Cross-Border Infrastructure: A Toolkit Cross Border Infrastructure: An Introduction Session on...

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it Cross Border Infrastructure:An Introduction

Session on Planning & Policy

Rita NangiaAsian 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.

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itSession 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.

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itOverview

• 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

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itLinkages 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

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itWhat 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.

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itWhat 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)

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itWhat 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

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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.

Lower Externalities Higher

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

Rival

Non-Rival

Excludable Non-excludable

Source: World Development Report, 1994

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Source: UNESCAP

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Cross-Border Infrastructure in the GMS

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Land area 2.5 million km2

Population316.8 Million

The Greater Mekong

Subregion

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Thailand

Land area: 513,000 km2

Population: 64.7 M

GDP per capita: US$ 2,727

Myanmar


Population: 55.4 M

GDP per capita: US$ 176

Yunnan & Guangxi, PRC


Population: 93.8 M


Viet Nam


Population: 83.1 M


Lao PDR


Population: 6.0 M


Cambodia


Population: 13.8 M


The GMS Economic Conditions

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

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itGMS 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

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itGMS 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

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itStrong Economic Performance...

GDP growth rates in %

Source: Asian Development Outlook 2005 and Key Indicators, 2005

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itOpenness Is Growing...

Trade as % of GDP

Source: Asian Development Outlook 2005 and Key Indicators, 2005

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itA 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

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itThe GMS

Experience

Cross-border economic corridors

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itThe GMS

Experience

Infrastructure

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Thailand

Hydro: 12,700 MW

Coal: 2,400 MT

Gas: 943 BCM

Oil: 124 MT

Cambodia

Hydro: 15,000 MW

Gas: 42.5- 99 BCM

Oil: 7- 14 MT

Myanmar

Hydro: 100,000 MW

Coal: 200-230 MT

Gas: 160 BCM

Oil: 32 MT

Yunnan, PRC

Hydro: 150,000 MW

Coal: 23,580 MT

Gas: 32 BCM

Oil: 226 MT

Viet Nam

Hydro: 30,000 MW

Coal: 32,250 MT

Gas: 144 BCM

Oil: 82 MT

Lao PDR

Hydro: 26,000 MW

Coal: 910 MT

Greater Mekong Subregion

Source: GMS Energy Strategy July 2006 Proceedings, work in progress

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itThe GMS

Experience

A

A

C

B

C

B

BD

D

E

E

115 kV Line

220 kV Line

500 kV Line

Hydropower plant

(HPP)

Thermal plant (TPP)

Gas Field

12

3

45

6

78

910

11

12

Legend: Generation Projects1- 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)13

C

V

VV

T

T

MM

Legend: Gas FieldsC- Offshore Blocks (Cambodia)

M- Yadana, Yetagun (Myanmar)

T- Malay, Pattani (Thailand)

V- Bach Ho, Rong, Dai Hung (Viet Nam)

E

F

F

G

G

14

15

16

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

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itMajor 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

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itKey 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.

Cross-Border Infrastructure: A Toolkit Cross Border Infrastructure: An Introduction Session on...

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