Peoples of Mekong move in ways that will boost intra-Asia trade fortunes
 The Greater Mekong Subregion (GMS), that is Vietnam, Cambodia, Laos, Myanmar and Thailand and China have banded together into an important economic alliance - that is likely to impact significantly on the intra-Asia trade as a whole - even more so with booster rockets of China's inter-connecting Belt and Road Initiative.
On the face of it, GMS could be taken as one of those feel-good pacts, now 25 years old, whose benefits have been largely derived from announcing the goodwill it has generated, which chiefly benefit those making the announcements, but quickly forgotten as the gloss and glitter fades.
But today, GMS has a new easily recognisable and mutually beneficial potential, not only to enrich the signatories, albeit unevenly at first, but also alleviate what ails China and intra-Asia trade lanes in general. And this is what makes GMS more exciting and relevant today than ever before - and of momentous importance to the intra-Asia trade.
As Vincent Wee of Britain's Seatrade Maritime puts it: "While the intra-Asia trade has been held up as the next great thing the container industry, it is notoriously difficult to make money from it."
Nonetheless, it is big - the world's largest single trade. And it grew 3.8 per cent last year to 28 million TEU. It is forecast to grow 5.6 per cent this year to 29 million TEU, according to IHS Markit forecasts.
According to the World Bank, South Asia intra-regional trade accounts for less than five per cent of the total, compared to 35 per cent for East Asia and 60 per cent for Europe, notes the London's Economist newspaper.
Those last two paragraphs contain the nub of problem and provide the nub of the solution, which the GMS pact hopes to bring about locally, and if successful, it will go a long way to rectifying the problem regionally, that is, throughout much if not most of the intra-Asia trades.
Another factor to consider is the rapid development of e-commerce, and its disproportionate impact among buyers of low-end items, namely young people armed with mobile devices.
This, more than any other factor, is likely to impact the intra-Asia trade like no other because of the trade's unique and peculiar condition.
As the intra-Asia trade is big and hardly profitable, its substance can be is characterised as one of high volume and low value. Yet there are still gigantic cost savings to be made to enlarge the sale of the low-end products these ever larger ships carry - if they could reach buyers deep in the intra-Asian hinterlands at less cost. This leads to the possibility, a near certainty in some cases, of local manufactures being developed for export, using the same new infrastructure that bring goods in to take new locally made goods out to world markets.
These are times when manufacturers are being driven out of coastal China because of the rising cost of labour. They cannot increase wages without increasing prices and to increase prices would price them out of the market on which they depend on for survival. They hunger for affordable labour and it is most likely found in new regions where their goods are most popular.
But that is a future development. First must come the roads and bridges to reach these hinterland locales. In the here and now, if such products are produced in greater numbers, they could be produced for less. Further cost-savings could be had by making them cheaper to deliver because transport costs in relation to the paltry retail prices for each stock keeping item could meet and make such products worth delivering. So the farther a potential retail customer is from ship that lands the low-end item the less likely, she is to buy it.
Let us also consider the relative scale of intra-Asia trade. In one sense it is the world's biggest, but compared to other intra-regional trades, it is the small, accounting for less than five per cent of the total trade, compared to 35 per cent for East Asia and 60 per cent for Europe.
And that's what GMS - and on a larger scale, China's Belt and Road - intends to fix. Over 25 years, the subregion’s annual economic growth has averaged 6.3 per cent and per capita growth has been five per cent - intra-subregional trade has increased 90-fold. Quality of life is heading toward high development.
To advance further, what GMS members need to develop is connectivity and competitiveness. Connectivity means physical infrastructure, rehabilitation and construction of transport and energy facilities. Already there have been notable achievements, including new airports, 80 bridges, 10,000 kilometres of roads, 500 kilometres of railways, 3,000 kilometres of power transmission lines and distribution lines, and installation of 1570MW of generation capacity.
"Connectivity software" as the GMS communique calls red tape, means reducing bureaucratic barriers, and cross-border difficulties. "Since the previous summit in 2014, we are pleased that all members ratified the GMS Cross Border Transport Agreement (CBTA), and its Annexes and Protocols, and agreed on the MOU for 'Early Harvest' implementation, allowing subregional movement of commercial vehicles and containers to begin," said the group's communique.
Thus full single stop inspection at the Lao Bao-Dansavanh border between Vietnam and Laos was established, for which the Greater Mekong Railway Association and GMS Freight Transport Association were given credit for "advancing cross-border flows and supporting development of the logistics service industry".
Agricultural competitiveness is also a major feature. The plan is to increase Mekong farmers' access to international agricultural value chains and promote environment-friendly agricultural practices. This, of course, helps overcome customs and health and safety inspectors' objections in foreign markets - a common bureaucratic device used to block food imports.
This is expected to benefit smallholders, and small and medium enterprises, thereby addressing poverty, reaching marginalised groups and increasing the reach of inclusive development.
Connectivity, good roads, airports and hospitality facilities has already boosted tourism to the Mekong area. There has been a successful campaign to market GMS as a single destination, which helped to more than double tourist arrivals from 26 million in 2008 to 60 million in 2016.
Moreover, innovation, new technologies and digital transformation are critical new sources of growth. The GMS Cross-border e-Commerce Cooperation Platform was founded in 2016 and its progress included an alliance with private businesses. This facilitated growth of e-commerce for higher efficiency, better connectivity and transformation of micro, small and medium enterprises, said the communique.
In Indonesia, wherever microwaves towers are established in the interior, distribution centres have sprung up to facilitate an e-commerce delivery demand of the popular items that are popular in these regions.
Given these developments, can and prosperity of the Mekong River people be far behind?
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