Remarks: Strengthening Cooperation & Promoting Cross-border Transport Logistics

GMS workshop

NOTE: The following is the English language transcription of a speech by Yang Shiji, Vice Director of the Yunnan Provincial Government’s Research Office, presented on June 5, 2013 at a workshop on GMS (Greater Mekong Subregion) Freight Transport Association Capacity Building.  The first part contains an interesting portrayal of connectivity potentials and a brief history of transportation linkages between China and Southeast Asia.  The reader should keep in mind that the area in discussion contains some of the most difficult terrain in the world, but the speaker’s main concerns are inter-government cooperation and the harmonization of customs and trade procedures throughout the region.   The final portion of the speech provides a framework to improve connectivity and upgrade logistical services within the region. 

For reference, a map of the Greater Mekong Subregion is linked here

“Strengthening Cooperation and Promoting Cross-border Transport Logistics in the Greater Mekong Subregion”

Cross-border logistics is an emerging industry combining several composite services such as transport, warehousing, and information.  Connecting production with consumption and linking countries to the outside world, the industry is composed of tangible and intangible factors and covers the entire process from product manufacturing to commodity flow.  Therefore, giving full play to the function and role of transport and upgrading the efficiency of cross-border logistic transport will have significant impact on all aspects of the economic and social lives of the countries in the GMS.  With the maturation of China’s market economy, a professional and efficient logistic system has been an indispensible factor for upgrading the quality of its economic functions, the income of its enterprises, and an accelerator for its entire national economy.

Located at the junction of China and Southeast Asia, the South Asian Subcontinent, Yunnan borders with Laos, Vietnam, and Myanmar, and shares with them a 4060 km national boundary line, about one-fifth of China’s total land border.  It has 25 frontier counties, 23 national entry ports, and over 100 trading channels for border residents.  To its east Yunnan is linked to the Zhujiang River delta and the Yangtze River delta economic circles, and to its south it has direct access from three routes, east, central, and west, to Hanoi, Bangkok, Singapore, and Rangoon via the Kunming-Bangkok highway and the Pan-Asia Railway, currently under construction.  It is the gateway to the vast western hinterland of China to its north.  To its west, it has access to the Indian Ocean via Myanmar.  In a word, the province enjoys the locational advantage in “connecting with two oceans, the Pacific Ocean and Indian Ocean, and linking with three major markets in East Asia, Southeast Asia, and South Asia.”

Since ancient times, Yunnan has been an important land-bridge and link between China and its neighboring countries for cross-border transport and trade.  Over 2000 years ago the “Southern Silk Road” was an important passageway between the Chinese nation and people in India and Southeast Asia.  The Yunnan-Vietnam railway built between 1903 and 1910 was Yunnan’s first railway and also the first international railway of China.  From 1937 to 1945, international passageways in Yunnan represented by the Yunnan Burma Road, China-India Road (Stillwell Road), the Hump airlift route, China-India petroleum pipeline, and the Yunnan-Vietnam railway made grater contributions to China’s victory in the Anti-Japanese War and the world’s triumph over fascism.

Since the beginning of the new century, Yunnan has been actively enhancing its exchange and cooperation with GMS countries and promoting deeper development by relying on its advantages.  So far, it has preliminarily established a characteristic industry system with a core competitiveness making Yunnan China’s top province in tobacco production, a key nonferrous metal and phosphorus chemical industry base, a  famous tourist destination, an electricity and energy resource base, and the largest fresh cut flower export base in Asia.  Rapid economic development in Yunnan province, particularly brought on by improvements in customs clearance measures, has given boost to a regional logistics industry and laid a solid foundation for further promoting mutual advantage and reciprocal cooperation among GMS countries.

We are delighted to see that through efforts by all parties concerned, connection and communication in the GMS have greatly improved, and logistics in the subregion has been further upgraded.  In recent years Yunnan has been advancing the construction of its highway network, which includes “seven highways leading to other provinces and four to other countries.”  It has over 13000 kilometers of high-level roads.  There are 11 railway projects under construction including “eight railways leading to other provinces and four to other countries.”  The railways in operation measure 2631km in Yunnan.  The province’s operating water channels include “two leading to other provinces and three to other countries”  measure 3375km in length.  The Lancang-Mekong River four-nation international shipping route can accommodate sits with a tonnage of up to 300 tons and allow shipping for 11 months a year.  Yunnan has 12 airports.  The Kunming Changshui International Airport is China’s fourth largest international hub airport and operates air routes to all five other GMS countries.  Yunnan has seen significant upgrading of its port construction and customs clearance facilitation and continuous improvement of support facilities.  Now, it has 17 road ports and 24 international road transport routes leading to GMS countries.  It has over ten thousand logistics enterprises of all sizes employing nearly 400,000 workers.  In 2011, Yunnan and GMS countries jointly transported 1.6mn passsegners and 2.13mn tons of goods via international roadways between them.  Now, three kinds of logistic enterprises, state-owned, private, and foreign invested are going strong in Yunnan.  A cross-border logistic transport development pattern centering on Kunming, supported by ports connecting the Yangtze River delta and Zhujiang River delta, and having access to Southeast Asia and South Asia has gradually taken shape in Yunnan; this has promoted extensive trade and cooperation among GMS countries.

Cross border trade and transport in the GMS has gathered favorable momentum and further developments have great potential.  However, generally speaking, there are many challenges to overcome.  First is a critically low level of infrastructure capacity.  Common problems include low grade roads and complicated customs formalities.  The second is scattered logistics resources. There is neither a preferred cooperation and negotiation mechanism nor a set of unified logistics standards among GMS countries.  Third is the great variance of trade volumes between GMS countries.  Few leading logistics enterprises have a full range of services and the region lacks senior talent in logistic transport management.  These are longstanding problems which have restricted progress in regional economic integration and improvements in the competitive capacity of the GMS.

Upgrading and finalizing logistical systems that facilitate cross-border trade and establishing an efficient and convenient logistics coordination mechanism has great significance for deepening economic cooperation in the GMS.  I believe this is also the wish of all friends present at this meeting.  In my opinion, cross-border trade has enormous development potential and a bright future.  However, to maximize this potential and realize joint prosperity and development in the GMS requires greater efforts in negotiation and cooperation among the countries in the region.

To improve convenience and efficiency in GMS logistic coordination, support from national and local governments is required as well as a powerful boost from the chambers of commerce, trade associations, and other non-governmental organizations in the region.  On one hand, GMS chambers of commerce should strengthen cooperation and share their market and investment information with a view to overcoming great differences in market systems, trade policy, and the investment environment.  On the other hand, they should work together to streamline the transfer of information resources, promote economic and trade cooperation, and deepen cross border transport cooperation.

To meet these outcomes, I’d like to put forward the following proposals:

1)       Establish a GMS Logistic Association to strengthen official and non-governmental negotiation and communication among GMS countries, to overcome challenges, and establish an efficient and convenient coordination mechanism.

2)      Actively promote data collection and develop modern logistics service infrastructure such as logistic parks, and third party logistics.

3)      Deepen the roles of various exchange and communication platforms in the GMS and promote win-win projects.

4)      Quicken the promotion of personnel training and exchange programs.  Carry out professional logistic training to produce a pool of talents well informed of logistic policies and operational procedures.  Make active use of the Mekong Institute and other training facilities and promoting incentive structures to attract talent to the industry.

5)      Innovate and perfect customs clearance inspection and quarantine methods.  Simplify formalities and finalize laws and regulations on port logistics by making them more transparent and matching laws and regulations of GMS countries with international practices.  This will guarantee the smooth flow of import and export commodities along international thoroughfares and the construction of a barrier free international logistics passageway.

6)      Advance the implementation of the GMS Cross Border Transportation Agreement.

7)      Increase efforts to promote logistic standardization in the GMS.

8)      Explore channels to establish regional transport companies that coordinate and balance the interests of all parties.

With win-win economic complementation, cooperation in the GMS has a bright future.  Rapid developments in modern transport, science, and technology have drawn all countries in the region closer together in space and time and thus created favorable conditions for cross-border transport logistics.  We warmly welcome experts from the GMS to visit Yunnan and hold in-depth talks with us about the joint promotion of cross-border trade logistics and to seize favorable opportunities for investment and entrepreneurship.  We are willing to cooperate with you to bring about new development, share best practices and create a brighter future.


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