"Mekong Basin to become EAst Asia's

[brelief@xxxxxxx]

Subject: "Mekong Basin to become EAst Asia's Next Economic Miracle?  from new frontiers, Oct 1996

new frontiers

Monthly Briefing on Tourism, Development and Environment Issues
in the Mekong Subregion

Vol. 2, No.10
October 1996

MEKONG BASIN TO BECOME EAST ASIA'S NEXT ECONOMIC MIRACLE? 

(BP: 15.9.96; 19.9.96) - THE Mekong river has long sustained the livelihoods
of fishermen and boatmen, rice-growers and highland farmers. These days, it
is also supporting an army of bureaucrats and bankers plotting to turn its
catchment area into East Asia's next economic miracle. But this will take a
flow of money as impressive as the river itself. 

Some of the bureaucratic army's senior ranks recently gathered in Kunming,
the capital of China's Yunnan province, for the 6th ministerial conference
on cooperation in the Greater Mekong Subregion (GMS). The GMS forum is the
contribution of the Asian Development Bank (ADB) to a rash of overlapping
initiatives to develop what is billed as "East Asia's last frontier". The
idea is a simple one. With China's Yunnan province, the countries through
which the Mekong flows are home to 230 million people. Many live in poverty.
Cross-border links, such as roads and railways, are often rudimentary, where
they exist at all. By improving links in transport, tourism,
telecommunication and energy, it is argued, prosperity will spread
throughout the Mekong basin. A vast new market will be opened up:  the
Mekong will become the channel of commerce and prosperity. 

As with many simple ideas, however, there are good reasons why it has not
already been realized. The most obvious is that Indochina has been at war
for much of this century. And now that peace has arrived, geography and
under-development conspire to make the improvement of infrastructural links
an expensive business. The GMS has nearly 100 "priority projects", including
plans for the establishment of road and railway networks as well as dozens
of dams on the Mekong and its tributaries. The total cost is put at US$40
billion. Since 1992, the ADB has committed US$280 million, a figure it
expects to increase to more than US$1 billion a year by 2000. That still
leaves a big shortfall. 

Nobody wants to discourage the plethora of initiatives, if they are
accompanied by money. But, worried about the duplication of effort and the
sheer muddle they entail, the ministers in Kunming agreed that the ADB
should play a leading co-ordinating role (see also new frontiers 2/9). They
stopped short, however, of suggesting merger, since an ADB takeover would
inevitably antagonize some of the other planners. Despite the lofty talks of
cooperation nobody pretends that the Mekong countries and the potential
donors are drawn together by anything other than enlightened self-interest. 

For China, the Mekong offers a link with Southeast Asia, and a chance to
develop Yunnan. The Chinese government seems to have overcome an initial
nervousness that membership in such forums might weaken central government
control in the province. In Kunming some of the officials Dom Beijing spoke
glaringly of the opportunities on offer to make the Mekong navigable from
Yunnan to the sea - a feat of engineering many believe impossible China may
also be seeking to forestall Japanese economic dominance of the region. With
its insatiable thirst for new markets and raw materials, Japan has launched
two initiatives in the Mekong region and financed some of the ADB studies.
But fear of Chinese dominance also prevails, for example in Mandalay of
Burma, which has been overrun by Chinese who are forcing local citizens into
the suburbs. In Thailand, the fear is of Chinese goods rather than people. 

For the least developed countries, the GMS offers a dream of prosperity,
although the poorest, Laos, is perhaps the most cautious, fearful that its
natural wealth will be carved up by overbearing neighbours like Thailand and
China. 

Thai officials see themselves as at the natural hub of the Mekong region.
Thai investment in Yunnan amounts to US$1 billion. In Laos and Cambodia,
Thailand is the first and second largest investor respectively. However, its
partners in ASEAN seem less happy about the central role Thailand might play
when in the next two years Cambodia, Laos and Burma will join the grouping.
ASEAN's own Mekong initiative, which emerged in December 1995, has been
commandeered by Malaysia and Singapore. 

The potential for mutual benefit and suspicion is seen most clearly in the
plans for the river itself The countries with the biggest demand for
electricity are not those with the greatest hydroelectric potential hence
the myriad of dam schemes. Environmentalists are increasingly horrified,
warning of problems ranging from the intrusion of salt water into the delta
to the loss of fish and rare mammals. The people whose forests are to be
logged or whose homes are to be flooded may also object. But their voices
have never been heard in the conference chambers where the GMS is debated. 

Some of the dam projects, however, also serve as a model for other
developments because they have attracted special private sector interest.
Investors are encouraged by an assured market for electricity, usually
Thailand. Similarly, foreign oil companies have invested in the Yadana
project to pipe natural gas across Burma to Thailand. But it may be harder
to interest investors in, for example, road and railways, where traffic
volumes are unknowable. Multilateral lenders, aid agencies and governments
simply to not have the money to carry out more than a fraction of the
projects in the near future. Thus, they heavily rely on private investors. 

Plans for a GMS Free Trade Area have also been floated, although both the
ASEAN Free Trade Area (AFTA) and Asia Pacific Economic Cooperation (APEC)
are already operating in the region. At the recent GMS Growth Summit
conference in Ho Chi Minh City, Noritada Morita, ADB's programme director,
rejected the idea by saying that setting up another free trade area is not
an issue as subregional states already enjoy economic cooperation. Easing
trade and services among them is more important, he added. 

new frontiers
Tourism Investigation & Monitoring Team
TERRA
Email:  TERRAPER@xxxxxxxxxx