ADB investments to promote trade between PRC and Viet Nam

The Western Guangxi Roads Development Project is estimated to cost US$1.566 billion, out of which US$300 million will be funded by the ADB. The project will be implemented over a period of five years. The project will involve the construction of a 177-kilometer expressway; an upgradation of 1,060 kilometers of existing local and border roads; improvement of road transport services through the construction of 50 township bus stations and the implementation of passenger bus route licensing reforms; the improvement of road maintenance system through policy reforms; and enhancing corporate governance and strengthening institutional capacity by providing consulting services, equipment and training.

ADB’s East Asia Department identified inadequate transport infrastructure and services as the major causes for continuing poverty in Guangxi. Xiaohong Yang, Senior Financial Analyst of ADB’s East Asia Department said, “The project will contribute to pro-poor sustainable economic growth in western Guangxi and northern Viet Nam by developing an integrated road transport network”.

Ms. Yang also added, “The Project represents an integrated solution to the transport needs of the poor and ethnic minorities in western Guangxi”. Of the 2.3 million people expected to benefit from the Project, 80% are ethnic minorities and 30% are poor, living on less than $1 per day, particularly in the border area with Viet Nam.

The traffic of the existing national highway has reached saturation levels, resulting in high transport costs. “This transport bottleneck needs to be removed to help move goods and people between rural and urban areas and between interior and coastal provinces,” Ms. Yang said.

More than 90% of the poor in the country live in rural areas. Roads usually are the only mode of transport that can help the poor reach markets and services. Recognizing the role of rural roads in poverty reduction, the government has stepped up rural road improvement to bridge the development gap between urban and rural areas.

Guangxi provides a strategic link between the resource-based economies in the western region of the country and the trade-oriented economies in the eastern region. Developing infrastructure in key corridors, including seaport links and trade corridors connecting the western and coastal regions, is essential to promote trade and reduce regional inequalities in the long run. Benefits will also accrue to people living in the other poor provinces in China’s southwest.

The Project has strong regional cooperation dimensions. It constitutes part of a key transport corridor in the Greater Mekong Subregion (GMS), contributing to the improved infrastructure connectivity between PRC and Viet Nam.

The on-going policy dialogue between the two governments with regard to the implementation of the GMS Cross-Border Transport Agreement and other trade facilitation measures under the GMS Program will help reduce non-physical barriers to the cross-border movement of goods and people. As such, the Project will directly promote the PRC’s trade with Viet Nam and the rest of the GMS.

The project has enough potential to provide significant support to the PRC's efforts to promote regional cooperation and integration with its neighbors, as well as enhance connectivity, competitiveness, and community in the GMS, as expressed by Ms. Yang.

Released on: 15 August 2007
Resource: www.adb.org