Cross Border Economic Zones Institutional Development and Capacity

Cross Border Economic Zones: Institutional Development and Capacity Building ØHekou, Yunnan, PRC-Lao Cai, Viet Nam ØPingxiang, Guangxi, PRC-Lang Son, Viet Nam Technical Assistance Inception Meeting, Nanning, Guangxi, PRC November 25 -26, 2010 Robert L. Wallack, Institutional Development and Capacity Building Specialist, Unites States of America, robert. wallack@rlw-international. com ASIAN DEVELOPMENT BANK, TA 7356 -REG, DEVELOPING CROSSBORDER ECONOMIC ZONES BETWEEN THE PRC AND VIET NAM

CONTENTS I. Background II. Purpose III. Work Plan IV. International Examples V. Conclusion

Border Trade Increasing Pingxiang, PRC-Lang Son, Viet Nam US $840 million (2007) Hekou, PRC-Lao Cai, Viet Nam US $477 million (2006); estimate: US $800 million (2015)ADB -----------------------US $1 billion+: Langbang-Cao Bang (2007) Dongxing-Mong Cai ---------------------Total Enterprises Lang Son-697 Lao Cai-802 (Vietnam Statistics Office, 2009) Contributing to Trade CAFTA: 1. 9 b. people; US $4. 5 trillion Nanning-Singapore Econ. Corridor Guangxi Beibu Gulf Economic Zone

BACKGROUND ADB Ministerial Meeting North-South Economic Corridor (NSEC) by Developing Cross-Border Economic Zones (CBEZ): v Hekou, Yunnan, PRC-Lao Cai, Viet Nam v Pingxiang, Guangxi, PRC-Lang Song, Viet Nam

BACKGROUND Borders are the Weakest Link along Corridors Institutional and Infrastructure Constraints: 1) Cross-Border Transport Agreement (CBTA) 2) Coordination and Capacity Among Agencies 3) Private Sector Participation and Investments 4) Facilities, Equipment, Modern IT & C Systems 5) Uneven Development Across Borders: 6) Dry Ports: CAFTA Pingxiang Logistics Park

PURPOSE Institutional Development & Capacity Building Build Effective and Functioning CBEZs by: 1. Establishing PRC-Viet Nam Joint Committees 2. Organize Training, Study Tours, Workshops 3. Main Topics: Planning, Design, Management, Operations, Awareness of ADB Programs, other international organizations, and Concepts (marketing, investment promotion, supply chain)

PURPOSE Joint Commission/Committee/Subcommittees for Collaboration, Coordination and Interfaces by regular meetings and by electronically involving all public and private stakeholders for CBEZs -Clearly defined roles & responsibilities to implement the CBTA and CBEZ (central: local) -transport, trade, commerce, finance, ports, logistics environment, Customs, inspections, phytosanitary, & private sector, financial companies, banks, international organizations- so that all are “on the same page”

PURPOSE Our Joint CBEZ Institution is building on the: Economic Corridors Forum, GMS Ministers, 2008 NSEC Enhanced Organizational Effectiveness for Developing Economic Corridors which is to: Serve as a venue for networking and sharing of information and views among central and local officials, business people and international agencies on strategies, approaches, programs and projects to accelerate economic corridor development Only meets yearly: Joint Committees of CBEZ to confer regularly

PURPOSE Joint CBEZ Institution & 4 Layers of Main Issues: 1. ) Intergovernmental Agreements • Hekou-Lao Cai and Pingxiang-Lang Son CBTA 2. ) Institutional • Customs, Inspections, Land, Envir. , Investment 3. ) Infrastructure • Roads, yards, facilities, utilities 4. ) Operational • Processes, material handling, WWW, performance measurements (ADB, World Bank)

Work Plan Activities Novembe r 2010 Inception Meeting 25 -26 Nanning Borders & Capitals 27 -30 PRC Decembe r January 2011 February April 1 -8 PRC/VN Best Practices Research/ Write Design Institution Research/ Implement Write Assess Capacities Meet Officials Design Training Workshop /materials Final Report March Workshop /materials Submit with comments

INTERNATIONAL EXAMPLES North America: U. S. A. -Canada 5, 552 miles of cross-border trade: $1 million of good/services cross the border each minute ($1. 5 billion/day; over $500 billion/year (2003)-128 border crossing Cross-Border and Corridor Cooperation 1) International Mobility & Trade Corridor Project 2) CAN/AM Border Trade Alliance 3) Ports to Plains Trade Corridor 4) North America’s Corridor Coalition (NASCO) economic development organization

INTERNATIONAL EXAMPLES U. S. A. -Mexico: 2, 000 miles of cross-border trade -Cooperation between developed-developing 1) San Diego-Tijuana-San Diego Free Trade Zonemaquiladora/TVs/power plant/LNG-California 2) Mc. Allen Foreign Trade Zone-30 years/F. 500 s -Reynosa, Mexico to markets: C. and South America CANAMEX Trade Corridor: 1, 700 miles-US funds US $1 billion produce/1, 200 truckloads of crops/yr. Investment: U. S FDI-Canada $273. 7 billion (2006)

International Mobility Trade Corridor Project Suggested Institutional Framework Joint Border Development Commission (JBDC) Core Group Steering Committee Funding Sources 1999 -2009 ($38 million) US Federal Highway-$7. 1 million-50% Transport Canada-$2. 6 million-19% B. C. Province $2. 4 million-17% WA State-$1. 3 million-10% Local B. C. & WA-$180, 429 -!% Other $375, 000 -3% General Assembly Working Group Committees Urban Border Trade

INTERNATIONAL EXAMPLES Private Sector Participation at Border Crossing Federal Express Corporation at U. S. -Mexico Fed. Ex Transborder Distribution Service: El Paso, Texas-Ciudad Juarez, Mexico Border Cross Supply Chain Solution to simplify transportation, distribution and brokerage for traders at borders Fed. Ex on line tools/automation; consolidate invoices: cargo from maquila to U. S. in 1 -5 days

INTERNATIONAL EXAMPLES Lessons Learned in Establishing Institutions: - One single organization with clear mandate to regulate the CBEZ operations - Autonomous and independent decision-making in setting policy for quick implementation - Close relationship with other national agencies with mechanisms for coordination - Close relationship with the private sector - Promotional rather than regulatory mindset (USAID Report on Assessing FTZ Program, 2004)

INTERNATIONAL EXAMPLES Inner Mongolia Highway and Trade Corridor Russia-Manzhouli-Hailar Cargo Transfer Terminal • Baotou, Inner Mongolia Inland Container Depot Operational Difficulties for Lack of Marketing Plan & Strategy (Advertising-Pricing of Services) • China-Kazakhstan Horgos International Border Cooperation Center-mutual exchange in planning, • design, construction, management and operations 2012 to 2018: 528 hectares (185 KAZ-343 PRC)

CONCLUSION I. Cross-Border Trade is Increasing: Pingxiang-Lang Son and Hekou-Lao Cai : Markets II. CBEZ initiative by ADB GMS NSEC development III. Constraints at the border-crossing are overcome by better organization of the public and private sectors IV. The Work Plan for TA 7356 -RETA: public and private sectors determine best practices to apply to the situation V. Establish /Implement Institutions with Targeted Training

Thank You Question & Answers with Discussion Asian Development Bank, TA 7356 -REG Robert L. Wallack, Institutional Development and Capacity Building Specialist, United States of America, robert. wallack@rlw-international. com