Mekong Institute : Transport Sector: ‘Backbone of EWEC’

Transport Sector: ‘Backbone of EWEC’

“The transport sector is the backbone for trade in the EWEC. Therefore there is a need to support it,” said Mr. Sumit Pokhrel, the Energy and Climate Change Coordinator from GMS-EOC, ADB, at a workshop held at the Mekong Institute (MI), Khon Kaen, Thailand, last Friday, October 7, 2011.

The East West Economic Corridor (EWEC), is the most established corridor out of the four that are operational in the Greater Mekong Sub-region (GMS). The GMS Economic Program, under the Asian Development Bank (ADB), set up these economic corridors to enhance the cooperation and integration of the region. The EWEC runs from East to West, namely through Myanmar, Thailand, Laos and ends in Vietnam. Across this corridor, trade is open, yet there are still many areas that need upliftment, in order to maximize this project.

The transport sector is one of these areas. Since most of the trade across this region runs in-land, issues regarding freight and logistics are affecting its business potential. To address this, the ADB and MI have conducted a survey along the EWEC in Thailand, Laos and Viet Nam, to know about the business situation and fuel costs of road freight businesses.

To validate the searches and stimulate further discussion, they also organized a 1-day consultative workshop on “EWEC Freight and Logistics Energy Efficiency”, wherein Government Agencies, Logistic Companies and Associations from Laos, Thailand and Vietnam, as well as Clean Air Initiative-Asia, Manila, were in attendance.

The survey showed that more than 70% of companies change their vehicles every 6-10 years. Also, 40-60% of the operating costs of the companies were on fuel alone. Fleet and vehicle upgrade is a major barrier to fuel efficiency, and the causes of this, as identified in the workshop, are the access to loans and credit, high interest rates thereof, lack of information on investment, driver quality and behavior, and technological barriers, to name a few. Other factors to fuel inefficiency are empty running, trade imbalances, and inefficient border procedures causing delays and double-handling.

The recommendations were for the government and associations to expand the policies on trucks, provide market information, build better infrastructure, and minimize empty running through networks.

Also, they should make available decent credit opportunities, provide technical training to drivers, and rationalize tariffs, etc. Companies, at their end, should seek partnerships, available credit options, and technological advancements to upgrade their fleets.

While discussing the international companies’ view on this issue, Mr. John Quarmby, from the GMS Business Forum pointed out that multi-national companies don’t worry about fuel cost too much, all they need is the borders to run smoothly. Border crossing delays and border opening times are major issues to them, therefore there is a pressing need for standardization in the EWEC as a whole.