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Cross Border Infrastructure: An Introduction

This session explores the challenges and complexities involved in planning and policymaking for cross-border infrastructure, using case studies from Asia. It discusses the impact of infrastructure on trade, economic growth, and poverty reduction, and highlights the unique characteristics of infrastructure projects. The session also examines the market economy and its role in infrastructure development.

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Cross Border Infrastructure: An Introduction

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  1. Cross Border Infrastructure:An Introduction Session on Planning & Policy Rita Nangia Asian Development Bank The views expressed here are those of the presenter and do not necessarily reflect the views or policies of the Asian Development Bank (ADB), or its Board of Directors, or the governments they represent.

  2. Session Description • The session covers four areas - • Major attributes of network infrastructure that makes planning and public policy complex; • Planning and political economy aspects using case studies of Indonesia, Thailand, Philippines and People’s Republic of China (PRC); • Complexity inherent in planning for cross-border infrastructure; and • Estimates of infrastructure investments.

  3. Overview • What do recent trends in Asia’s integration mean for cross-border infrastructure? • Planning for cross-border infrastructure • What is so special about infrastructure? • Why is it different? • What is needed? • Inherent complexities of cross-border infrastructure • Political economy and planning case studies • The Greater Mekong Subregion

  4. Linkages Between Trade and Infrastructure • Trade - a major driver of economic growth and poverty reduction in Asia • Transport infrastructure affects overall costs and value addition • Logistics account for 20% of GDP in PRC compared to 10% in USA • It can amount to two thirds of final costs of industrial and food production in PRC, but only 10% in USA • Not only hard infrastructure, but how this is delivered in terms of logistics services

  5. What Do We Mean by Market Economy? • Prices and quantities are set by market supply & demand • Many suppliers and many consumers • Competition leads to efficiency • Producers maximize their profits, consumers maximize their surplus • Largely decentralized decisions, flexible, practical and changeable. • Market economy rests upon the fundamental principle of freedom of choice for all economic agents, i.e., a consumer, producer, or worker - accountability for own choices.

  6. What Is Different About Infrastructure? • Capital intensive and economies of scale • Flows of services from capital goods • Produces services (ultimately performance of service market impacts on users, not provision of capital alone) • Lumpy not incremental (difficult to match supply and demand) • Long-lasting (implications for finance and maintenance)

  7. What Is Different About Infrastructure? • Space-specific and use-specific in services provided (high sunk costs) • Infrastructure is political • Source of services for final consumption and as input to enterprise • It is like new technology which lowers costs or promotes market development, (or expansion when new areas are opened) • Finally, it is complicated - its impacts depend on other inputs

  8. Excludable Non-excludable Rival Private Common goods property Telecommunications Urban Bus Fossil fuel power generation Groundwater Urban Roads Rural Sanitation (on-site disposal) Local power distribution Rail, airport, and port services Piped water supply High-voltage transmission Surface water irrigation Sanitary landfill Urban sewerage Rail, port, and airport facilities Rural roads Interurban highways Street sweeping (toll roads) Traffic signaling Club goods Public goods Non- Rival Higher Lower Externalities Note: Excludable means that a user can be prevented from consuming the good or service. Rival means that consumption by one user reduces the supply available to other users. Source: World Development Report, 1994

  9. Source: UNESCAP

  10. Cross-Border Infrastructure in the GMS

  11. The Greater MekongSubregion Land area 2.5 million km2Population316.8 Million

  12. Source: Beyond Borders – Regional Cooperation Strategy & Program Update, 2007-2009; Asian Development Outlook, 2006; ADB Key Indicators, 2006; FAO/People’s Govt. of Yunnan Province; http://www.china.org.cn The GMS Economic Conditions Yunnan & Guangxi, PRC Land area: 624,000 km2 Population: 93.8 M GDP per capita: US$ 842 Myanmar Land area: 677,000 km2 Population: 55.4 M GDP per capita: US$ 176 Thailand Land area: 513,000 km2 Population: 64.7 M GDP per capita: US$ 2,727 Viet Nam Land area: 332,000 km2 Population: 83.1 M GDP per capita: US$ 622 Cambodia Land area: 181,000 km2 Population: 13.8 M GDP per capita: US$ 393 Lao PDR Land area: 237,000 km2 Population: 6.0 M GDP per capita: US$ 491

  13. GMS Economic Cooperation Program • 1992: Cambodia, Lao PDR, Myanmar, Thailand, Vietnam and Yunnan Province of PRC launched the GMS Economic Cooperation Program with support from ADB. Guangxi Zhuang Autonomous Region of PRC joined in December 2004. • Encourages cross-border trade and investment by easing movement of people and goods across national boundaries. • Pursues a 3-pronged strategy to achieve their vision of a peaceful, prosperous and more closely integrated subregion • Fostering greater Connectivity • Enhancing Competitiveness • Building a greater sense of Community

  14. GMS Economic Cooperation Program • Confidence building • Pragmatism and results orientation • Building blocks: • Initial focus on infrastructure • Soft sectors: health, education, HRD, environment • Policy and regulatory frameworks

  15. Strong Economic Performance... GDP growth rates in % Source: Asian Development Outlook 2005 and Key Indicators, 2005

  16. Openness Is Growing... Trade as % of GDP Source: Asian Development Outlook 2005 and Key Indicators, 2005

  17. A Vibrant Region… • Total exports are up from about • $36 billion in 1992 to $130 billion in 2004 • Intraregional trade expansion • More than 11 times in past 12 years • Tourist arrivals has almost doubled to 18 million • FDI has more than doubled Source: Mekong Economic Review, various issues

  18. The GMS Experience Cross-border economic corridors

  19. The GMS Experience Infrastructure

  20. The GMS Experience Infrastructure

  21. The GMS Experience Infrastructure

  22. Greater Mekong Subregion Yunnan, PRC Hydro: 150,000 MW Coal: 23,580 MT Gas: 32 BCM Oil: 226 MT Myanmar Hydro: 100,000 MW Coal: 200-230 MT Gas: 160 BCM Oil: 32 MT Cambodia Hydro: 15,000 MW Gas: 42.5- 99 BCM Oil: 7- 14 MT Viet Nam Hydro: 30,000 MW Coal: 32,250 MT Gas: 144 BCM Oil: 82 MT Thailand Hydro: 12,700 MW Coal: 2,400 MT Gas: 943 BCM Oil: 124 MT Lao PDR Hydro: 26,000 MW Coal: 910 MT Source: GMS Energy Strategy July 2006 Proceedings, work in progress

  23. 115 kV Line 220 kV Line 500 kV Line Hydropower plant (HPP) Thermal plant (TPP) Gas Field Legend: Generation Projects 1- Jinghong HPP (2013) 2- Nuozhadu HPP (2014) 3- Nam Mo HPP (2009) 4- Sekong 5 HPP (2015) 5- Sekong 4 HPP (2014) 6- Sekaman 3 HPP (2009) 7- Sekaman 1 HPP (2013) 8- Xeset 2 HPP (2008) 9- Nam Kong HPP 10- Xepian- Senamnoy HPP (2012) 11- Nam Ngum 2,3 HPP (2011-2012) 12- Lower Sre Pok HPP (2018) 13- Hongsa Lignite TPP (2013) 14- Mong Duong TPP (2009-10) 15- Quang Ninh TPP (2008-09) 16- Nghi Son (2010-2011) 2 1 B 14 B 15 13 16 3 11 F F 4 5 6 M 8 M B C 7 D 10 9 C 12 Legend: Gas Fields C- Offshore Blocks (Cambodia) M- Yadana, Yetagun (Myanmar) T- Malay, Pattani (Thailand) V- Bach Ho, Rong, Dai Hung (Viet Nam) D E T A E E T A C V V V G G The GMS Experience Energy Scene Hydropower: 333,700 mega watts Coal: 59,340 million tons Gas: 1,378 billion cubic meters Oil: 478 million tons Source: Regional Power Trade Coordination Committee Proceedings

  24. Major Cross-Border Projects GMS Power Transmission Project (CAM): ongoing ADB funded project (target completion: 2008) GMS Power Transmission Line (PRC- Lao PDR-Thailand): proposed in place by 2013 GMS Power Interconnection Phase II (Bansok-Pleiku): proposed in place by 2010 115 kV Line (Southern Lao PDR to CAM): 115 kV Line (VIE to CAM): Power Generation Projects LAO: Nam Theun 2 HPP CAM: Offshore Gas Resource Development CAM: Lower Sre Pok HPP VIE: Mong Duong TPP VIE: Quang Ninh TPP VIE: Nghi Son TPP

  25. Key Messages • Investment in cross-border projects and policy planning requires coordination at multiple levels. • Cross-border infrastructure projects are time-consuming and skill-intensive processes. • Retrofitting solutions is expensive.

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