Subregional Economic Cooperation
Policy Highlights
ADB's mandate to promote regional cooperation was translated into policy in
1994. The Bank has since supported several subregional cooperation programs
in Southeast Asia (e.g., Greater Mekong Subregion or GMS, East ASEAN Growth
Area or BIMP-EAGA), Central Asia, and more recently, in South Asia.
In these schemes, ADB plays a coordinating role cum 'honest broker' between
governments and the private sector. The Bank's support to subregional
cooperation covers the whole range of activities from technical studies and
workshops in support of cooperation dialogue, to physical investments in
cross-border projects and, where appropriate, assistance for cross-border
agreements like the 'landmark' Framework Agreement on Movement of Goods and
People recently signed by Thailand, Lao PDR and Vietnam in the Greater
Mekong Subregion scheme.
Related NGO Documents
Coopting cooperation: The ADB and
subregional economic zones, Jenina Joy Chavez-Malaluan, Focus on the
Global South, 2001
Subregional Cooperation Galore in
Asia-Pacific, Violeta Q. Perez-Corral, NGO Forum on ADB, April 2001
Pacific
South Asia Subregional Economic Cooperation (SASEC)
Central Asian Regional Economic Cooperation (CAREC)
Greater Mekong Subregion (GMS)
In March 2001, ADB approved its new Pacific strategy which focuses on the
streamlining of Pacific countries' public sectors and boosting private
sector investment. The new strategy responds to five key challenges in the
Pacific Island nations:
* Vulnerability due to remote locations and a narrow resource base, and
susceptibility to natural disasters and global markets; Political
instability and poor governance; Limited skilled human resources;
Socio-cultural factors that affect politics and productivity; and
* Inadequate physical, technological and financial sector infrastructure for
sustainable growth.
ADB's Pacific strategy underscores the importance of regional cooperation to
collectively reap the benefits of economies of scale. ADB is currently
supporting regional cooperation in fisheries, air transport, financial
sector restructuring (including addressing money laundering), public sector
management and governance.
In the countries which are resource-rich but have poor growth and high
population rates (Papua New Guinea, Solomon Islands and Vanuatu), the
strategy will focus on governance, public sector reform and poverty
reduction through social and infrastructure investments. In the more
economically advanced countries with a higher skill base, moderate resource
potential and relatively low poverty (Cook Islands, Federated States of
Micronesia, Fiji Islands, Samoa and Tonga), the strategy will promote
private sector growth through policy reform and physical and financial
sector strengthening. In the island atolls of Kiribati, Marshall Islands,
Nauru and Tuvalu which are severely disadvantaged by their smallness,
isolation and weak resource base, the strategy is to establish and expand
trust funds to support the sustainable financing of basic services.
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South Asia Subregional Economic Cooperation (SASEC)
ADB promotes South Asia as the region accounting for the 'single largest
concentration of poor people in the world', or about 500 million out of a
total 900 million persons living in poverty. Full-fledged subregional loan
projects, however, have yet to be financed in South Asia. An initial
subregional TA facilitated a power exchange agreement between India and
Bangladesh in May 1997; another TA provided support to the first meeting of
the Private Sector Forum promoted by the chambers of commerce from SAGQ
countries (Bangladesh, Bhutan, India and Nepal) in November 2000.
The SAGQ was formally launched by the foreign ministers of 'member'
countries in April 1997; Nepal became overall coordinator and the following
key sectors identified -- environment, energy and power, trade and
investment, transport and tourism. Consequently, SAGQ countries requested
ADB's assistance in identifying and preparing subregional projects.
The first Private Sector Forum on SASEC in Calcutta (India) brought together
public and private sector representatives and was seen as a major step
towards identifying an investment program to develop the SAGQ; the event was
attended by a large ADB delegation. The Calcutta forum aimed to begin
translating these broad concepts into specific, bankable, investment
projects. ADB will urge SAGQ governments and private sector representatives
to prepare a regional development masterplan to identify specific projects
in different sectors, and prioritize them for financing. [back to
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Central Asian Regional Economic Cooperation (CAREC)
In 1997, ADB initiated support to Central Asia Regional Economic Cooperation
(CAREC) with a three-year TA plan prepared for 2000-2003. In March 1998, ADB
crafted a private sector strategy for the newly-independent republics of
Central Asia formed after the break-up of the former Soviet Union. The
transition economies were then encouraged to design broad-based reforms that
promote the development of a viable and healthy private sector, especially
in those areas concerned with developing commercially viable firms and
farms.
In October 2000, ADB approved a $70 million loan to rehabilitate the road
linking the Central Asian republics of Kazakhstan and Kyrgyz; the road forms
part of the famous 'Silk Road' which links Europe and the People's Republic
of China. This the first subregional cooperation project in Central Asia;
twenty-five percent of the traffic is international, largely of agricultural
and industrial goods. [back to
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Greater Mekong Subregion (GMS)
The GMS consists of the six countries of Thailand, Vietnam, Cambodia, Laos,
Burma, and Yunnan province of People's Republic of China. Several TA grants
from the ADB in 1991-1993 initiated the process of bringing together
government officials from the subregion to discuss greater economic
cooperation and to facilitate trade and investments in the GMS. Some 100
priority projects have been identified -- several already funded by ADB --
in the key areas of energy, transport, trade and investment,
telecommunications, human resources development, tourism and environment.
ADB views the GMS as a Mekong-centered 'natural economic area' where a
'natural process' of integration in trade and investment develops as
subsistence levels rise from an expected rapid economic growth. The ADB's
experience in the GMS has considerably strengthened its theory-building on
the concept and actual practice of subregional economic cooperation.
National Highway 1 Improvement Project
In the very first project developed under ADB's Greater Mekong subregion
(GMS) initiative, an estimated six thousand lives are expected to be
disrupted. The project involves the construction of a 240 kilometer highway
linking Phnom Penh to Ho Chi Minh City aimed to encourage trade flows
between Cambodia and Vietnam. [back to
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