Since its inception in 1992, the GMS Program has made significant strides in

developing the transportation, energy, and telecommunications infrastructure of the

subregion. To complement investments in infrastructure, GMS countries have entered

into agreements to facilitate the cross-border movement of goods and peoples in the

GMS. GMS trade and investment have benefited from these initiatives and have

contributed to the opening of the GMS economies. The People's Republic of China, as

well as Cambodia's accession to the World Trade Organization are expected to bring

unprecedented opportunities for further expanding trade in the region. As the GMS

countries become gradually integrated into the regional and global trading environments,

they have recognized the need to fast track improvements in trade, initially applying

improved trade measures among countries in the subregion as well as other trading

partners.

The growing openness of the GMS economies is creating opportunities for

enterprise in the Greater Mekong to become part of larger regional production networks.

These region-wide production networks are generally on the rise in Southeast Asia from

advantages of locating in the region and integrating with ASEAN through the ASEAN

Free Trade Area and the ASEAN Investment Area or AIA. In the GMS, small and

medium enterprises (SMEs), the basic production units, could benefit from these

developments if they are made more competitive. Efforts to develop SMEs through an

enabling policy environment, access to credit and long-term finance, and training in

product development and marketing assistance are essential to helping SMEs

participate in global production networks, thus expanding production capacities and

trade.

The flagship program on facilitating cross-border trade and investment aims to:

(i) promote the competitiveness of the subregion by facilitating cross-border trade and

investment in the GMS, (ii) implement measures to facilitate trade, initially focusing on

customs procedures, followed by the upgrading of standards framework, the

development of trade finance, integration of freight forwarding and the introduction of

electronic data interchange (EDI), (iii) overcome existing inadequacies in information on

trade and investment to stimulate business expansion in GMS border areas, and (iv)

support small and medium enterprises and make them competitive in global markets.

These objectives are closely linked with those of enhancing private sector participation

and competitiveness.

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The Program has the following key components:

i) Development and maintenance of a cross-border trade and investment

information system;

ii) Development of products and services to support SMEs;

iii) Trade and customs facilitation, initially focusing on single-stop and single-

window inspection and expanding to modern border management

systems;

iv) Standards framework upgrading;

v) Facilitation of cross-border movement of goods and peoples in the GMS

vi) Development and integration of freight forwarding;

vii) Industrial development;

viii) Coordination of policies and regulation on trade-related financial and

insurance services;

ix) Development of market information networks to facilitate trade linkages

(including market access mechanisms, export promotion programs,

access to international trading companies); and

x) Development of e-commerce systems to improve the integration of the

trade transaction process (between sellers, shippers, bankers and

purchasers).

The component on cross-border trade and investment information aims to

develop and maintain cross-border trade data and information, and make them

accessible to private business in a timely and useful manner. The trade information data

base will be developed in parallel with the implementation of Single-Stop Customs

Inspection (SSCI) at the eight border pilot sites in the GMS. Training and capacity

building will be provided to border area public sector personnel and a consultation

mechanism developed with the private sector in order to ensure responsiveness of the

data base to private sector requirements (exporter, freight forwarder, banker).

Products and services to support SMEs include guides for business planning and

development, organization of trade and investment missions, market encounters to

promote matching of business opportunities, assistance in formulating business

development plans, and building networks with multinational enterprises. Subregional

cooperation will entail establishing mechanisms by which SMEs can access these

products and services to expand or generate new production capacities. Networking

among SMEs, especially those located in contiguous areas, as well as with multinational

companies, is crucial in enabling these enterprises to enter into subcontracting

arrangements, especially geared towards the export market.

Consistent with the holistic approach of the 10-Year Strategy Framework, trade

facilitation will focus on complementing efforts to reduce nonphysical barriers to trade.

The Third Trade Facilitation Working Group Meeting, held on December 2 and 3, 2003 in

Manila, agreed on the following stages of trade facilitation: (i) modern border

management systems (i.e. single-stop and single window), customs transit transport

regimes, multimodal transport operations and improving the proficiency of exporters; (ii)

the development of supportive structures for GMS exporters to meet international

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regulations, as well as streamlined trade documentation procedures are issues that have

been raised by government officials in the TFWG-3. A study on these and other

impediments to trade-finance is planned for 2004 to help identify the magnitude of the

problem and the appropriate response through subregional cooperation.

Seventeen projects and activities have been identified to support the seven

components described above, of which 12 have estimated costs. It is not appropriate

however, to add up these cost estimates since in a number of cases, several activities

are closely linked and are funded under one project. Moreover, some of the projects

listed are preparatory in nature and do not reflect the cost to implement full-scale

activities.