UN PHOTO - KIBAE PARK
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- Frederick Richardson
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1 150 UN PHOTO - KIBAE PARK
2 REGIONAL STRATEGIES FOR STRENGTHENING REGIONAL CONNECTIVITY 2 Regional conneciviy requires inegraing differen ypes of regional neworks, ranging from infrasrucure neworks o hose concerned wih knowledgesharing. As hey evolve, hese neworks are becoming more complex and inerdependen. Developing regional neworks in a sraegic and coordinaed way will spread he benefis more evenly across Asia and he Pacific, paricularly o he leas developed counries, landlocked developing counries and small island developing Saes. Given he unique spaial conexs in which hey are siuaed, hese counries will require differen approaches and modaliies for srenghening regional conneciviy.
3 One of he mos imporan conribuions o economic growh is exensive and efficien infrasrucure paricularly sysems for ranspor, energy and communicaions. Invesmen in physical infrasrucure neworks generally resuls in ne income gains a boh naional and local levels. 1 This is especially rue for counries ha depend heavily on exernal rade. Linking naional invesmens o regional prioriies in an inegraed manner can expand he benefis o a wider group of counries. Regional neworks can hus be seen as a ype of regional public good, whereby he collecive benefi for he region exceeds he cos of he individual secions of he nework. Meanwhile, across Asia and he Pacific, counries are exploring new forms of people-o-people conneciviy. Wih he exension of ransporaion links, people in he Asian and Pacific region are ravelling more quickly o more places and a lower coss han ever before. Many are labour migrans ravelling abroad o earn money o send home as remiances, providing income and employmen in boh counries of origin and counries of desinaion. Ohers are ravelling as academics or sudens and are conribuing o he developmen of he region s knowledge economies. Meanwhile, regional business neworks and ouris flows are growing rapidly, hanks largely o he expansion of aviaion links. The conribuion of hese various neworks o economic and social developmen depends on he policy, legal, regulaory and insiuional frameworks in which hey are locaed. These frameworks can be considered as sof infrasrucure and are as imporan in deermining he effeciveness of neworks as physical capaciies. 2 In he pas, he developmen of hard and sof infrasrucure was by and large delegaed across auhoriies ha used differen parameers and mehodologies o analyse and cos invesmens. However, i is eviden ha hard and sof infrasrucures are fundamenally complemenary, and ha mulifaceed approaches achieve beer oucomes. A he same ime, i is becoming eviden ha conneciviy is mulisecoral, wih he conneciviy of one secor influencing he conneciviy of ohers. This inerdependence demands greaer crosssecoral coordinaion. One final challenge is o exend hese neworks across borders. There are already examples of cooperaive approaches ha have enhanced regional conneciviy, including boh formal arrangemens, such as inergovernmenal agreemens, and less formal approaches, such as he adopion of common principles or codes of pracices. However, he benefis of eiher approach have ye o be fully realized due o weaknesses in insiuional collaboraion and in capaciy for implemenaion. The fac ha counries in he region are a differen sages of developmen is an opporuniy for counries o configure new infrasrucure ha makes bes use of he naural differences beween counries and conribues o more susainable and inclusive forms of developmen. The fuure of regional conneciviy depends on how closely hey can work ogeher o srenghen neworks in four criical areas: rade and ranspor conneciviy; informaion and communicaions echnology (ICT) conneciviy; energy conneciviy; and people-opeople conneciviy. TRADE AND TRANSPORT CONNECTIVITY The saus of rade and ranspor conneciviy in he region As noed in he previous chaper, he expansion of rade depends on having appropriae ranspor infrasrucure and an enabling environmen for privae businesses o engage in rade. Trade conneciviy and ranspor conneciviy are hus wo sides of he same coin, and boh hard and sof infrasrucures need o be improved o enhance access o global and regional markes. From he perspecive of physical ranspor infrasrucure, some counries in he Asian and Pacific region have made major srides in expanding heir road neworks, wih an esimaed 300,000 km of roads being added every year over he pas decade. 3 Furhermore, here has been angible progress in he developmen of he region s railway neworks. Ausralia, China, India, he Islamic Republic of Iran, Japan, he Republic of Korea, he Russian Federaion and Turkey have expanded and upgraded heir railway neworks, while in Mongolia and Turkmenisan, new racks are being laid o carry mineral expors o inernaional markes. 24 REGIONAL CONNECTIVITY FOR SHARED PROSPERITY
4 CHAPTER 2 However, here are sill significan gaps in ranspor infrasrucure conneciviy. One sudy esimaed ha, by 2020, developing Asian counries could gain 6% of real income, or close o $1 rillion, if he esimaed ranspor invesmen needs in Asia were me and appropriae infrasrucure were consruced. 4 Wha is needed in paricular are beer linkages from landlocked developing counries and leas developed counries o he region s mariime pors and airpors, as well as he upgrading, inegraion and operaionalizaion of regional ranspor neworks. Under he auspices of ESCAP, member Saes have formulaed a number of regional sraegies on rade and ranspor conneciviy. The Regional Acion Programme for Transpor Developmen in Asia and he Pacific, phase II ( ), for example, idenifies 10 hemaic areas for developing an inegraed, inermodal, inernaional ranspor and logisics sysem in he ESCAP region. 5 Meanwhile, ESCAP is promoing rade faciliaion hrough a variey of channels, including he Unied Naions Nework of Expers for Paperless Trade in Asia and he Pacific (UNNExT). 6 Wihin he framework of hese iniiaives, counries should prioriize he issues described below o srenghen rade and ranspor conneciviy in he region. Upgrading and inegraion of regional ranspor neworks Many of he principal regional approaches o infrasrucure have been faciliaed by ESCAP. In paricular, hese led o inergovernmenal agreemens on he Asian Highway and Trans-Asian Railway neworks which oday comprise 143,000 km of roads and highways, and 117,500 km of rail roues of inernaional imporance, including approximaely 11,000 km of secions ha have ye o be consruced, ha is, he so-called missing links. 7 Given ha he road ranspor secor carries he majoriy of overland freigh, he Asian Highway Nework is especially imporan for carrying bilaeral rade beween coniguous counries. The esablishmen of minimum sandards under he Inergovernmenal Agreemen on he Asian Highway Nework has helped counries o raise progressively he qualiy of heir major inernaional highways (see figure 2.1). However, here is sill scope for upgrading he qualiy of he nework, paricularly from below class III o class III. Wih almos wo hirds of road secions under class III found in Afghanisan, Mongolia, Myanmar, Pakisan and Tajikisan, effors o upgrade he Asian Highway Nework should focus on hese counries. 8 Increasing he share of rail for freigh ranspor would bring subsanial benefis Furhermore, all counries should look a ways o beer manage and mainain heir road neworks. While ESCAP esimaes ha he cos of upgrading he Asian Highway Nework is approximaely $36 billion in oal, he cos of mainaining he exising nework is also expeced o become as cosly as building new infrasrucure. 9 Alhough many counries have improved heir mainenance regimes over he pas decade, naional budges end o under-allocae for road mainenance, increasing he long-run coss o Governmens as well as vehicle operaing coss for road users. Meanwhile, here is an urgen need for counries in he region o increase he modal share of oher modes of ranspor, paricularly for freigh. As figure 2.2 shows, he Trans-Asian Railway nework connecs mos counries of coninenal Asia o Europe and he Middle Eas, wih plans proceeding for he consrucion of some of he remaining 11,000 km of missing links. Despie progress, however, he region s exensive railway nework is sill underuilized for inernaional freigh movemens. Increasing he share of railways in he region would bring subsanial benefis in many respecs. Freigh railways have an operaing cos advanage over road ranspor for long disances (ypically greaer han 500 km), while ofen being compeiive for medium disances ( km). This is paricularly rue for heavy indusry and where annual ranspor volumes are high. I is also well documened ha railways offer a more environmenally susainable mode of ranspor for long disances one esimae found ha carbon dioxide emissions by rail are almos eigh imes less han hey are for rucks and four imes less han for inland waerways (barges). 10 To realize he advanages of railways, counries in he region need o improve inermodal conneciviy beween he various neworks. The lack of efficien and properly equipped faciliies for ransferring REGIONAL STRATEGIES FOR STRENGTHENING REGIONAL CONNECTIVITY 25
5 Figure 2.1. Progress in upgrading roues of he Asian Highway Nework, Primary Class I Class II Class III Below Class III Source: Unied Naions Economic and Social Commission for Asia and he Pacific, Review of Developmens in Transpor in Asia and he Pacific. ST/ESCAP/2627. goods beween he region s road and railway neworks is a major hindrance o promoing a modal shif o rail. Trucks can pick up a conainer a a facory warehouse and deliver i o he por, bu if railways are o paricipae in conainer haulage, hey mus have physical access o an inermodal ransfer erminal. Thus, here is an urgen need for greaer invesmen in inermodal faciliies, such as dry pors or inland conainer depos a sraegic locaions where freigh can be swiched from one form of ranspor o anoher wihou delay or damage. 11 Wih he appropriae conrol auhoriies presen, dry pors can also ac as exended gaes for seapors, since hey are beer able o conrol and adjus ranspor flows. 12 In his regard, he Inergovernmenal Agreemen on Dry Pors, adoped in 2013, offers a useful framework for counries o develop dry pors in he region. 13 Enhancing cooperaion a border crossings Anoher major impedimen o rade and ranspor conneciviy is he presence of muliple choke poins, paricularly a borders. Border agencies are required o mainain a fine balance: on one hand, hey have o faciliae rade and ranspor; on he oher, hey have o asser regulaory conrols. They have o comba, for example, he smuggling of illici, counerfei and environmenally sensiive goods, money laundering and human rafficking, and more recenly, hey have had o conrol healh pandemics, such as ha caused by avian influenza. This requires a large and diverse number of governmen auhoriies and agencies, including immigraion, police, cusoms, quaranine, saniary and phyosaniary inspecion, and ranspor. These conrols are imporan, bu hey add o he cos, ime and risk involved in moving freigh by land. For example, he Inernaional Road Transpor Union, hrough is New Eurasian Land Transpor Iniiaive, found ha border waiing imes accoun for abou 40% of ime los during ranspor, and ha such a siuaion encourages corrup pracices ha can accoun for 30% of ranspor coss. 14 Such coss inhibi he expansion of rade in he region and undermine oher imporan iniiaives, such as ariff reducions. Many counries in he region are already aking seps o enhance cooperaion beween heir border agencies, mosly on a bilaeral basis. Kazakhsan and Kyrgyzsan, for example, began join cusoms conrol and a single-sop inspecion of vehicles, goods and passengers a border crossings in Augus 2012, 15 while Georgia and Turkey also esablished 26 REGIONAL CONNECTIVITY FOR SHARED PROSPERITY
6 Nariin Sukhai Shiveekhuren Tavanolgoi Gashuun Sukhai Sainshand Ereen Choibalsan sav Khuu Bichig Numrug Vladivosok Gwangyang Hanoi Chiang Rai CHAPTER 2 Figure 2.2. Curren saus of he Trans-Asian Railway nework, 2014 Buslovskaya S. Peersburg RUSSIAN FEDERATION Yekaerinburg Moscow Koelnich Omsk Tayshe Peropavlovsk Novosibirsk Krasnoe Syzemka Tobol Kapikule Izmir Isanbul Eskisehir Ankara TURKEY Mersin Samsun Kavkaz Likhaya Novorossiisk Rosov Krasnodar Veseloe Volgograd Asrakhan Olya Ozinki Uralsk Maka Ganushkino Akau Beyneu Kandagach KAZAKHSTAN Asana Poi Arys GEORGIA Samur UZBEKISTAN Bishkek Baumi Tbilisi Yalama Dashowuz Dogukapi AZERBAIJAN Tashken ARMENIA Turkmenbashy Yerevan Baku TURKMENISTAN Bukhara Osh Ceinkaya Kapikoy Yangi Bazar Tavan Jolfa Asara Malaya Van Turkmenabad Dushanbe TAJIKISTAN Razi Ashgaba Yavan Kulyab Bandar-e-Anzali Kurgan Bandar-e- Toprakkale Tehran Amirabad Mashhad Hairaon Tube Sarakhs Iskenderun Qazvin Kashmar Garmsar Fariman Qom Torba Sangan Khosravi ISLAMIC Heidarieh Hera Kabul Islamabad Khaneghein Arak Badrud REPUBLIC OF IRAN AFGHANISTAN Peshawar Moiny Lugovaya Kashi Jammu and Kashmir Loko Akogai Dosyk Chinese Line Alaaw Pass Indian Line Urumqi Turpan CHINA Irkusk Sukhbaaar MONGOLIA Naushki Lanzhou Ulan-Ude Ulaanbaaar Zamyn Uud Baoji Karimskaya Xian Chia Erenho Zabaykalsk Manzhouli Beijing Zhengzhou Tianjin Jinan Dalian Qingdao Lianyungang Harbin Changchun Shenyang Dandong Pyongyang Grodekovo Suifenhe Ussurijsk Khasan Vosochny Tumangang Nakhodka Rajin Chongjin DEMOCRATIC PEOPLE'S REPUBLIC OF KOREA Seoul REPUBLIC OF Daejeon KOREA Iksan Mokpo Busan Khabarovsk Khorramshahr Esfahan Chadormalu Ardakan Ahvaz Bafq Bandar Emam Zahedan Koh-i-Tafan Mirjaveh Dalbandin Track Gauges Bandar-e-Abbas Gwadar 1,676 mm 1,520 mm 1,435 mm 1,067 mm 1,000 mm 1,000/1,435 mm TAR LINK - PLANNED/UNDER CONSTRUCTION POTENTIAL TAR LINK POTENTIAL TAR LINK TO BE CONSIDERED BREAK-OF-GAUGE FERRY CROSSING The designaions employed and he presenaion of maerial on his map do no imply he expression of any opinion whasoever on he par of he Secrearia of he Unied Naions concerning he legal saus of any counry, erriory, ciy or area or of is auhories, or concerning he delimiaion of is froniers or boundaries. Doed line represens approximaely he Line of Conrol in Jammu and Kashmir agreed upon by India and Pakisan. The final saus of Jammu and Kashmir has no been agreed upon by he paries. Karachi Chaman Quea Spezand PAKISTAN Rohri Khanewal Mulan Lodhran Khokropar Hyderabad Mumbai Wagah Aari Nanjing Indian Line Shanghai Chinese Line Brahma Mandi NEPAL New Delhi Kahmandu BHUTAN Changsha Mahura Birgunj Hengyang Raxaul Kakarvia Thimphu Kanpur Pana Birol Kachang Dali Mughalsarai Mahisasan Kunming Shahbazpur Jiribam BANGLADESH Ruili Baoshang Siarampur Darsana Tamu Yuxi Bhopal Dhaka Kalay Lashio Guangzhou Nanning Kolkaa Chiagong Lao Cai QuanTrieu Shenzhen Nagpur Mandalay Dong Dang Hong Kong, China Wardha MYANMAR Boen Halong LAO PEOPLE'S Hai Phong INDIA Naypyiaw DEMOCRATIC VIET NAM REPUBLIC Chiang Mai Vieniane Nong Khai Yangon Mae Sod Suvannakhe Vijayawada THAILAND Nakhonsawan PHILIPPINES Thanphyuzaya Mukdahan Bangkok Nakhon Chennai Namok rachasima Bangalore Lamchabang Poipe Manila Jolarpeai Por CAMBODIA Saahip Por Phnom Penh Madurai Rameswaram Sihanouk Ville Ho Chi Minh Ciy Talaimannar Tuicorin Trincomalee Colombo SRI LANKA Ha Yai Sri Jayewardenepura Kaaragama Padang Besar Sungai Kolok Koe Maara Banda Aceh Buerworh Tumpa MALAYSIA BRUNEI DARUSSALAM Belawan Ipoh Male Bandar Seri Medan Kuala Begawan MALDIVES Por Lumpur Klang MALAYSIA Ranauprapa Johor Bahru Borneo Singapore Naras SINGAPORE INDONESIA UNITED NATIONS 2014 Muaro Teluk Bayur Lubuklinggau Kerapai INDONESIA Panjang Jakara Merak Bandung Kalimanan Surabaya Banyuangi Dili TIMOR-LESTE Source: ESCAP secrearia. Tokyo JAPAN PAPUA NEW GUINEA REGIONAL STRATEGIES FOR STRENGTHENING REGIONAL CONNECTIVITY 27
7 join cusoms conrol. In November 2011, China and Mongolia inroduced he pilo implemenaion of a unified cusoms manifes. Wihin one year, he cusoms auhoriies processed 180,000 unified cusoms manifess, and he pilo was exended o oher major border crossings beween he wo counries. 16 The nex sep is o inegrae check pos faciliies a all inernaional border crossings, saring wih hose along he Asian Highway and Trans-Asian Railway neworks. For example, India has begun implemening inegraed check pos (ICP) faciliies wih is neighbours saring wih he Aari border check pos wih Pakisan (see box 2.1). Early repors show ha his has led o a significan increase in he number of vehicles and goods crossing he border and a corresponding increase in cusoms revenues. India s ICPs also demonsrae anoher opporuniy for enhancing conneciviy in he region he use of ICT o faciliae rade and ranspor. Box 2.1. Inegraed check pos a Aari, India-Pakisan border In order o faciliae rade wih neighbouring counries, he Governmen of India has launched an inegraed check pos (ICP) iniiaive. ICPs are expeced o serve as single window faciliies covering cusoms, immigraion securiy and warehousing services. One ICP has been operaional since 2012 a Aari on he India-Pakisan border. Previously, cargo from Delhi o Lahore, Pakisan, was sen in four hops via he Nhava Sheva por in Maharashra, India, by sea o Dubai, Unied Arab Emiraes, where cargo was rans-shipped and ranspored o Karachi, Pakisan, and hen from Karachi o Lahore over land. The shipmen would hus ake abou 30 days o reach is desinaion. Wih he Aari-Wagah land roue, he journey has been reduced o hree days. During 2012/13, he firs year of operaion of he ICP a Aari, impors grew by 81%, and expors regisered an increase of 122% in value erms. Meanwhile, he number of rucks carrying expor cargo from India hrough Aari increased from 3,882 o 41,248, while he number carrying impor cargo increased from 19,087 o 33,599. This led o a 166% increase in cusoms revenue. In addiion, i is repored ha he incremenal revenue during he pos-projec period recovered almos one hird of he invesmen in one year, as axes were also colleced from services provided commercially. Land prices in he area have gone up subsanially and a variey of organized commercial aciviies have sprung up on boh sides of he border. India is planning o open anoher 12 ICPs wih various neighbours: 4 on he India-Nepal border, 1 on he India-Myanmar border and 7 on he India-Bangladesh border. Noably, he opening of he ICP a he border of Raxaul (India) and Birgunj (Nepal), which are linked by boh road and rail, means ha he ICP is inegraed wih boh neworks. Source: ESCAP secrearia. Harnessing ICT conneciviy for rade and ranspor faciliaion The greaer use of auomaed equipmen and daa collecion sysems is ransforming he way border agencies operae. Auomaed daa collecion sysems reduce overlaps when he same informaion is colleced by more han one agency and on boh sides of he border. ESCAP has developed several models o demonsrae how auomaed equipmen and new echnologies such as radio frequency idenificaion and global posiioning sysem can help in managing cross-border movemens of rade and ranspor more efficienly (see box 2.2). However, he real breakhrough in Asia s overland rade and ranspor conneciviy will come from 28 REGIONAL CONNECTIVITY FOR SHARED PROSPERITY
8 CHAPTER 2 combining rade, ranspor and ICT applicaions along he whole rade process. As shown in he single window roadmap, developed by ESCAP and he Economic Commission for Europe in collaboraion wih UNNExT (see figure 2.3), mos counries have begun developing heir single windows by inroducing elecronic cusoms declaraion sysems. The nex sep is o inegrae oher governmen agencies and heir associaed documen requiremens ino a naional single window environmen. 17 Today, nearly all counries in he region have some form of auomaed cusoms sysem in place a key border checkpoins, and more han half are developing single windows o enable raders o submi all required informaion o governmen agencies a one ime and place in elecronic form. Noably, he Associaion of Souheas Asian Naions (ASEAN) has aken seps o develop a regional ASEAN Single Window. The iniiaive, signed in December 2005, has made some progress: as of March 2013, he exchange of he inra-asean cerificae of origin and cusoms declaraion documen was esed in a scaled-down ASEAN Single-Window Pilo Projec. Box 2.2. ICT applicaions for smooh cross-border ranspor As par of is effors o promoe efficien cross-border ranspor, ESCAP has developed several models demonsraing how ICT applicaions can be adaped and applied by counries o mee heir specific requiremens. For example, he Border Crossing Managemen Informaion Sysem shows how informaion from auomaed equipmen, advanced informaion from carriers and daa provided by governmen agencies can be conneced o he cenral border crossing daabase of a counry, and how his informaion could hen be fed o he various border agencies. Such a sysem could be used in conjuncion wih various auomaed equipmen and inegraed ino single window iniiaives. Imporanly, as volumes of rade and raffic grow, he sysem could also be scaled up wihou large addiional invesmens. Model on inegraed conrols a border crossings Auomaed Daa Collecion Advance elecronic informaion and/or daa submied by carrier Daa provided by governmen agencies DB Counry 1 DB Counry 2 Auomaed sysem of weigh and dimension conrol Auomaed radiaion deecion sysems Auomaed vehicle plae no./conainer code recogniion sysem In-deph inspecion equipmen Auomaed passpor conrol Elecronic seals and vehicles racking sysems Auomaed fever scanner Cusoms Transpor Quaranine Healh Police Immigraion Cusoms Transpor Quaranine Healh Police Immigraion Source: Adaped from Unied Naions Economic and Social Commission for Asia and he Pacific, Model on Inegraed Conrols a Border Crossings (2012). Available from hp:// REGIONAL STRATEGIES FOR STRENGTHENING REGIONAL CONNECTIVITY 29
9 Box 2.2. (coninued) Anoher ype of model is he Secure Cross-border Transpor Model, which provides a concepual and sandard basis for he design of a cross-border vehicle monioring sysem using new echnologies such as ICT, saellie posiioning and elecronic seals. The model prescribes sandardized componens, and heir ineracion and insiuional requiremens. Secure Cross-border Transpor Model Saellie Monioring Plaform Counry A Monioring Plaform Counry B Cellular Communicaion Nework Conrol Auhoriy Conrol Auhoriy Cellular Communicaion Nework Conrol Auhoriy e-seal/ e-lock Trucking Uni e-seal/ e-lock Trucking Uni Conrol Auhoriy Origin Counry A Border crossing Counry B Desinaion Source: ESCAP, Secure Cross Border Transpor Model (2012). Available from This model demonsraes ha he inegraed use ICT can secure and faciliae rade and ranspor, while aking care of he concerns of conrol auhoriies. A vehicle racking sysem based on his model can give conrol auhoriies he confidence hey need o open up more land roues for inernaional rade and ranspor, while enabling ranspor operaors o manage heir operaions efficienly Source: ESCAP secrearia. Furher deails of hese and oher models are available on he ESCAP websie a www. unescap.org/our-work/ranspor/ranspor-faciliaion-and-connecing-subregional-ranspor-neworks/resources. 30 REGIONAL CONNECTIVITY FOR SHARED PROSPERITY
10 CHAPTER 2 Figure 2.3. A single window road map in five evoluionary sages Sage A: Paperless Cusoms + e-paymen for Cusoms Duy + e-manifes + and elecronic risk-based inspecion Sage B: Connecing Oher Governmen Back-end IT sysems, and e-permi/e-cerificae Exchange wih Paperless Cusoms Sysem Sage C: e-documen/daa Exchange among Sakeholders wihin he (air, sea) por communiy Sage D: An inegraed naional logisics plaform also wih raders, regulaors and logisics-service providers informaion exchange Sage E: A regional informaion exchange environmen Oher Regulaory Agencies for E-Permis/e-Cerificaes Exchange Paperless Cusoms Naional e-logisics Plaform Por Communiy Sysem Informaion Exchange Traders Freigh Forwarders A regional informaion exchange sysem or cross-border paperless rade Banks for various kinds of e-paymen Insurance Companies Imporer/ Exporer/ Cusoms Broker/ Represenaive/ oher Sakeholders Inerne NSW Air Por Auhoriy Por Auhoriy ec. Ship Agens/ Vessels Airlines Duy Free Zones Freigh Forwarders and Logisics Service Providers Terminal Operaors Source: ESCAP and Unied Naions Economic Commission for Europe, Single Window Planning and Implemenaion Guide. ECE/ TRADE/404. Because mos ICT applicaions require some degree of sandardizaion for daa ransfer, he inroducion of elecronic plaforms for rade and ranspor faciliaion also brings wih i new opporuniies for counries o simplify and sandardize rade documens, as well as processes. These measures will grealy boos conneciviy by reducing he ime for border clearance and enabling auomaic risk analysis, which helps o preven fraud and non-compliance, as well as o boos revenues for cusoms auhoriies. The developmen of paperless rade also ses he sage for he ransiion o elecronic logisics, or e-logisics. E-logisics comprises a se of communicaions, compuing and collaboraive echnologies ha enables he elecronic exchange of daa, knowledge and informaion beween supply chain parners. The sysem evenually enables raders and domesic logisics service providers o inerac and o rack he progress of applicaions and regisraions wih governmen agencies. 18 The furher inegraion of paperless rade and ranspor sysems, such as regulaory single windows, por communiy sysems, e-paymen or banking sysems and naional e-logisics sysems, can ulimaely give rise o naional inegraed paperless supply-chain plaforms and evenually o inegraed sysems along an enire chain of impor-expor operaions. 19 This is he ulimae arge for regional cross-border paperless rade iniiaives, such as he regional arrangemens for cross-border paperless rade faciliaion of ESCAP (see box 2.3) and he ASEAN Single Window. Iniiaives led by he privae secor, such as he Pan Asian E-commerce Alliance, which bring ogeher single window operaors from several counries, also show promise. 20 REGIONAL STRATEGIES FOR STRENGTHENING REGIONAL CONNECTIVITY 31
11 Box 2.3. Towards cross-border paperless rade in Asia and he Pacific Recognizing he poenial benefis from conducing rade ransacions using elecronic raher han paper-based daa and documenaion, a number of counries in he Asian and Pacific region began implemening paperless rade sysems in he lae 1990s and early 2000s. However, mos of hese iniiaives focused on informaion exchange beween sakeholders domesically, while faciliaing inernaional rade inherenly requires rade informaion o flow across borders along inernaional supply chains. As a resul, he flow of elecronic rade informaion generaed domesically faces boh echnical and legal barriers beyond he border, urning raders o convenional paper-based rade pracices and reducing he overall benefis from paperless rade sysems. To overcome hese barriers, he Commission adoped resoluion 68/3 on enabling paperless rade and he cross-border recogniion of elecronic daa and documens for inclusive and susainable inraregional rade faciliaion. A sudy conduced by he secrearia in consulaion wih naional focal poins and expers from UNNExT recommended ha an inergovernmenal agreemen be developed o provide willing counries wih an effecive and long-erm framework o joinly develop and implemen cross-border paperless rade faciliaion. The draf ex of his arrangemen is under negoiaion and will be furher revised over he course of Source: Unied Naions Economic and Social Commission for Asia and he Pacific, Enhancing Regional Conneciviy: Towards a Regional Arrangemen for he Faciliaion of Cross-border Paperless Trade. ST/ESCAP/2684. Available from Developing compeiive regional ranspor and logisics services The cos and qualiy of ranspor services are affeced by he level of compeiion in he ranspor secor. Research conduced in landlocked developing counries suggess ha governmen regulaions ha proec domesic road-ranspor operaors can conribue o ren-seeking monopolisic or oligopolisic behaviour, adding o he already high ranspor coss for raders in hese counries. 21 Experiences from he mariime and aviaion secors show ha deregulaing ranspor services can increase compeiion and reduce prices paid by cusomers. For example, he liberalizaion of he aviaion secor in Souh-Eas Asia and he Pacific helped o lower airfares and provided a boos o ourism, a criical secor for many counries (see box 2.4). The issue of deregulaion is difficul o ackle, especially if i involves he opening of domesic markes o foreign operaors. Currenly, almos all counries in he ESCAP region resric he enry of foreign ranspor service providers in heir domesic markes. These barriers are parly responsible for he high ranspor coss in he region and hey conribue o delays a land border crossings due o he ime spen suffing and unsuffing cargo beween vehicles. However, counries have begun o ake seps owards he developmen of a regional marke for ranspor services and logisics by allowing foreign ranspor operaors o ener or o ransi heir erriories along seleced roues. Several counries have esablished bilaeral or rilaeral arrangemens o allow crossborder movemens by road wihou he need for ranspor permis. There are such arrangemens beween Armenia, he Islamic Republic of Iran and he Russian Federaion, and beween he Lao People s Democraic Republic, Thailand and Vie Nam. China has also aken significan seps o open ranspor roues hrough major border crossings wih Mongolia and Vie Nam. 22 Progress can also be seen among member Saes of he Shanghai Cooperaion Organizaion, which are finalizing a draf agreemen on faciliaing inernaional road ranspor. 23 Iniially, abou 15,500 km of roads 32 REGIONAL CONNECTIVITY FOR SHARED PROSPERITY
12 CHAPTER 2 Box 2.4. Impac of deregulaion on aviaion in he Pacific In Vanuau and Samoa in he Pacific, he deregulaion of he aviaion secor has helped o improve regional ransporaionconneciviy and o increase flows of ouriss. In Vanuau, Air Vanuau was he naional carrier, and in he lae 1990s and early 2000s i suffered losses. Once he aviaion secor in Vanuau was deregulaed in 2004, and low-budge carriers such as Pacific Blue were permied o ener Vanuau s skies, passenger raffic beween Ausralia and Vanuau grew by 19%. Deregulaion has allowed fares o drop, increased visior arrivals and increased airline choices for passengers. Vanuau is now served by five inernaional airlines. In Samoa, he naionally conrolled carrier Polynesian Airlines suffered heavy losses during , and was no financially viable. In response, he Governmen reformed he aviaion secor. I resrucured Polynesian Airlines for domesic roues and venured ino a parnership wih Virgin Ausralia. Gains in he ourism secor in Samoa have been aribued o his join venure. In boh counries, he reforms resuled in more flighs o regional hubs such as Ausralia, Fiji and New Zealand, and more compeiive fares. In addiion, he resrucured naional airlines are in beer financial posiions, reducing he burden on public finances. Source: Taumoepeau and Kissling, Economic susainabiliy of airlines in he Pacific. Presened a he 31s Ausralasian Transpor Research Forum (2008). Available from are o be opened under his agreemen, including a road from Lianyungang, China, o Sain Peersburg, Russian Federaion. Also under he agreemen, wo seapors in China and he Russian Federaion will evenually be accessible for ransi raffic from Cenral Asia. In he case of railways, cross-border movemens are ofen hampered by insiuional differences in operaing rules, ariff srucures and licensing requiremens for rain drivers and crew. However, here are also examples of how counries can cooperae o provide regular and compeiive inernaional railway services. These include he long-running Trans-Siberian Railway linking he Russian Federaion, Mongolia and China o he Far Eas and Europe; he Economic Cooperaion Organizaion conainer block rain beween Isanbul (Turkey), Tehran and Islamabad; and he Chongqing- Xinjiang-Europe railway service beween China and Germany via Kazakhsan, he Russian Federaion, Belarus and Poland. 24 ESCAP is now developing a draf regional sraegic framework for he faciliaion of rail in he region, which will idenify and address he curren obsacles o cross-border rail freigh movemens. INFORMATION AND COMMUNICATIONS TECHNOLOGY CONNECTIVITY The evoluion of he digial divide in Asia and he Pacific Economies across he world have become increasingly relian on ICT, including he Inerne and mobile elecommunicaions. These inpus can increase he produciviy of boh labour and capial, and have become inegral pars of inernaional rade and logisics services linking producers o consumers across borders and providing insan marke informaion. The abiliy o ake advanage of his echnology depends on bandwidh, which affecs he speed of ransmission akin o he widh of highways in road ranspor. This depends o a cerain exen on physical infrasrucure, paricularly on cable and someimes saellie services. Alhough he infrasrucure has been expanding rapidly in Asia and he Pacific, bandwidh is sill far lower han i is in Norh America or in Europe (see figure 2.4). REGIONAL STRATEGIES FOR STRENGTHENING REGIONAL CONNECTIVITY 33
13 The majoriy of he region s people who have lile or no access o broadband live in lower-middleincome counries wih high income inequaliy, such as China and India, or in leas developed counries or island developing economies. However, poorer communiies in urban and rural areas remain underserved even in higher-income economies. This is because legacy elecommunicaion operaors have ypically invesed primarily in commercially viable areas mainly in major ciies and urban cenres. Moreover, incumben operaors ofen mainain exclusive access o submarine and erresrial cable neworks, limiing poenial compeiion. There are also significan inequaliies beween counries in erms of physical infrasrucure and he availabiliy of, and access o, criical Inerne exchange poins. Moreover, prices end o be higher where bandwidh is lower. Urban hub areas, such as Singapore and Hong Kong, China, enjoy levels of bandwidh ha lead he world, while many developing economies, paricularly he leas developed counries, landlocked developing counries and Pacific island economies, lag far behind. Many of hese dispariies arise from he curren configuraion of sea- and land-based fibre neworks. These have evolved organically over wo decades and are no serving o bring affordable ICT conneciviy o all. There are, for example, insufficien landbased roues for inernaional Inerne raffic in Asia and he Pacific, so he region s raffic is exchanged hrough submarine cables, and rouings ha are based on hub-and-spoke configuraions. In Eas Asia, for example, key hubs are Hong Kong, China; Singapore; and Tokyo, or furher afield in he Unied Saes of America. Thus, inernaional nework raffic mus pass hrough muliple Inerne exchange poins. Since he Asian and Pacific region relies heavily on submarine cables, i is also vulnerable o naural disasers, marine vessel accidens and even saboage. For example, in 2009, Typhoon Morako and a subsequen undersea earhquake damaged a leas eigh submarine cables and adversely affeced voice and daa raffic across Souh-Eas Asia, as well as in China, India and Japan. The overreliance of he region on submarine cables makes i more vulnerable o exreme weaher evens and naural disasers, which have been increasing in frequency and poency over he pas decade. Towards an Asia-Pacific informaion superhighway In his regard, ESCAP has recenly begun promoing he concep of an Asia-Pacific informaion superhighway: a cohesive meshed erresrial Figure 2.4. Annual average growh in bandwidh vs. disribuion of bandwidh added, by region ( ) 100% 80% 76% 81% 88% 92% Annual Growh 60% 40% 20% 0% 39% 40% 48% 49% 56% Oceania Unied Saes & Canada Lain America Wesern Europe Eas Asia Easern Europe Africa Souh Asia Middle Eas Oceania Unied Saes & Canada Lain America Wesern Europe Eas Asia Toal Growh (Tbps) Easern Europe Africa Souh Asia Middle Eas Source: Telegeography, 2013 Telegeography landscape, presenaion a he Pacific Telecommunicaions Council Annual Conference, Honolulu, Hawaii, January, Noe: The Y-axis shows erabis per second (Tbps). For example, a oal of 8.2 Tbps of bandwidh capaciy was added in Eas Asia during he period REGIONAL CONNECTIVITY FOR SHARED PROSPERITY
14 CHAPTER 2 fibre opic nework for he region ha would provide coseffecive broadband access on boh an inraregional and inerconinenal basis. A coninen-wide erresrial fibre opic nework would complemen he exising submarine cable neworks. A meshed nework would no only bridge Asia s vas landmass wih compeiive poins of Inerne access in Europe, i would also reduce he impac of ouages from undersea cable accidens and naural disasers and open up opporuniies for value added services. By linking Asia o Europe, he proposed Asia-Pacific informaion superhighway would enhance he physical ICT conneciviy of landlocked counries ha are locaed housands of kilomeres from undersea cables, while compeiion inroduced by he nework could lower he cos of inernaional bandwidh and provide Governmens wih incenives o liberalize inernaional gaeways. The developmen of an Asia-Pacific informaion superhighway is a complex process requiring very close collaboraion beween member Saes, as well as wih privae secor parners and inernaional organizaions. While more work needs o be done o develop a concree road map, ESCAP has idenified he following principles ha should underpin any regional sraegy: The nework should be fully inegraed and coheren. I should provide robus cross-border conneciviy across he coninen, wih a paricular focus on reaching rural and less commercially profiable areas. A mesh configuraion would allow for innework healing in he even of physical cable ouages or poliical insabiliy ha may affec nework conneciviy in individual counries. The nework should be of uniform qualiy. Currenly, some erresrial neworks are pachworks of domesic elecom neworks, which provide variable qualiy and offer vasly differen erms and service guaranees. A single uniform nework wih sandard erms and qualiy of service would alleviae hese problems. The nework should leverage exising infrasrucure In order o remain cos effecive, any pan-asian erresrial nework would need o be based on he sreamlined procuremen of righs of way, as well as on uniform consrucion echniques andparameers. This could be realized hrough a parnership wih exising long-disance infrasrucure neworks, such as he Asian Highway, he Trans-Asian Railway or power ransmission neworks. The proposed Asia- Pacific informaion superhighway could also build parnerships wih ongoing and planned erresrial links, such as he Trans-Eurasian Informaion Superhighway. The nework mus be cos-effecive. If consruced on a proper scale in erms of boh geographical coverage and ransmission capaciy, a pan-asian erresrial nework could effecively compee wih submarine infrasrucure a boh regional and inerconinenal levels. In paricular, a erresrial nework dimensioned around 100 Gbps ransmission echnology would benefi from a las-mover s advanage and he recen sep changes in 10G and 40G echnology. The nework should be open access and have non -discriminaory pricing. For i o achieve developmen and policy goals, as well as o bes serve he region s consumers, all purchasers of capaciy mus be able o access he nework on equal, non-discriminaory erms. In an effor o overcome he high price of bandwidh in leas developed, landlocked and Pacific island markes, he concep of non-discriminaion should also be carried over on a geographical basis so ha counries can receive bandwidh a equal prices. Governmens and he privae secor could combine heir resources and experise o adop a lower-risk model. This would involve sharing he invesmen cos among muliple elecom operaors and Governmens, on condiion ha he nework be operaed on an open-access basis. Harnessing cross-secoral synergies for infrasrucure developmen Given he low level of broadband peneraion in coninenal Asia, here is a remendous opporuniy for Governmens o look a synergisic approaches o developing an Asia-Pacific informaion superhighway. In paricular, examples from he naional ICT infrasrucure developmen sraegies of India, he Republic of Korea and he Unied Saes sugges ha he cohabiaion of fibre-opic cables wih road and railway infrasrucure neworks can save on high capial coss and faciliae access o he fibreopic cable for mainenance and repair (see box 2.5). REGIONAL STRATEGIES FOR STRENGTHENING REGIONAL CONNECTIVITY 35
15 Alhough i is preferable o insall fibre-opic cables while roads and railways are being buil, even insalling jus he necessary ducs and conduis wihou he fibre would provide significan cos benefis by avoiding muliple excavaions. Beween 70% and 90% of he coss of developing a erresrial fibre-opic nework are relaed o he excavaion and insallaion of ducs and conduis hrough which cables are pulled. 25 Rail and power neworks already have fibre neworks for railway signalling and for heir supervisory conrol and daa acquisiion sysems. Allowing foraddiional fibre would no add significan coss. Furhermore, as neiher railway signalling nor supervisory conrol and daa acquisiion sysems are bandwidh inensive, he rail and power eniies ineviably end up wih surplus capaciy in heir fibre neworks. Such capive fibre capaciy is aracive o elecom providers who are keen o avoid he coss of renching fibre in remoe locaions and of securing new righs of way. There are also opporuniies o inegrae power ransmission and elecommunicaions. Highvolage ransmission lines are ofen mouned wih opicfibre ground wire o mainain conacs among subsaions and dispach cenres. If here is spare capaciy, ransmission companies can lease ou he lines o elecommunicaions providers. The Power Grid Corporaion of India Limied, for example, has a fibre-opic nework covering 206 ciies and owns wih abou 25,000 km of opical fibre. The nework covers many remoe areas, including he norheasern par of he counry and Jammu and Kashmir, and offers a domesic leg for inernaional long-disance carriers ha wish o connec hrough India o Bangladesh, Bhuan or Nepal. Similar synergies can be achieved when developing cross-counry connecions. In paricular, under he inergovernmenal agreemens on he Asian Highway and Trans-Asian Railway neworks, and on dry pors, counries have already agreed on a se of Box 2.5. Laying broadband cable along highways and railways Globally, many counries have sared o synchronize he deploymen of broadband infrasrucure wih he new consrucion or mainenance of roads and railways. In he Republic of Korea, for example, fibre-opic cable infrasrucure has been deployed along he highway backbone nework. India has also been successful in deploying opical fibre beneah rain racks. As a resul, RailTel Corporaion of India Ld. has become one of he region s larges carrier-neural elecom infrasrucure providers and has deployed 45,000 km of fibre-opic cables, connecing more han 4,500 ownships and several rural areas. Togeher wih he Inernaional Telecommunicaion Union, ESCAP has recenly developed Asia- Pacific informaion superhighway maps, a se of online maps of ransmission neworks. These ineracive maps enable he superimposiion of Inerne ransmission infrasrucure, such as fibre-opic cables, on he Asian Highway and he Trans-Asian Railway neworks, which hus helps o idenify where addiional fibre-opic cable segmens could be laid along highways and railways. The figure shown is a screensho from he Inernaional Telecommunicaion Union websie, which currenly hoss he onlinemaps. The figures show he border areas beween China and Myanmar. Given he probable increase in demand for inernaional Inerne Proocol by Myanmar, as well as he need o reinforce redundancy wihin he ASEAN region, a poenially ineresing soluion could be o lay opical fibre along planned Trans-Asian Railway racks or Asian Highway roue 3, which runs from Kunming, China, via Jinghong (Yunnan Province), ino Mong La (Myanmar). From Mong La, he opical fibre could be linked up wih he exising Myanmar nework in Kengung, where i mees exising erresrial connecions ha run easwards ino he Lao People s Democraic Republic and souhward ino Thailand (along Asian Highway roue 2 and missing segmens of he Trans-Asian Railway nework roue). This would creae a regional crossroads for opical fibre o reinforce norh-souh and eas-wes redundancy in Souh-Eas Asia. 36 REGIONAL CONNECTIVITY FOR SHARED PROSPERITY
16 CHAPTER 2 Box 2.5. (coninued) Norh-easern Myanmar: a crossroads for connecing China, he Lao People s Democraic Republic and Thailand Source: ITU Ineracive Terresrial Transmission/ESCAP Asia-Pacific Informaion Superhighway Maps, accessible a hp:// inernaional border crossings along hese regional neworks. By linking he developmen of he proposed Asia-Pacific informaion superhighway wih hese exising inergovernmenal agreemens, counries may avoid lenghy righs-of-way negoiaions, which ofen become a source of conenion and delay for major cross-border infrasrucure projecs. From he perspecive of he managers of his infrasrucure, income from providing access o he fibre-opic cables along heir neworks can become a valuable source of revenue, which could be used o finance recurren mainenance coss. REGIONAL STRATEGIES FOR STRENGTHENING REGIONAL CONNECTIVITY 37
17 Figure 2.5. Fibre-opic ducs and conduis are placed alongside a highway in he Republic of Korea Source: Korea Telecommunicaions Given he complexiy of hese secors, he benefis and risks of such cross-secoral approaches require furher research. In his regard, he secrearia is planning o conduc furher analyical work hrough he esablishmen of an exper working group on seamless conneciviy, as proposed by he Miniserial Conference on Regional Economic Cooperaion and Inegraion in Asia and he Pacific, which was held in Bangkok from 17 o 20 December This exper group could also work wih Unied Naions sysem parners, noably he Inernaional Telecommunicaion Union, as well as ap ino he exper analysis provided by research companies and regional insiuions wih similar objecives. Srenghening he ICT conneciviy of Pacific island economies Pacific island economies offer many examples of how ICT conneciviy is ransforming economies and socieies for he beer. These include mobile elephone conneciviy, access o financing and banking services and access o educaional opporuniies hrough disance learning. The spread of mobile elephones in he Pacific has been spurred by regulaory reforms over he las decade, paricularly in Fiji, Papua New Guinea, Samoa, Tonga and Vanuau. These Pacific island economies underook specific reforms ha led o inroducing compeiion (a leas one oher privae compeior) in domesic markes previously dominaed by public enerprises. As a resul, subscripions (per 100 people) increased noiceably in hese economies (see figure 2.6). The benefis from expanding mobile communicaions o he populaion while lowering prices has been well documened. Surveys of boh rural and urban respondens in Vanuau, for example, showed ha access o mobile elephones reduced business coss, increased sales of goods and services, improved ranspor and logisics, and enhanced inerpersonal conacs. 26 Mobile communicaions are also simulaing innovaions in financing services, which had remained ou of reach for a large proporion of heir populaions. However, broadband peneraion in he Pacific remains very limied. Only 5 economies (Cook Islands, Fiji, Palau, Tonga and Tuvalu) have more han 1 fixed broadband subscripion per 100 inhabians. Broadband prices are also sill prohibiively expensive: for example in 2012, fixed broadband coss approximaely $19.5 in Fiji and $185.6 in Papua New Guinea, corresponding o 6.4% and 150.5% of Gross Naional Income per capia respecively. 27 A number of echnological soluions can overcome he high coss and he lack of daa conneciviy and Inerne bandwidh. For example, a nex-generaion medium Earh orbi saellie consellaion, O3b Neworks, was launched in O3b is aimed a combining he ubiquious reach of saellies wih he speed of fibre o deliver saellie Inerne services and mobile backhaul services o emerging markes in he Pacific. Anoher programme is he Pacific Regional Conneciviy Program, financed by he World Bank, he Asian Developmen Bank, paricipaing member counries and oher privae and public secor parners. 29 This programme is aimed a connecing Tonga, Samoa, Solomon Islands and Vanuau by submarine fibre-opic cables o a global communicaions nework and is designed o arac privae invesmen in ICT infrasrucure developmen, based on open-access principles. Technological soluions, such as he O3b saellie, will o a grea exen sill be relian on inernaional bandwidh from land- and sea-based opical fibre, so heir success will depend on he wholesale Inerne Proocol ransi prices in such hubs as Singapore and Hong Kong, China. The proposed Asia-Pacific informaion superhighway could herefore help o expand compeiion, even for economies in he Pacific, hereby reinforcing he case for a regional approach o ICT conneciviy. In he meanime, effors should 38 REGIONAL CONNECTIVITY FOR SHARED PROSPERITY
18 CHAPTER 2 Figure 2.6. Mobile subscripions per 100 people in seleced Pacific island economies, Fiji Tonga Papua New Guinea Vanuau Samoa Source: Inernaional Telecommunicaion Union, Mobile cellular subscripions per 100 people. Available from ITU-D/Saisics/Documens/saisics/2013/Mobile_cellular_ xls. coninue on ways o furher develop economic opporuniies offered by mobile conneciviy. The experiences from he Pacific highligh he imporance of a conducive regulaory environmen o arac boh consumers and privae invesors. In paricular, Governmens need o esablish credible and ransparen rules for he susainable developmen of ICT operaions. For example, one sudy found ha, a he early sages of reform in Fiji, Papua New Guinea and Samoa, he independence of regulaory auhoriies was challenged by pressure from cerain ineres groups and Governmens. 30 The sudy also highlighed he limied financial and echnical capaciies of hese newly esablished regulaory auhoriies o handle effecively he full scope of regulaion. ENERGY CONNECTIVITY Curren saus of energy conneciviy in he region Susainable human developmen depends on adequae, reliable and affordable supplies of energy ha is, energy securiy. However, he Asian andpacific region remains heavily dependen on fossil fuels. In 2011, he region accouned for abou 40% of global oil and gas consumpion and more han 70% of global coal consumpion. 31 The region also relies heavily on radiional energy sources: despie recen progress, more han 1.8 billion people are sill using biomass, and more REGIONAL STRATEGIES FOR STRENGTHENING REGIONAL CONNECTIVITY 39
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