Industrial parks that offer special privileges to companies that operate inside them play a dominant role in attracting investment in the region, but countries must focus more on building up their infrastructure and human resources to take advantage of increased connectivity, development experts said yesterday.
Officials and development partners attending the 8th Greater Mekong Sub-Region (GMS) Economic Corridors Forum in Phnom Penh said targeting border areas for special economic zones (SEZs) provides a tangible start for attracting foreign investment and stimulating cross-border trade.
“An initiative that has captured interest in the sub-region is the development of special economic zones, industrial parks and economic clustering, which have proven to be an effective tool for attracting investment and fostering job creation,” said James Nugent, director-general of the Southeast Asia department at the Asian Development Bank (ADB).
However, he added that in order for economic corridors to reap the full benefits, countries need to become more competitive.
“To this end, we need to make sure that the corridor can effectively access global supply chains,” he said. “We need to make them more attractive to investors by consistently establishing sound policies, and providing the requisites for production and trade.”
Economic corridors, a term coined by the ADB, aim to develop transport networks and other linkages between economic hubs along a defined geography in order to stimulate social and economic development in areas surrounding the route.
Given the vast area covered by GMS economic corridors – which crisscross Cambodia, Laos, Myanmar, Thailand, Vietnam and southern China – governments and development partners need to agree to choose specific areas that have the greatest potential for economic activity, he added.
In order to do this, GMS economic corridors need to expand on existing partnerships for implementing and financing major infrastructure projects, said Sok Chenda Sophea, secretary-general of the Council for the Development of Cambodia (CDC).
He added that Cambodia will take advantage of development funds provided through the China-backed Asian Infrastructure Investment Bank (AIIB), as well as through its long-standing bilateral partners, to increase the Kingdom’s infrastructure.
While he noted that SEZs are the best solution for the short term, he said this was the only model that could be readily expanded once large-scale industrialisation eventually takes hold.
“In the end, we hope that we can replicate that model nationwide as [SEZs] were always meant to be a pilot project that we could then generalise.”
However to achieve that, he said GMS countries need to cooperate on reducing the barriers of regional trade.
“Being attractive is about having open borders and working with relevant authorities in other countries, but all sides need to be ready to engage,” Sophea said.
CDC has approved 30 registered SEZs in Cambodia as of November 2015, but only nine are operational.