Upcoming Event /

Other Meetings Proceedings - 2

14 to 15 August 2013

 

Second Working Group Meeting of Transport Associations

on Transport Facilitation in the

Greater Mekong Subregion

August 14-15 2013

,Pingxiang, Guangxi, PRC

 

Summary of Proceedings

I. Introduction

1. The Second Working Group Meeting of Transport Associations on Transport Facilitation was held on 14-15 August 2013 in Pingxiang, Guangxi, People’s Republic of China. The meeting was attendedby around twenty (20) private sector representatives from Greater Mekong Subregion transport associations and participants from academic and research institutions. The meeting was chaired and facilitated by Mr. Yushu Feng, Asian Development Bank (ADB) and co-organized by the China Road Transport Association (CRTA). The meeting program is provided as Appendix 1 and the list of participants as Appendix 2.

2. The objective of the Second Working Group Meeting of Transport Associations on Transport Facilitation in the GMS on 14-15 August in Pingxiang, Guangxi, PRC is to consult the private sector about exploring the potentials of accelerating the establishment of a customs transit system and measuring its impact and benefits in the GMS in light of recent developments on the: 1) expansion of the East West Economic corridor to key GMS cities and deep sea ports, 2) and the increased capacity(hardware and software) for transport facilitation in the Kunming-Bangkok route.

 

II. Opening Remarks

3. Madame Wang Limei, Secretary General, China Road Transport Association, welcomed the participants and thanked them for their time and effort in coming to meeting. She noted that the GMS Cross-Border Transport Agreement (CBTA) is not yet fully implemented although it has been signed sometime ago. Thus, she expressed her hope that ADB along with the other key players can play a stronger coordinative role in implementing the CBTA. She thanked ADB for its fruitful work and long term efforts in facilitating transport in the GMS. She also underscored that it will be very beneficial for the subregion to establish an efficient and implementable customs transit system as soon as possible.She also encouraged free and open communications amongst the delegates in expressing their viewpoints on the future directions for establishing transport facilitation mechanisms in the GMS.

4. Mr. Yushu Feng, Principal Economist (Regional Cooperation), Asian Development Bank (ADB), in his opening statement remarked that recent positive developments on the expansion and increased capacity of the corridors, upgrading of logistics and border facilities, as well as the increased demand and trade flows in the GMS make it very timely to look into the operational and institutional issues of transport facilitation mechanisms especially on establishing an operational customs transit system.Two recent positive developments in the GMS provide a good reason to revisit the issue of customs transit. These are: (i) the recent signing of the MOU on the expansion of the EWEC to GMS capitals(Bangkok, Hanoi, and Vientiane) and deep sea ports (Laem Chabang and Haiphong), in February 2013 in the EWEC, and (ii) the completion of the Chiang Khong-Houayxay Bridge connecting Thailand, and Lao in late 2013, which would increase the capacity of the Kunming-Bangkok highway 2 and the smooth flow of traffic between the countries. These two developments has renewed the urgency of establishing a customs transit system since with the involvement of a third country,customs transit becomes very crucial, since the existing bilateral agreements will not be enough to address future commercial demands. He noted the importance of the meeting since the collective views from the private sector on how to handle customs transit is important to move forward and provide recommendations in the upcoming GMS National Transport Facilitation Committee (NTFC)Senior Officials Meeting (SOM) in 4-5 September 2013 in Nay Pyi Taw, Myanmar.

5. Mr. Yushu Feng, ADB also introduced and presented a video on transport facilitation entitled Knocking Down Borders: Facilitating Transport in the GMS, which provides a short montage on: (i) the key aspects of the transport facilitation; (ii) recent achievements in CBTA implementation at key border crossing points and (iv) challenges in facilitating transport in the GMS.

 

III. Presentations and Discussions

6. The six GMS Transport Associations gave their brief statements and presented their views on the status of transport facilitation initiatives, opinions on transport facilitation needs, requirements,constraints and challenges, and suggestions on ADB involvement, as summarized below:

(i) China Road Transport Association (CRTA)

• The opening of the Kunming Bangkok Highway provides a good opportunity for countries to accelerate the implementation of the GMS CBTA along the NSEC.
• One of CRTA’s role within the framework of the GMS NTFC is to provide information to the Chinese government and enterprises and undertake various research endeavors.
• Customs transit systems, especially the issue of guarantee is very important. A customs transit system will increase potential risks and the design of the guarantee system needs further simplification and improvement.
• For the sustainable development of CTS, in terms of risk control, there will be a shift from single control (Customs) to joint control with the private sector (Customs + guaranteeing organization).
• For the CTS to work, there is a need to strengthen partnerships between governments and guarantee organizations (3 stakeholders: governments, guarantee organizations, and transport operators).
• Recommendations to ADB include: (i) provide guidance to the private sector in reaching agreement/consensus (i.e. through the establishment of an integrated working group, (ii)strengthened coordination support, (iii) support for the governments in ratifying the CBTA, and(iv) provide operations manuals and standard documents for the guarantee system.

(ii) Lao International Freight Forwarders Association (LIFFA)

• Lao government policies are focused on transforming the country from a land-locked to a land bridge country, and this is specifically laid out its five-year strategic plans.
• Suggestions on CBTA improvements include a provision for LCL shipments to be consolidated in containers in transit through a country.
• Emphasized that Lao is in the middle of other countries and emphasized that it cannot move ahead if other countries are also stuck.
• On CTS implementation:
• Currently, there is no functioning customs transit system in the EWEC and the GMSC TS form’s usability needs to be improved.
• There is definitely a need for a customs transit system in order to effectively pursue regional integration in addition to advanced information on shipment arrival, advanced ruling, easier risk management, paperless transaction, seamless, and faster cross-border processing of documents.
• The Lao National Single Window is set to accommodate the ASEAN customs regime,and CTS and the SAD are not in the same format.

(iii) Board of Trade (BoT)

• Development GMS Economic Corridors are important to ensure efficiency in doing business,finding a good Business Partner, and instituting good regulations and mechanisms.
• On CTS implementation:
• there is a need to address the issue of providing permission to trucks to go beyond the routes and travel to a specific location or areas (i.e. beyond the Maesot – Mukdahan –Savannakhet – Dansavan – Laobao – Danang)
• The CTS document is quite difficult to administer because it needs to be filled-up manually and there are too many copies. Computer software is needed.
• Raised the issue on how to get CTS documents when delivery cargos return to the home country (the host guaranteeing organizations need to set-up branch offices at the border.

(iv) Viet Nam Automobile Transport Association (VATA)

• VATA noted the several routes have opened between Viet Nam, China and Lao PDR viabilateral transport agreements (i.e. 500 permits for each countries can go through the inland areas to Haiphong).
• For Viet Nam and Lao PDR, there is no limit for bilateral permit quotas, and there are around 11 border crossing points between the two countries. Between Viet Nam and Cambodia, there are 5 pairs of border crossings that are currently under consideration under a bilateral transport agreement.
• On CTS Implementation:
• VATA has actively supported its transport associations, provided dialogue, and provided support for customs transit. However, it would like to note that there are still problems in the pilot implementation of the CTS at the EWEC, mainly low traffic demand and the complexity of the CTS.
• VATA requested ADB to provide support in simplifying the pilot CTS at the EWEC.

(v) Cambodian Freight Forwarder Association (CAMFFA)

• The ASYCUDA systems has now been implemented at the main border points in Cambodia(Poipet & Bavet) but CAMFFA lack of regular communication with Cambodia GDCE including but not limited to their planning and progress.
• In terms of current operations, there is now daily bilateral transport from/to Phnom Penh and Bangkok or Ho Chi Minh, but at today the demand for end to end operations along the Southern Economic Corridor (SEC), implicating customs transit for Cambodia, seems limited..
• While Cambodia actually expects many opportunities for trade on this route, we lack of updated informations on the demand and bottleneck encountered.
• CAMFFA count on the present meeting to better understand issues rose on other corridor;develop the relation with neighboring guarantor agencies and wish to take this opportunity to push for a new dynamic on the South Economic Corridor.

CAMFFA recommends ADB to provide:

• support for the development of regular communications between Cambodia GDCE and CAMFFA to encourage the prompt signing of relevant MOUs and to tackle trade and customs issues (i.e. through a subcommittee or public relations board).
• support to guarantee organizations in the payment of guarantee deposit (i.e. through financing facilitation).
• local and tri-lateral workshops involving Guarantee organization(s), NTFC and NTTCC on south economic corridor to support its development.
• support for Thailand to ratify the pending 4 protocols under CBTA and update on the time frame of ratification.
• support to open the quota from 40 to 500 vehicles as per CBTA between Cambodia and Thailand.
• support the signing of bilateral agreements between Cambodia and Thailand to open more routes.

(vi) Myanmar International Freight Forwarders Association (MIFFA)

• Underscored the importance of TTF and transport investments based on the recent GMS Regional Investment Framework.
• Mentioned the role of the GMS FRETA and its 12 national priorities (i.e. border operating hours, mutual recognition of routes, recognition of documents transferred by electronic means).
• All directions from recent GMS meetings, lead to the need to strengthen the implementation of the CBTA with a systematic and efficient customs transit system, as well as single window systems.
• Discussions with the government are needed on the simplification of processes.
• Myanmar has ratified majority of the CBTA Annexes and Protocols (except for some which are contingent upon the amendment of multi-modal laws). The draft version of the multi-modal laws has already been published in national papers, and just waiting for the Parliament next session.
• Myanmar NTFC and Customs are very familiar with the CBTA and the existing CTS - they are well studied and well aware of ADB’s systems.
• Expressed concerns for the introduction of new modified systems, which might take a very long time to implement.
• Myanmar Customs is very ready to sign with a guaranteeing organization and the issuing guaranteeing organization is not a problem. However, one constraint is the bank guarantee deposit.
• Another issue is the limited liability and cargo insurance.
• One major issue is the coordination between issuing/guaranteeing organizations, and ADB plays an important role in this region in terms of coordination and regional cooperation. It is only ADB who can do this role at the moment.
• Myanmar is very flexible (both government and the private sector) since they have no existing systems yet, but needs to make a decision as soon as possible.
• Myanmar is eager to establish a customs transit system and urge its neighbors to move very fast, in order to take advantage of the momentum.
• Recommends allowing the passage of the entire container to cross the border based on the CBTA framework during first phase of implementation, followed by chassis exchange in the next phase, and then eventually the whole car when the system is proven to be working efficiently.

7. Pilot Implementation of the GMS Customs Transit System along the East West Economic Corridor. Mr. Yushu Feng, ADB provided a short briefing on the status of the Pilot Implementation of the GMS Customs Transit System along the East West Economic Corridor in terms of what has been done, constraints, bottlenecks and challenges to its implementation. Key clarifications and discussion issues include the following:

• BOT raised the issue of lack of inland access of trucks from the existing routes, and ADB responded that the governments are flexible on this issue but this is contingent upon trucking demand and the progress of the system’s implementation.
• Myanmar raised the issue that they would prefer to follow the CBTA system and are willing to discuss with Thailand, Viet Nam and China. They would prefer to use the solid documented system of the CTS that was piloted in the EWEC and are willing to pursue further discussions with Thailand and Viet Nam. Myanmar raised the issue that introducing an entirely new system might take so many years more to implement. Moreover, for it to be viable, there is a need to prove that any system that will be implemented will result to substantial shortening of border clearance time.
• BOT raised the issue that, in order for CTS to be attractive to transport operators, Thai transport operators should have the incentive of access to “fast track lanes” and shorter clearance times at the borders.

8. North South Economic Corridor (NSEC)/Kunming Bangkok Route (Perspective of PRC,Lao PDR, and Thailand). Resource persons from academic and research institutions in the GMS presented case studies on the North South Economic Corridor (NSEC)/Kunming Bangkok Route in terms of the Potentials and Challenges to Implementing Transport Facilitation Measures and Customs Transit Systems. The salient points of their presentations are summarized below:

(i) Professor Bi Shihong, GMS Study Center, Yunnan University,

• In spite of developments in hardware and software facilitative measures, (i.e. Lao PDR and China signed an MOU on the implementation of the CBTA at the Mohan Boten gate in 2000,Opening of Friendship Bridge at Chenkong to Hoayxay), the Kunming Bangkok Route is still only a transport corridor.
• Challenges to economic corridor development include: issues of different languages and cultural backgrounds, visa issues (Chinese need visa for ASEAN countries), and the lag of logistics development, such as:
• Lag in border gate infrastructure (Mohan) and gate management mechanisms.
• Logistics costs are currently high (logistics costs account 30% of the total cost of goods.)
• Long logistics time (i.e. it takes about 60 hours or more from Kunming to Bangkok.)
• Logistics enterprises are small scale, logistics facilities are backward, and the level of logistics information is low.
• Trade settlement barriers.
• Lack of human resources development.
• Recommendations:
• Enhance political mutual trust and the level of intra-regional trade liberalization
• Clearly define the importance of trade facilitation, and explore cooperation under various frameworks,
• Make sure that signed agreements are implemented and work for more cooperation.
• Promote regional cooperation in infrastructure construction, and improve local infrastructure conditions.
• Strengthen the regional information technology (i.e. improve e-commerce sites).
• Establish a coordination mechanism (working group)
• Implementation of traffic facilitation
• Promote facilitation of customs clearance
• Ensure that the Kunming-Bangkok Route is travel-able and strengthen mutually beneficial cooperation.
• Accelerate the application of information technology and promote development ofe-commerce.

(ii) Assistant Professor Poon Thiengburanatham, Chiang Mai University, Thailand

• Due to its unique attributes and strategic location, the NSEC corridor is expected to open the subregion to the world. Another key thoroughfare is the Kunming–Bangkok Expressway, which is considered as a strategic enabler of flattening the world. Once the Kunming Bangkok Expressway is activated, GMS countries can benefit in different sectors such as rubber,energy, plastics, vegetable, fruit and livestock; and in accordance with the ASEAN-China FTA,growth in contract farming, rubber, sugar cane, cassava, soy bean, etc.
• Based on trade flows from Thailand, including the demand for trade, he noted that cross-border trade at NSEC at the moment is increasing. It is also expected to increase significantly when the hard and soft infrastructures are improved.
• This corridor is viewed by a lot of stakeholders that only Southern China and some parts of Thailand stand to benefit, in NSEC development.
• Cost of maintenance of the corridor infrastructure is also a key issue of sustainability,particularly in Lao PDR.
• Externalities for the local people must be measured and taken into consideration. The sharing of benefits between local people/companies and multi national corporations (MNCs) and also among nations that corridor pass through is important.
• In brief, there is still a challenging gap between current situations to a sustainable economic corridor for NSEC.
• Understanding ASEAN culture is also essential. Each corridor has unique characteristics. For example, to improve the logistics process in border areas, it should not only over emphasis onIT development but also business as usual activities in each area.
• To achieve a sustainable Economic Corridor development, area based development planning is strategically essential. Including proper interventions to promote accessibility, knowledge build-up, investment, and proper immigration will cause ability to do value added to the flow, and tap the opportunities of have better connectivity to other economic areas. Without the building up itself to be proper size of economic growth pole, it is difficult to be sustainable economic corridor.
• Recommendations:
• Improve feeder system to the main corridor to access key resources and open up new attractions and services.
• Encourage exporting from local production of value added activities.
• Promote balanced investment and impacts resulting from economic migration
• There is a gap of understanding between field persons and implementors, particularly in CBTA issues. The Kunming–Bangkok Expressway consists of both hardware and software. CBTA is a key software to the regional infrastructure. It can be perceived as “asoft super highway” that has to built based on institutional arrangements and processes,sharing benefits among stakeholders, and promoting mutual understanding of the connectivity philosophy, for both national and international levels. This is transit across countries to become more efficient.

(iii) Mr. Syviengxay Oraboune, Deputy Director-General/Senior Researcher at the National Economic Research Institute,

• Lao PDR made a presentation regarding the R3B Section of the North-South Economic Corridor (NSEC) and provided updates on Transport and Trade Facilitation issues relevant to the R3B Section of NSEC.
• Implementing the CBTA and other regional cooperation efforts should be in line with the national interests of each country since usually national interests are more or less in line with the socioeconomic situations and needs for domestic development of each country. The economic development level of Lao PDR, for example, is quite backward, compared to its neighboring countries Demand for domestic goods for freight transportation, is not sufficient. Therefore, the main beneficiaries from the R3B seem to be freight forwarders from neighboring countries. The key question is how can local people, local enterprises fully utilize and harness the NSEC and R3B. Is there an Economic Corridor Model that is suitable to the unique characteristics of NSEC, which might be different from traditional economic corridors (i.e.transport, jump to economic corridor).
• Update on R3B section of NSEC: For physical infrastructure, includes the construction of 2-lane highway, the 4th Lao-Thai Friendship Bridge, the road and railway network in Northern region of the country and also the development of special economic zones (Boten BeautyLand SEZ and Golden Triangle SEZ, in particular). For non-physical facilitation, included development efforts of Lao Custom Department, legal system, IT database system, the establishment of One-Stop-Service (OSS), human resource development, etc.
• Recommendations:
• Setting a pilot project for cross border transportation along R3B in particular, which might include reducing number of inspection checkpoints of related authorities by grouping checkpoints at the same area; Setting up single window office at border checkpoint,develop and apply automated Customs system at border checkpoint to simplify procedure;Establishing a joint anti-smuggling mechanism across border by development of joint legal framework for jointly implemented; Establishing a cross-border transport association in order to assist small local transport enterprises as well as improving cross border transport business transaction; Developing joint capacity building programs for local officers from related authorities; Developing instruction manual on cross-border transport and trade procedure specifically along R3B; etc.
• Enhance private sector development by improvement of competitiveness: Lao Transport and Logistic Service related enterprises should replace those old and degraded trucks with new and modern trucks; Government may consider providing specific training for Lao drivers, particularly on international standard traffic and other related knowledge on cross-border transportation and assisting them to get international driving license, etc.
• Implementing the existing domestic related laws and regulations, particularly on applying OSS in order to enhance business competitiveness and sound investment climate by develop regular monitoring system and studies on business and investment climate related issues in order to solve those obstacles of doing business and investment.
• Regarding its potentials, Lao PDR will benefit from tourism sector in the NSEC, therefore,Lao PDR should utilize the existing development programs and projects, particularly the GMS Sustainable Tourism Development project, the tea caravan along NSEC, for example,in order to enhance economic activities, and develop local area along R3B and gradually develop it toward perhaps creating a new model for economic corridor development.

9. The participants raised the following issues during the open discussion:

• The NSEC is very active in terms of trade flows and demand. Trade demand is rising exponentially between Thailand, China and Lao PDR. But the challenge is to ensure benefits for the local economy and to ensure local development.
• Once the corridor opens, the users/transport operators will use the best and most efficient route.
• The biggest beneficiary in NSEC cooperation will be China and Thailand, and there is a need to provide attractive incentives and benefits for Lao PDR and Myanmar.
• There is a big underlying concern to manage the local development (to convince Myanmar and Lao PDR of the benefits of integration).
• There is a need to design an economic hub (i.e. train stop area),
• Cross-border insurance is very important
• CAMFFA request to increase quota.
• Need for agreement legal agreement for Southern Economic Corridor.

10. The delegations discussed the merits of three options/course of action for accelerating the facilitation of customs transit initiatives in the GMS, namely:

(i) Option A: CTS is feasible -- continue to implement initiatives on GMS CTS with some improvements

(ii) Option B: CTS is not feasible - major redesign of CTS needed

(iii) Option C: Alternative system needed, such as__________ (identify system) 

The transport association’s comments and views are:

(i) CAMFFA: In terms of CTS implementation, there is a need to have an automated system eventually, but if there is no choice, in order to move forward, paperwork is okay for the meantime. There might be reluctance amongst the key players because of the unknowns, etc.,which can be solved through: (a) the investment by guarantee organizations in a joint GPS system so the transit are secured (b) strong tri-lateral communications between guarantee organizations (joint border office) (c) the provision of ADB operations manuals and standard documents for the guarantee system. Having a legal framework signed would be a first step,and for Cambodia to be involved in the CTS along the SEC, three countries (Cambodia,Thailand, and Viet Nam) need to sign an MOU on the exchange of traffic rights first

.(ii) CRTA: Fully support the CTS systems since they are of the view that CTS is the most suitable for all the GMS countries since it has been designed by the GMS countries and and discussed so many times during various meetings and forums (the Customs departments of other countries has understood fully the framework of CTS). Even if the amount of transport through the CBTA is very low at present, they think that with mutual endeavors, the amount will increase and the implementation of CTS and CBTA will be a good example for other regions.Suggestions for improving the CTS include:

• Set-up fast lanes at the checkpoints
• Strengthen business/operations manual, training on how to use the system,
• Improve the CTS forms for convenient use.

(iii) LIFFA: As an association is split (some in favor and some are not). The shipping company members are not in favor of the CTS (partly because they may benefit from guaranteeing cargo trucks). However, with the volume of traffic increasing, we can no longer wait for the slow processing of the cross-border system, and an automated CTS system is needed in addition to an insurance system to clearly identify which party is responsible for damages.

(iv) MIFFA: The private sector would prefer to go with Option A- CTS is feasible, but continue to initiate CTS with some improvements. MIFFA will report the meeting findings to the Myanmar NTFC and Customs. Myanmar is flexible and ready to implement as soon as possible,especially since its single window system has not started yet.

(v) BOT: CTS is good so far, but based on discussions with Thai transport operators, obstacles on the design of the route. BOT would like to request ADB to talk with Customs to allow trucks to go to distribution centers, 5-10 Km beyond the main route). Some practical suggestions on how to improve its operations are as follows:

• In the current system for transit shipment through Lao PDR, there is a facilitation fee paid to customs brokers in Lao to guarantee customs transit for goods clearance,which they would have to pay on top of CTS fees. Therefore, it is not attractive to use CTS due to the costs. For it to work, there needs to be more incentives for companies who will use CTS (i.e. fast track lanes, guaranteed lowering of clearance times).
• There is a need to set-up GMS Fast lanes with priority at the border as an incentive to use the CTS.
• Regarding insurance, Thai trucks will not be able to buy insurance in Viet Nam (but nota problem in Lao)
• There is a need to set-up branches at the border to resolve the issue on long waiting time for documents, if possible have a branch at the border (i.e. VATA branch in Lao Bao, etc). BOT will assign Mukdahan Chamber of Commerce to issue documents for them when the implementation starts.
• Improve design of the CTS the forms (i.e. possibility of change into thinner paper, and maybe a computer/printing system).

(vii) VATA: Fully supports the CTS, but they have a concern on the guarantee amount, which is quite high. Thus, they would like to request to lower the guarantee amount.

 

I. Collective Opinion/ Findings of the Meeting

11. Based on the reports, presentations, and the comments by the experts, the Meeting concluded that it would be beneficial for the GMS countries to pursue previous efforts in establishing the pilot GMS Customs Transit System with some improvements. As was observed,the pilot implementation of the CTS is far from being ideal (and its deficiencies have been duly noted),but it is tailor fitted to the realities of the GMS countries, whose framework is deemed acceptable bythe relevant GMS agencies. The private sector transport operators agree that there is a need to implement a customs transit system as soon as possible, considering that establishing a similarASEAN CTS system might take a longer time. Specific findings of the Meeting were as follows:

(i) There is a need to propose to establish a Subcommitttee of Issuing/Guaranteeing/Organizations/Institutions under the Joint Committee Meeting of the GMS CBTA (TOR will be circulated and approved after the meeting). Having this proposed new Subcommittee will enable close coordination between Guaranteeing organizations and relevant government agencies (5 countries agree and BOT will provide their response in a week).

(ii) There is a need to improve the pilot implementation processes of the CTS.

(iii) Benefits of the CTS must be clearly identified, measured, and quantified, in order to achieve buy-in from the stakeholders and end-users.

(iv) Need for legal agreement for Southern Economic Corridor for traffic rights exchange.

12. During the meeting, the participants (i) shared knowledge and expertise from ongoing and planned transport facilitation initiatives in the EWEC and NSEC, (ii) provided collective views and inputs on the feasibility of proposed transport facilitation initiatives (i.e. establishing a customs transit facilitation systems in the EWEC), and (iii) collectively agreed on a course of action/next steps for accelerating the facilitation of transport facilitation initiatives in the GMS.

13. The Meeting agreed to assign Capt. Aung Khin Myint to represent the Meeting to attend the NTFCSOM and report the meeting findings to the Senior Officials (transport, customs, immigration,quarantine) and to voice out the Guarantee organization’s requests for support for transport and trade facilitation.

 

IV. Adoption of the Summary of Proceedings

16. The Meeting adopted the Summary of Proceedings on 15 August 2013 in Pingxiang, Guangxi,PRC.

 

V. Acknowledgements

17. The delegates expressed their sincere thanks and appreciation to ADB and CRTA fo rorganizing and facilitating the Meeting.