Countries on the banks of the greater Mekong river – Cambodia, the People’s Republic of China, Lao People’s Democratic Republic, Myanmar, Thailand, and Vietnam, which have been experiencing growth rates of 7 percent or more in the past decade came together over the weekend in Laos, to discuss strenghtening trade and investment ties in the region.
The subregion’s economic performance was driven in part by increased trade, resulting from the transition to market-based systems and closer integration with external markets.
The greater Mekong subregion (GMS) countries met to discuss ways and means to increase intra-regional trade. On Monday, Xinhua reported that over the last few years, trade has expanded both within and outside the subregion. Over the period 1994-2006, intra-GMS exports, excluding to China, grew at an annual average rate of 19 percent, while exports to other countries increased at an annual average rate of 11 percent.
Regional cooperation within the GMS framework has seen advances in transportation, telecommunications, trade, tourism, and agriculture.
Take transportation as an example. After the Trans-Asian Railway was completed, the key cities in the region, Bangkok, Hanoi, Ho Chi Minh City, Yangon, Phnom Penh, and Vientiane, all started direct flights to their capitals as well as construction of their ports. A transportation network linking water, land and air will play an increasingly important role in the region, and Asia as a whole.
Two criss-crossing corridors have just been completed in the region. The “north-south corridor” – a 2,000-km highway linking Kunming, capital of Yunnan province, and the Thai capital city of Bangkok via Laos, and the “east-west corridor” – a 1,500-km highway stretching from Vietnam’s Da Nang through Laos and Thailand to Myanmar, will serve as vital transportation arteries in the region.
The countries in the Mekong River basin have deepened their opening up to each other, nurtured closer ties with the rest of Asia, and the world. Their efforts in recent years are paying off. The per capita annul income was $1,100 in 2006 compared to $630 in 1992.
However, the low level of intra-regional trade is a key challenge to the GMS. The share of intra-GMS trade (excluding China) to total trade has risen from 2.2 percent in 1994-1996 to 5.4 percent in 2004-2006. This is still way below the share of non-GMS AFTA members of 15.3 percent, other East Asian countries of 19.2 percent, and the rest of the world of 52 percent. (AFTA is a free trade zone in Southeast Asia where member countries include Malaysia, Singapore, Thailand, the Philippines, Indonesia, Vietnam, Laos, Myanmar, Cambodia and Brunei.)
Nonetheless, the development momentum of the region has also attracted the attention of other countries.
The relationship between the United States and the Mekong River nations has improved, especially that between the US and Vietnam. Nguyen Minh Triet, the Vietnamese President, visited the US last year, the first visit by a Vietnamese state head to the US in the 32 years following the end of the Vietnam War.
Japan has also been paying more attention to its diplomatic ties with the Mekong River countries. The current Prime Minister Yasuo Fukuda has designated this year as one of exchange between Japan and nations of the Mekong region. Japan hosted a ministerial meeting in Tokyo with the foreign ministers of the five Mekong region countries in January.
More multinational companies headquartered in the US or Japan are looking to invest in the Mekong region.
It is viewed as the gateway to the east by India. And the link between the Mekong River and the Ganges River is seen as a “natural pivot to advance eastward”.
The Mekong River flows through six nations, including China. Its basin covers 2.56 million sq km with a population of 320 million. With vast forests and rich underground resources, the basin boasts one of the best biological reserves in Asia.
The ADB launched the GMS in 1992, aimed at poverty eradication, and all Mekong nations have since been involved in the common initiative of economic development. It was under such a backdrop that the concept of “Greater Mekong Subregion” took shape.