The flagship initiative for the East-West Economic Corridor (EWEC) directly
supports three of the five strategic thrusts of the Greater Mekong subregion (GMS)
Strategic Framework: (i) strengthening connectivity through a multisectoral approach, (ii)
facilitating cross-border trade and investment, and (iii) enhancing private sector
participation in development and improving its competitiveness. The goal is to develop a
highly efficient transport system, which will allow goods and people to move around the
Greater Mekong subregion without significant impediment or excessive cost or delay.
Improvement in the transportation network plays a key role in promoting economic
growth and regional development, thereby reducing poverty.
In an effort to improve intraregional transport and maximize benefits derived,
GMS countries have begun to adopt a holistic approach to development, in the form of
. In developing these growth corridors, investments in priority
infrastructure sectors such as transport, energy, telecommunications, and tourism will
focus on the same geographic space to maximize development impact while minimizing
development costs. The initiative will also involve carefully planning and managing
policy, regulatory, and infrastructure initiatives in support of selected business
The central component of the EWEC flagship is the 1,450-km long road
connecting Da Nang in Viet Nam on the eastern-end, with Mawlamyine in Myanmar on
the western-end, cutting across central Lao PDR and north and northeastern Thailand.
When completed, this transport corridor would be the only link that will traverse mainland
Southeast Asia on an east-west axis. It would also connect the Pacific Ocean and the
The objectives of the East-West Economic Corridor flagship initiative are: (i) to
further strengthen economic cooperation and facilitate trade, investment, and
development between and among Lao PDR, Myanmar, Thailand and Viet Nam; (ii) to
reduce transport costs in the project influence area, and make the movement of goods
and passengers more efficient; and (iii) to reduce poverty, support development of rural
and border areas, increase the earnings of low-income groups, provide employment
opportunities for women, and promote tourism. The EWEC is also expected to provide
focused support for development opportunities, including in agro-industry and tourism.
Major infrastructure components of EWEC have been completed, or are nearing
completion. The 1,450-km road corridor is expected to be completed in 2006/07,
including the eastern terminus sea port in Da Nang. The establishment of the
Mawlamyine port, which has generated some interest from foreign private sector
organizations, or the Yangon port could act as the western terminus of the EWEC.
Adequate provisions for power along the EWEC have been made in Thailand and Viet
GMS Flagship Initiative
EAST-WEST ECONOMIC CORRIDOR
Nam, and new rural electrification initiatives are required for Lao PDR and possibly
Myanmar. The proposed Nam Theun 2 Hydropower Project and associated transmission
lines to Thailand will also provide needed power for Lao PDR, along the EWEC, which is
currently being imported from Viet Nam and Thailand. The GMS Phase I
Telecommunications Backbone Optical Fiber Network connecting, among others, the
EWEC areas has been completed, and now Myanmar needs integration by the
establishment of the Phase II Western Loop.
The mitigation of nonphysical barriers to the cross-border movement of goods
and people is a key initiative in transforming the East - West transport corridor into an
economic corridor. The GMS Cross-Border Transport Agreement as well as bilateral
land transport agreements between Lao PDR and Thailand, and between Lao PDR and
Viet Nam are now in force, but have yet to be fully implemented. Preparations are being
made for the implementation of single-stop customs inspection (SSCI), initially at the
Dansavanh (Lao PDR) – Lao Bao (Viet Nam) border, and then at Savannakhet (Lao
PDR) – Mukdahan (Thailand) border. Plans are being formulated to establish selected
industrial estates and special economic zones at border and gateway locations, which
would promote private sector investment in the EWEC in manufacturing, trade and
agriculture. The diverse tourism resources in the EWEC, particularly in Viet Nam and
Myanmar, are being promoted, and could utilize the increased connectivity that the
corridor would provide to facilitate the development of multi-country and circuit tours.
The sustained competitiveness and efficiency of the GMS countries would depend on
the development of the corridor’s human resources and skills competencies, which is
being addressed on a GMS-wide basis under a separate flagship program.
As a result of consultations with EWEC Governments and Provincial Authorities
held in February-March 2004, a total of 77 projects/subprojects were identified to
comprise the updated EWEC development matrix (DM). These projects fall under the
following sectors: (i) Transportation; (ii) Energy; (iii) Telecommunications; (iv) Tourism;
(v) Trade Facilitation; (vi) Agriculture; and (vii) Private Investment and Industrial
In transportation, financing has been secured for the entire road corridor, except
for a section in Myanmar. A 140-km expressway from the new Hai Van Tunnel in Da
Nang Province to Cam Lo in Quang Tri Province, which would run in parallel with the
existing Highway 1, has been proposed to accommodate the expected increase in traffic
to the Viet Nam ports. Projects that would rehabilitate Route 9 from Savannakhet to
Seno, and construct feeder roads, which would ensure improved access to markets and
social services for affected rural communities, have also been included in the DM. The
development of the Savannakhet airport for joint use with Thailand, and upgrading of
Phu Bai airport in Hue, Viet Nam have been proposed by the respective Governments.
In addition to the Da Nang and Mawlamyine ports, two additional sea ports in Viet Nam
are being considered to accommodate national and subregional demand.
1 Six volume of Preinvestment Study for the Mekong Subregion East West Economic Corridor
covering agro-industry, industry and industry zones, infrastructure, tourism, and trade and
investment with possible projects are also available.
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EAST-WEST ECONOMIC CORRIDOR
In energy, Phase I of the GMS Regional Power Interconnection Project (Nam
Theun 2-Savannakhet-Roi Et) is expected to provide electricity to the EWEC areas. The
extension of rural electrification along Route 9 and distribution to 71 villages in six
districts has been recommended. Viet Nam recommended the inclusion in the EWEC
DM of oil and gas pipeline projects from the Chan May Port-Highway 1-Route 9 to Lao
PDR and Thailand for possible public-private sector financing, which would need prefeasibility
studies to determine their viability. While the status of provision of reliable
energy supply in the Myanmar section of the EWEC needs to be determined, a feasibility
study for a transmission line linking the Thai border town of Mae Sot to Thaton in
Myanmar has been included in the DM. In telecommunications, a project to improve
telecommunications services in the Myanmar section of the EWEC has been included in
In tourism, a comprehensive tourism study has been recommended for the
EWEC that will cover areas to promote tourism in the EWEC as a single tourist
destination. The study will look into potential tourism infrastructure projects in the Lao
and Vietnamese sections of the EWEC, which have been identified by the respective
Governments and provisionally included in the DM.
In trade facilitation, seven projects have been included in the DM to support the
planned implementation of single-stop customs inspection at the EWEC border
crossings, which include electronic data interchange and standardization of trade
documents. The implementation of SSCI remains as a high priority initiative for the
EWEC. Viet Nam recommended the inclusion of road station in Dong Ha, the concept of
which is being promoted by the Japan Bank for International Cooperation.
In agriculture, projects on regularizing raw material supplies in from Lao PDR and
Myanmar for processing in Thailand have been recommended for inclusion in the EWEC
DM2. A project on fish processing in Mawlamyine, Myanmar has likewise been included.
The establishment of industrial estates and special economic zones has been
proposed to promote private investment in the EWEC, specifically, in Myawaddy in
Myanmar, Mae Sot and Mukdahan in Thailand, Savan-Seno and Dansavanh in Lao
PDR, Lao Bao, Lien Chieu and Hoa Khanh, and Phu Bai. A study on harmonizing
industrial zone management policies and rationalizing industrial zones has been
recommended to be undertaken, and will be complemented by Thailand’s offer of
sharing best practices for industrial estate development.
A specific sequencing and prioritization strategy for all the project components
needs to be formulated and agreed upon by the four participating governments. The
eastern section of the East-West Corridor transport infrastructure is scheduled to be
completed by 2006/07. The implementation period for other infrastructure components,
notably, the Mawlamyine Port and the industrial estates development, is not yet firm.
The cross-border land transport facilitation agreement, including its annexes and
protocols, is expected to be final and complete by 2005, and implemented by 2007/08.
2 Myanmar has expressed reservations about the inclusion of the project in the DM.
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Estimated total cost of all the projects and initiatives under the EWEC is US$2.5
billion. Of this amount, an estimated US$1.2 billion worth of financing has been
identified, mostly related to the ADB tentative investment pipeline, and some committed
funds from the governments concerned. There appears to be a financing gap of US$1.4
billion, for which financing may be sought.
Several major potential sources of funding have been identified for the various
proposals: (i) government, (ii) multilateral development agencies and international
lending agencies, (iii) foreign and local direct private investment, (iv) international private
equity funds, and (v) international and domestic capital markets. Public sector funds will
play a key role in project financing, given the nature of the project components for the
East-West Economic Corridor, particularly in the early stages of project development.
The four participating governments will have to shoulder a significant share of
project development costs. This is especially the case with policy and program
formulation and implementation, and institutional development. In several cases,
implementation of various programs and institutions will require multicountry support,
and cost-sharing will have to be established on a case-by-case basis, in line with