Vietnam plays active role in GMS trade, investment cooperation
Updated : Tuesday, April 10, 2018 9:23 AM (GMT+0700)

Vietnamhas proactively participated in trade and investment cooperation activities inthe Greater Mekong Subregion (GMS), which comprises Cambodia, China’s Yunnanand Guangxi provinces, Laos, Myanmar, Thailand and Vietnam, over the past 25years.

Vietnamese Prime Minister Nguyen Xuan Phuc (C) and heads of delegation of the GMS
countries - Photo: VNA

The successful hosting ofthe 6th GMS Summit (GMS-6) and the 10th Cambodia-Laos-Vietnam (CLV) Summit onDevelopment Triangle Area (CLV-10) in Hanoi from March 29-31, 2018 demonstratedVietnam’s contributions to regional economic cooperation mechanisms.


A unique characteristic ofGMS cooperation is that member countries share land borders, which isconvenient for land transport connectivity and economic corridor development.

Vietnam holds key nodes inthree GMS economic corridors: the Southern Coastal Corridor (GMS-SCC) whichlinks Thailand to southern Vietnam via Cambodia; the East-West EconomicCorridor (EWEC) that links Myanmar to Vietnam via central Thailand and Laos;and the North-South Economic Corridor (NSEC) with sections linking China andVietnam.  

By the end of December 2017,roughly 6 billion USD had been poured into GMS cooperation projects in Vietnam,equivalent 30 percent of the total value of GMS loans and financial aid. Of theamount, transport accounted for 87 percent, followed by urban development (7.9percent), agriculture and natural resources (3.7 percent), healthcare andsocial welfare (2.7 percent), industry and trade (0.4 percent) and tradefacilitation and transport (0.2 percent).

In 2009, Vietnam commencedthe construction of a 264km expressway connecting the capital city of Hanoi andthe northern border province of Lao Cai with a total investment of 1.2 billionUSD sourced from the Asian Development Bank (ADB). It was put into operation inSeptember 2014. 

The expressway, the longestof its kind in Vietnam, is considered a strategic part of the Kunming(China)-Lao Cai-Hanoi-Hai Phong road corridor under the GMS cooperationprogramme. The road has significant impacts on the country’s economicefficiency as it helps reduce the travelling time between Hanoi and Lao Caifrom seven hours to three hours.

It is not only important toVietnam but also the whole GMS region by changing the economic panoramic oflocalities in northern Vietnam and southern China through enhancing transportconnectivity, commercial exchanges, investment and tourism cooperation. 

Vietnam signed the GMSCross-Border Transport Facilitation Agreement (CBTA) in 1999 and has ratifiedall CBTA annexes, enabling the reduction of time spent at border gates forvehicles, goods and passengers and facilitating trade. Since 2012, Vietnam andChina have facilitated each other’s vehicles crossing the shared border on theKunming-Hanoi-Hai Phong and Hanoi-Nanning-Shenzhen routes. The same year,Vietnam, Thailand and Laos signed a Memorandum of Understanding to expand roadsconnecting the capital cities of the three countries with two large sea ports –Laem Chabang (Thailand) and Hai Phong (Vietnam) on the EWEC.

The mechanism of Single StopInspection (SSI) has been carried out at Lao Bao-Dansavanh border gate betweenVietnam and Laos since 2015. The launching of the SSI at the Lao Bao-Dansavanhborder gate has helped transform landlocked Laos into a transit hub in the GMSand enabled the provinces of Quang Tri (Vietnam) and Savannakhet (Laos), toutilise their advantages for economic development. The SSI is being developedat other border gates along the EWEC and NSEC.

Freetrade relations

Addressing the first-everGMS Business Summit initiated by Vietnam on the sidelines of the GMS-6 andCLV-10 summits, Prime Minister Nguyen Xuan Phuc said Vietnam is acceleratingthe signing and ratification of two new-generation free trade agreements,namely the Comprehensive and Progressive Agreement for Trans-PacificPartnership (CPTPP) and the EU-Vietnam Free Trade Agreement (EVFTA) in 2018 and2019.

The country has also workedto effectively implement 10 FTAs currently in effect and acceleratenegotiations for the Regional Comprehensive Economic Partnership (RCEP) andother agreements.

Once the CPTPP and EVFTAcome into effect, Vietnam will have highly preferential, free trade relationswith the markets of nearly 40 developed countries, the PM said.

PM Phuc stressed thatVietnam continued to maintain its high economic growth in the top of Asia in2017 with trade turnover reaching a record level of 425 billion USD, andforeign reserves exceeding 60 billion USD. At present, there are about 25,000foreign direct investment (FDI) projects in Vietnam with total registeredinvestment capital of more than 320 billion USD, he added.

According to the World Bank(WB), Vietnam’s Ease of Doing Business Index (DB) last year jumped 14 places to68th among 190 economies, while the World Economic Forum (WEF) placed Vietnam’sGlobal Competitiveness Index (GCI) at 55th out of 137 countries, five placeshigher than the previous year. The World Intellectual Property Organization(WIPO) ranked Vietnam’s Global Innovation Index (GII) at 47th out of 127countries, leaping 12 places.

To a certain extent, theseachievements have shown the trust and enthusiasm of investors and entrepreneurstoward the Vietnamese Government’s efforts for stronger reforms and innovationover the past years, the PM said.

According to Vice Chairmanof the Central and Eastern European Chamber of Commerce in Vietnam CsabaBundik, the GMS countries as a subregion of the Association of Southeast AsianNations (ASEAN) have many similarities especially the role of agriculture isvery significant in every country.

Vietnam’s economic growth isoutstanding and the country is one of the engines of the bloc’s development, hesaid.

Particularly, the EVFTA willbe the next significant step for a closer economic cooperation between themembers of the European Union (EU) and Vietnam as the EU is a key exportpartner and source of technology, machinery and pharmaceuticals amongst other products,he said.

Most importantly forVietnamese citizens, companies and government, the EVFTA will help to havehigher salaries, further significant economic growth, more exports and profits,he added.

Newdrivers for growth

Amidst the profoundtransformations underway in the world economy and development environment, theGMS needs to find more robust drivers for its development, according to PMNguyen Xuan Phuc.

The GMS needs to maintain its unique identity as an effective mechanism with“3C” Strategy of Connectivity, Community and Competitiveness to amplify thedetermination and efforts of all sides in order to generate new resources tosettle differences, and broaden and deepen the sphere for economic cooperation,he said.

He called on member economiesto create a favourable business environment to harness all the potential andinnovation of businesses and people. 

The fourth industrialrevolution (Industry 4.0) and its new technologies carry potential forconnecting the GMS and CLV economies in non-traditional methods, which willsurpass the bounds of GMS founders’ imagination from 25 years ago, PM Phucsaid.

Nonetheless, to develop aprosperous, sustainable and integrated GMS, the countries need to ensuresustainable and harmonious development, he added, emphasising that “growth mustgo hand-in-hand with protection of the ecology and natural resources,especially the sustainable management and use of the Mekong River.”

As “harmony” is atraditional value of Asia, every national development plan, investment orbusiness activity, or cooperation programme between the GMS countries needs toensure the harmony and balance of interests among countries, governments,businesses and people, the Vietnamese government leader noted.

Vietnam is increasing theflow of investment in transport infrastructure on the main GMS economiccorridors, he said, adding that the Government of Vietnam is currentlytranslating initiatives into reality through prioritising investment inconnectivity infrastructure to support cross-border trade, investment, tourism,agriculture and economy, as well as other forms of cross-border economiccooperation.

Bundik said cooperation isinevitable and link of networks and infrastructure will support the membercountries to reduce production costs and further improve competitiveness.

Based on its strategiclocation and speed of development, Vietnam has a key role in the regionaleconomic cooperation, according to Bundik.

“Vietnam is such a large anddiverse country, and very complex issues should be managed. The economic growthis outstanding, the big metropolis like Hanoi and Ho Chi Minh City have eminentpositions in many international comparison, the growth of the wealth of HighNet Worth Individuals is the highest in the world. However, in the rural areasstill so many things to support and change, even in terms of access toelectricity”, he said.

Industry 4.0, especiallyrobotics, are key challenges for every emerging markets in the 21st century,but even for developed countries it can be a game changer, he said.

“Education is the key, we inEurope has the latest technology, and we are very happy to bring thesetechnologies to Vietnam, also we have state-of-the-art education and wetraditionally partners of Vietnam in this fields”, he added.

“Good education,competitive, creative labour force will be the answer for the challenges ofIndustry 4.0”, he suggested.

Vietnamese Deputy Ministerof Industry and Trade Tran Quoc Khanh said: “We should all acknowledge that theeconomic development of the GMS countries has benefited greatly from theincreased flow of cross-border trade in goods and services. In this regard, theGMS countries should continue to draw on trade liberalisation, and offersupport for open trade and regional multilateral trading system”.

Since e-commerce or digitaleconomy can be a key growth driver if the right policies are in place, the GMScountries need to improve cross-border payment systems to make payment fasterand more efficient; facilitate cross-border e-commerce customs procedures forlow value shipments; and improve e-commerce supporting service systems, herecommended.

Mekong– river of cooperation and development

The 4,800 km-long MekongRiver flows through China, Myanmar, Laos, Thailand, Cambodia, and Vietnam. Itsbasin spreads over 795,000 square kilometres in the four countries of Cambodia,Laos, Thailand and Vietnam.

The GMS economies havebecome more and more integrated with each other thanks to the subregion’spursuance of more liberal trade policies. The intra-GMS trade shares increasedfrom 5.7 percent in 2010 (201 billion USD) to 9.1 percent in 2016 (414 billionUSD). Total GMS foreign direct investment inflows among the member nationsincreased from 436 million USD in 2010 to 1.28 billion USD in 2016.

Throughout its 25 years ofdevelopment, the GMS has never seen a standstill. As reported by the ADB, overthe last quarter of the century, the annual economic growth of the subregionaveraged 6.3 percent.

ADB President Takehiko Nakaosaid he has a great optimistic view about the future continuous growth of theGMS countries.

There are six reasons forthis, he said. First, Vietnam, Cambodia, Laos, and Myanmar are growing at apace of 7 percent. That means in ten years, the size of their economies willdouble. 

Secondly, this growth is theresult of strong value chains in East Asia and the world and it is more basedon domestic and regional demand, instead of just exports to other regions.

Thirdly, this growth hasbeen supported by good policies, such as sound macroeconomic policies, opentrade and investment regimes, and market-oriented reforms.

Fourthly, the GMS countriesare well positioned geographically to connect South Asia, East Asia, andSoutheast Asia. 

Fifthly, the growth frominnovation will benefit the GMS countries, building on a well-educated andhard-working population.

Last but not least, the GMScountries’ development is backed by a strong sense of cooperation andframeworks for working together through such mechanisms as the GMS.

The GMS Programme hassupported projects worth 21 billion USD since its establishment in 1992 insectors such as transport, tourism, health, urban development, environment,human resource development, agriculture, and energy. About 40 percent of thefinancing for the projects have come from the ADB, 25 percent from the GMSgovernments, and the rest from bilateral and multilateral development partners.Each GMS country programme is designed to suit its unique situation.

Based on the Hanoi ActionPlan and Regional Investment Framework, which were adopted at the 6th GMSSummit, the programme is expected to support 227 projects worth 66 billion USDfrom 2018 to 2022, of which the ADB will finance 7 billion USD. The Plan callsfor an expansion of economic corridors to boost connectivity between countries,as well as between rural and urban centres, to ensure a more equitabledistribution of the benefits of economic growth.


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