses top-down and bottom-up estimates to provide an extensive estimate of the infrastructure required throughout Asia “in order to meet growing demands for services and facilitate further rapid growth in the region.”
12. OECD. https://www.oecd.org/dac/stats/aid-at-a-glance.htm Accessed 28 May 2017.
13. Inclusive Development International. November 2015. “The changing landscape of infrastructure finance in the Mekong region and beyond.” Factsheet 1, notes from conference presentation. Due to be published in working paper: “China and the evolution of development finance in the Mekong region and beyond”, December 2015.
14. Asian Infrastructure Investment Bank. https://www.aiib.org/en/news-events/news/2017/20170503_001.html Accessed 28 May 2017.
15. Ben Blanchard. “China says AIIB won’t be used for $46 billion Pakistan deal.” Reuters, 17 April 2015. Accessed 3 November 2015. http://www.reuters.com/article/2015/04/17/us-china-pakistan-idUSKBN0N80OX20150417
16. Asian Development Bank. “Overview of the Greater Mekong Subregion.” Accessed 19 December 2015. http://www.adb.org/countries/gms/overview
17. Rasio Free Asia. “Cambodian Villagers Displaced by Dam Complain of Nonarable Land, Access to Fishing”, http://www.rfa.org/english/news/cambodia/cambodian-villagers-displaced-by-dam-complain-of-nonarable-land-acess-to-fishing-03092017160301.html accessed 27 May 2017.
18. Asian Development Bank. “Greater Mekong Subregion cross-border transport facilitation agreement”, pages 117-125. Accessed 19 December 2015. http://www.gms-cbta.org/uploads/resources/15/attachment/ADB_TF_CBTA_Full_Text_gms-cbta-instruments-history.pdf
19. Asian Development Bank. “Transport in the Greater Mekong Subregion.”Accessed 19 December 2015. http://www.adb.org/countries/gms/sector-activities/transport
20. Carol Ransley, Jonathan Cornford, Jessica Rosien. Oxfam Australia: “A Citizen’s Guide to the Greater Mekong Subregion.” Accessed 15 December 2015. https://www.oxfam.org.au/wp-content/uploads/2011/08/oaus-citizensguidemekong-1108.pdf

SOURCE:

https://opendevelopmentmekong.net/topics/infrastructure/

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Saturday, June 24, 2017