GMS Economic Cooperation Program and ASEAN Economic CommunityPROSPECTS AND CHALLENGES for LMM

Suchat Katima Director, Mekong Institute (29 Nov 2012)

Topics•Greater Mekong Subregion (GMS)•The “Prosperity Gap”•Related Challenges in Achieving AEC 2015•Implications on Labor Migration Management

Thailand

Land area: 513 thou sq km

Population: 65.8 M

GDP per capita: US$3,133

Cambodia

Land area: 181 thou sq km

Population: 14.1 M

GDP per capita: US$510

Myanmar

Land area: 677 thou sq km

Population: 54.8 MGDP per capita: US$255 (2005)

People’s Republic of China

Land area: 633 thou sq km

Population: 97.3 M

GDP per capita: US$1,135(figures for Yunnan and Guangxi only)

Viet Nam

Land area: 332 thou sq km

Population: 84.1 M

GDP per capita: US$724

Lao PDR

Land area: 237 thou sq km

Population: 5.7 M

GDP per capita: US$601

The GMS in 2006

Land area: 2.6 M sq km

Population: 323 M

GDP per capita: US$1,453*

* excludes Myanmar

The GMS Economic Cooperation

Infrastructure is developed in specific geographical areas based on economic potential.Usually starts with transport links, but extends to other infrastructure as well as the “software” for their optimal use.

Some Characteristics of Economic Corridors:

• Create links to major markets;

• With nodal points – centers of enterprise development;

• Extend the benefits of improved transport linkages to remote locations and integrates them with more prosperous areas;

• Open up investment opportunities;• Promote synergies through the

clustering of projects;• Provide demonstration effects.

6

Road Transport Network

2015R3 a 228 km R3 b 253 kmR 9 EWEC 2463rd Bridge Nakhon Panom – Takek4th Bridge – Chiang Kong - Hoisai

1992

2004

2012

Power Transmission Line

Telecommunications Backbone

• GMS Power Grid

• Info. Super Highway Network

• Resources:

Available: Gas, Teak, Gemstone, Needs: Refined Oil, investment

Available: Tin, Rubber, HiTech, RiceNeeds: Fuel, Labor

Available: Timber, Fisheries, Product, GemstoneNeeds: Fuel, investment

Available: Copper, Lead, Zinc, Tin, Iron, HydropowerNeeds: Powdered Ores, Timber, Fisheries Products

Available: Timber. Hydropower, TinNeeds: Fuel, investment

Available: Crude Oil, Gas, Coal, ApatiteNeeds: Steel, Refined Oil

Available: Tin, Fisheries, ProductsNeeds: Manganese, Iron

Interdependency of GMS Countries

II. Diversity of GMS

Source: IMF and National Bureau of Statistics of China *Data in 2008

II. Diversity of GMS (cont)GDP per capita (Current USD)

GDP per capita at PPP

(Current USD)Thailand 3,940 8,059Guangxi* 2,155 naYunnan* 1,812 naVietnam 1,060 2,942Lao PDR 878 2,266Cambodia 775 2,015Myanmar 459 1,197

Source: IMF and National Bureau of Statistics of China *Data in 2008

Purchasing power in 2009:

“One Vision, One Identity, One Community”

ASEAN GMS Countries - 2010

Land area: 1.94 M sq Km

Population: 232 M

ASEAN Countries - 2010

Land area: 4.48 M sq Km

Population: 614 M

ASEAN Economic Community by Dec 31, 2015 0% tariff and reduction of non-tariff

barriers Single Production Base Single Marketing Base Free movement of investment,

capital and services Free movement of business people Free movement of knowledge

workers

Source:–AEC Chartbook 2010

Per Capita GDP – US$

Disparity bet. Rich & Poor

Big Economy – Small EconomyCoastal – InlandUrban – RuralRich and PoorHave – Have not

Implications on LMM

1. Second Wave of Migrants

2. More landless labors

3. Limited SME ability to integrate into GVC• Cannot compete with modern SMEs

4. Limited Good Agricultural Practices (GAP)• Less economic self-sufficiency & less food

security

Small and Medium Enterprises

Limited ability to integrate into ASEAN and

global value chains

AgricultureLimited absorptive capacity and adjustment of

agriculture policies and practices to a larger

and more competitive economy

Lack of GAPs and Good Postharvest Practices

What we need for the GMS

Modern farmers Machine operators, mechanics,

electricians, skilled factory workers, accredited vocational skills / MRA

Entrepreneurs Services Providers (Hotel, food

chains, tourism, logistics) Clusters, Associations, Consortia

What we have

BA, MBA, political sciences, humanity

International AffairsLanguages (translators,

interpreters) employees, followers, contented

low skilled workers Loosely organized business

association and Chamber of Commerce

Conclusion

Development gaps need to be addressed

Education and skills training must be based on current and anticipated needs

Minimum LMM standard and Mutual Recognition Arrangement must be in place and operational

Value chains integration of farmer associations and SMEs – a must