ECONOMIC AND SOCIAL COMMISSION FOR ASIA AND THE PACIFIC
EMERGING ISSUES AND DEVELOPMENTS AT THE REGIONAL LEVEL: TRANSPORT, COMMUNICATIONS, TOURISM AND INFRASTRUCTURE DEVELOPMENT
(Item 6 (d) of the provisional agenda)
PROGRESS IN THE IMPLEMENTATION OF RESOLUTIONS AND MAJOR DECISIONS OF THE COMMISSION IN TRANSPORT, COMMUNICATIONS, TOURISM AND INFRASTRUCTURE DEVELOPMENT
Report of the Executive Secretary
1. The Commission, at its forty-eighth session, adopted resolution 48/11 of 23 April 1992 on road and rail transport modes in relation to facilitation measures, in recognition of the fact that harmonized transport facilitation measures at the national and international levels were a prerequisite for enhancing international trade and transport along road and rail routes of international importance. The implementation of that resolution will facilitate the flow of international traffic and trade in the Asian and Pacific region. The Commission, at its fifty-fourth session, held in 1998, noted the progress made in the implementation of resolution 48/11, and recommended that the secretariat should give priority to organizing national workshops, advisory missions and training, and involving the subregional organizations of the Association of South East Asian Nations (ASEAN), the Economic Cooperation Organization (ECO) and the South Asian Association for Regional Cooperation (SAARC) more actively. Section I of the present report highlights the progress made in this regard.
2. The Commission, at its fifty-first session, adopted resolution 51/8 of 1 May 1995 on the implementation of the New Delhi Action Plan on Infrastructure Development in Asia and the Pacific, in recognition of the critical need for the provision of adequate infrastructure for economic and social development in Asia and the Pacific. In that resolution, the Commission requested the Executive Secretary to report to the Commission at its annual sessions until the last year of the Action Plan on its implementation. In line with that request, section II of the present document reports on the progress in the implementation of the New Delhi Action Plan.
3. The Commission, at its fifty-fourth session, noted the importance of up-to-date information on trends in the development of transport, communications, tourism and other infrastructure, and requested the secretariat to resume preparation of the review of developments in transport, communications and tourism. Section III of the report describes the approach to be adopted by the secretariat for the preparation of the review.
4. The Commission, at the same session, stressed the important role which the private sector could play in infrastructure development. It requested the secretariat to undertake a study on the implications of the financial crisis for private sector investment in infrastructure, and to suggest measures to encourage renewed investment. Section IV of the report highlights the major findings of an assessment of the effect of the financial crisis on the infrastructure sectors, carried out by the secretariat.
I. PROGRESS IN THE IMPLEMENTATION OF RESOLUTION 48/11 OF 23 APRIL 1992 ON ROAD AND RAIL TRANSPORT MODES IN RELATION TO FACILITATION MEASURES
5. In order to assist its members and associate members in the development of international trade and tourism, the Commission, at its forty-eighth session held in 1992, adopted resolution 48/11 on road and rail transport modes in relation to facilitation measures. At the same session, it endorsed the integrated project on Asian land transport infrastructure development (ALTID), comprising the Asian Highway and Trans-Asian Railway projects as well as the facilitation of land transport projects.
6. In the above resolution, the Commission recommended that countries in the region should consider the possibility of acceding to seven major international conventions related to land transport facilitation, if they had not already done so. This would be a cost-effective step towards the development of international transport in the region. It also recommended that the secretariat should examine the needs of individual countries or groups of countries in relation to the adoption of facilitation measures and, at the request of governments, provide advisory services and convene expert group meetings to consider problems, bottlenecks and facilitation measures in the field of road and rail transport.
7. The Commission, at its fiftieth session in 1994, endorsed the proposal that regional seminars should be organized to explain and discuss the implications of various conventions governing land transport and to highlight the benefits of acceding to them. In that regard, the secretariat adopted a subregional approach for providing assistance to member countries. The first subregional seminar was organized at Tehran in November 1994 for senior policy makers from the member countries of the Economic Cooperation Organization (ECO) on the implications and benefits of accession to the conventions. In 1996, two subregional seminars were held at Bangkok, one for the North-East Asian countries and the other for the countries of the Greater Mekong subregion; in December 1997, a subregional seminar was conducted in Dhaka for the countries of SAARC.
8. Noting the progress made in the implementation of resolution 48/11, particularly in the landlocked countries of Central Asia, the Commission, at its fifty-third session held in 1997, urged all other countries to consider the possibility, if they had not yet done so, of becoming a party to the conventions listed in the resolution. It strongly recommended that the secretariat should continue its assistance in the area of transport facilitation, through subregional seminars, national workshops and advisory services. The Commission requested that transit facilities to least developed and landlocked countries should be accorded high priority and that every possible endeavour should be made to increase transit facilities, due account being taken of the legitimate concerns and interests of transit countries.
9. As follow-up to the joint ESCAP/Asian Development Bank Seminar on Benefits of Acceding to International Conventions on Land Transport Facilitation for Countries of the Greater Mekong Subregion, held at Bangkok in November 1996, national-level seminars were held for the Lao People's Democratic Republic, Myanmar, Thailand and Viet Nam, and national action plans were formulated. At the country level, the conventions listed in Commission resolution 48/11 are being translated into national languages: Lao People's Democratic Republic (four conventions), Thailand (seven conventions, which have also been shared with the Lao People's Democratic Republic) and Viet Nam (seven conventions). National transport facilitation committees have been established in the Lao People's Democratic Republic and Thailand, and the establishment of such committees is being considered in Myanmar and Viet Nam. It is planned to hold national seminars in two more countries of the Greater Mekong subregion, Cambodia and China, in 1999.
10. As follow-up to the subregional seminar held at Dhaka in December 1997 for the countries members of SAARC, it is planned to hold national seminars in two countries of the SAARC region, Bangladesh and India, in 1999.
11. An ECO Regional Workshop on International Land Transport and Transit Conventions was held at Tashkent in June 1998. It recommended that (a) priority attention should be given to accession to all of the seven conventions listed in Commission resolution 48/11; (b) national interministerial committees for border-crossing facilitation and promotion of international transport should be established; and (c) chairpersons of national interministerial committees should be included in the Transit Transport Coordination Council to be established by ECO.
12. The first session of the Project Working Group on Transport and Border-crossing Facilities of the United Nations Special Programme for the Economies of Central Asia (SPECA) was held at Almaty in October 1998. The priority area of the Working Group is "the development of transport infrastructure and simplification of procedures for the transfer of goods, services and labour resources through national borders". The second session of the Working Group is scheduled to be held in April 1999, at which the Group is expected to consider a detailed work programme, with emphasis on facilitation issues.
13. The current status of countries and areas of the ESCAP region in respect of the international conventions listed in Commission resolution 48/11 is shown in the annex to the present document. It is clear that more efforts are needed to speed up the process, particularly by conducting national workshops followed by advisory services on the changes required in the legal framework, which, along with improved logistics and promotion, will greatly contribute to more efficient road and rail cross-border traffic, thereby facilitating international trade and tourism.
II. PROGRESS IN THE IMPLEMENTATION OF COMMISSION RESOLUTION 51/8 OF 1 MAY 1995 ON THE IMPLEMENTATION OF THE NEW DELHI ACTION PLAN ON INFRASTRUCTURE DEVELOPMENT IN ASIA AND THE PACIFIC
14. The Commission, in its resolution 51/8, requested all members and associate members in the region to take immediate initiatives in identifying areas for action to promote their infrastructure development, and to apply the New Delhi Action Plan as a guideline in accordance with their specific economic and social conditions. It also invited members and associate members to establish national focal points for infrastructure development to oversee the implementation of the Action Plan at the national level and to participate actively with all agencies and subregional organizations involved in supporting regional action. On the issue of resource mobilization, the Commission urged the United Nations Development Programme (UNDP) and other funding agencies, as well as donor countries, to provide the requisite funds to support the implementation of the Action Plan in the region.
15. The Ministerial Conference on Infrastructure, held at New Delhi in October 1996, adopted the New Delhi Declaration on Infrastructure Development in Asia and the Pacific, thereby launching the New Delhi Action Plan on Infrastructure Development in Asia and the Pacific, and approving a set of 64 operational activities for phase I (1997-2001) of the regional action programme.
16. The secretariat and other agencies have commenced work on 27 of the 64 activities, in a number of which considerable progress has been achieved. Action has also been initiated to secure funding or commence work on a further eight activities.
17. While the secretariat and other agencies are exploring various ways of mobilizing resources, the implementation of a number of activities is being constrained by the relatively low level of financial support and the changing sectoral and thematic priorities of donors. The secretariat has submitted a number of project proposals for bilateral extrabudgetary assistance in 1999.
18. In pursuit of requests made at various legislative meetings for ESCAP to undertake a number of activities designed to ensure the effectiveness of the regional action programme, the secretariat has requested members and associate members to establish national focal points, identify priority projects from among the 64 activities, and indicate projects for which similar activities are being undertaken at the country level. Thirteen countries have identified national focal points. For priority projects, 63 of the 64 activities, or 98 per cent, have been identified in the group of 20 top priority activities by one or more countries, and 34, or 53 per cent of the activities, are in the list of top five priority projects. In addition, for 55, or 86 per cent of the activities, similar action is being undertaken at the country level.
19. The Commission, at its fifty-fourth session, held at Bangkok in April 1998, underscored the importance of implementing activities under the programme in countries which had complementary activities. It urged countries that had not already done so to nominate national focal points and to indicate priority projects from within the regional action programme.
20. In examining progress in the implementation of the regional action programme and attempting to operationalize the functions of the focal points, the secretariat wrote to the focal points in September 1998 requesting them to provide relevant information concerning the implementation of the programme. The Commission may wish to urge countries to participate actively in the implementation of the regional action programme through their respective focal points and, for countries that have not yet done so, to nominate focal points and indicate priority projects from within the regional action programme and similar national action.
21. The Commission, at its fifty-fourth session, also requested that the secretariat set in place an efficient mechanism for monitoring the progress of implementation of the regional action programme. The Committee on Transport, Communications, Tourism and Infrastructure Development performs this important role of monitoring and evaluating the progress in implementation of the regional action programme of the New Delhi Action Plan on Infrastructure Development in Asia and the Pacific. The Committee, at its first session, held in November 1998, undertook a thorough review to ensure that the priority needs of countries were being adequately reflected in the regional action programme. Based on that review, the Committee provided guidance for effective and efficient implementation of further activities under the regional action programme.
22. The Regional Inter-agency Committee for Asia and the Pacific (RICAP) Subcommittee on Infrastructure Development is designed to serve as a forum for reviewing the emerging issues and initiatives in the field of infrastructure development in the Asian and Pacific region and promoting close cooperation among the United Nations bodies and specialized agencies, intergovernmental organizations and subregional organizations in addressing the issues which may confront the region. In this respect, at its third meeting, held in November 1998, the Subcommittee reviewed the status of implementation of the New Delhi Action Plan and its regional action programme, and discussed ways and means of promoting inter-agency cooperation and collaboration for its more effective and efficient implementation. The Subcommittee recommended that member countries should accord higher priority to the development of transport and communications in accordance with the commitments made by their ministers in adopting the New Delhi Declaration on Infrastructure Development in Asia and the Pacific. It also recommended that concerted efforts should be made to mobilize resources from all possible sources for the implementation of the regional action programme. It noted that consultations had started between ESCAP and the Economic Commission for Africa (ECA) to promote the development of transport linkages between Asia and Africa so as to facilitate international trade and tourism. It is planned to hold a meeting of directors of the transport divisions of ECA and ESCAP in 1999 to discuss the strategy for cooperation. The Subcommittee noted with satisfaction that the Economic Cooperation Organization (ECO) had launched a Programme of Action on the ECO Decade of Transport and Communications (1998-2007), which included various projects and activities in line with the New Delhi Action Plan. The Subcommittee further noted that ASEAN was in the process of formulating a transport plan of action for 1999-2004. In that regard, the regional action programme of the New Delhi Action Plan was being studied with a view to incorporating or complementing some of its activities.
23. The secretariat has cooperated closely with the subregional organizations to seek ways to accommodate the request of the Commission that annual reviews of the New Delhi Action Plan, its regional action programme and associated project activities be carried out under the auspices of the subregional organizations through the inclusion of such reviews as a standing item on the agenda of their appropriate meetings. In this connection, the secretariat had further consultations with the executive heads of the subregional organizations at the Fourth Consultative Meeting among Executive Heads of Subregional Organizations and ESCAP, which was held at Kathmandu in October 1998.
24. The matter was further pursued with the representatives of subregional organizations at the third meeting of the RICAP Subcommittee on Infrastructure Development. The representative of ECO informed the Subcommittee that the Second ECO Ministerial Meeting on Transport and Communications, held at Ashgabat in March 1998, had expressed appreciation of the procedure of annual reviews, and encouraged its member States to expedite national-level action on the regional action programme, and to nominate focal points and priority projects, if they had not already done so. The Subcommittee requested ECO to include the review of the New Delhi Action Plan in its Third Ministerial Meeting to be held at Islamabad in 2000, for which the ESCAP secretariat would prepare a document. The representative of ASEAN informed the Subcommittee that the ASEAN secretariat would initiate the possible inclusion of the review of the New Delhi Action Plan in its Senior Transport Officials Meeting, for which the ESCAP secretariat would provide background information. Funding of a joint ECO/Islamic Development Bank (IDB)/ESCAP/United Nations Conference on Trade and Development (UNCTAD) project will be discussed at the Second Inter-agency Consultative Meeting on Multimodal Transport Operations in the ECO Region, to be held at Jeddah, Saudi Arabia, in February 1999.
III. RESUMPTION OF THE REVIEW OF DEVELOPMENTS IN TRANSPORT, COMMUNICATIONS, TOURISM AND OTHER INFRASTRUCTURE
25. Noting the importance of up-to-date information on developments in transport, communications, tourism and infrastructure development, the Commission, at its fifty-fourth session, requested the secretariat to resume its preparation of the review of developments in transport, communications, tourism and other infrastructure. The publication has been included in the proposed programme of work, 2000-2001.
26. The last review, prepared in 1995, provided general background information for the biennial legislative meeting, and served as a useful reference for transport and communications policy makers and planners throughout the region, as well as other interested parties. For its preparation, regular budget funds amounting to $11,800 were provided in the biennium 1996-1997 for specialized expertise. Funds were also made available for printing the review. Owing to resource constraints, the Commission, at its fifty-second session, held at Bangkok in April 1996, decided to delete the review from the programme of work, 1996-1997.
27. The review was prepared biennially using statistical data collected from countries through sectoral questionnaires on road, rail, maritime and urban transport. Descriptive information on the development of infrastructure, transport services and transport policy was collected from a variety of sources, including national plans, country statements and journals. Inputs relating to developments in the field of air transport and communications were provided by specialized agencies.
28. In line with the request of the Commission that the secretariat should resume preparation of the review, the Committee on Transport, Communications, Tourism and Infrastructure Development, at its first session held in November 1998, recommended that the secretariat should resume the biennial review, and urged members and associate members to assist the secretariat in its preparation in accordance with the following approach proposed by the secretariat:
(a) Member countries would prepare country reports on transport policy and planning. The reports would contain descriptive and analytical information as well as a statistical appendix which would reflect the data previously collected by questionnaire. After the preparation of the first report, only updating would be required in the subsequent years;
(b) The secretariat would prepare a review of developments in transport and infrastructure development, drawing upon the country reports on transport policy and planning and on infrastructure development;(1)
(c) The secretariat would consolidate the statistical appendices of the country reports into an ESCAP database on transport and infrastructure.
29. Some of the advantages of the proposed approach are:
(a) Increased efficiency in the conduct of the Committee session, in that reports would remove the need for lengthy informative country statements and allow more time for discussion of substantive policy issues;
(b) The utilization of modern means of dissemination of the information contained in country statements to a wider audience through the use of the Internet;
(c) Easy access by policy makers and advisers to information concerning transport policy and planning in the ESCAP region and other parts of the world;
(d) Provision of the opportunity for countries to showcase priority transport projects and apprise potential investors and operators of the policy environment offered by the country;
(e) More efficient utilization of secretariat resources through a reduction in the time required to search for country-specific data and information;
(f) The resource cost to a member country of preparing the first report would probably be similar to that currently expended in responding to the secretariat's questionnaire and preparing a country statement for the Committee session. For second and subsequent editions of a country report, the resource cost would be lower as the preparation would only entail updating an existing report.
IV. ASSESSMENT OF THE IMPLICATIONS OF THE FINANCIAL CRISIS FOR THE INFRASTRUCTURE SECTORS
30. The Commission, at its fifty-fourth session, requested the secretariat to undertake a study on the implications of the financial crisis for private sector investment in infrastructure and to suggest measures to encourage renewed investment. It also requested that priority be given to activities within the New Delhi Action Plan that could play a significant role in the recovery from economic difficulties.
31. In pursuance of the Commission's request, an assessment of the implications of the financial crisis for the infrastructure sectors was carried out by the secretariat in 1998. Its findings are summarized below for the information of the Commission.
A. Loss of confidence by the private sector in the economies of East and South-East Asia
32. The first important impact of the crisis has been a general loss of confidence in the economies of East and South-East Asia, a phenomenon from which the infrastructure sectors have not escaped. As a result, the enthusiasm of the private sector for investing in infrastructure has waned considerably.
33. Prior to the crisis, governments of countries in the region had adopted various policies and incentives to build the confidence of, and facilitate participation by, both the domestic and the foreign private sector. In fact, however, they only went part of the way towards creating an environment which was conducive to private sector participation, an observation which is supported by the demand of the private sector for the creation of "level playing fields" as well as by some of the disputes which have arisen between developers and government agencies.
34. At the macroeconomic level, there is clearly a need to restore confidence in the affected Asian economies. There is also a considerable amount of work yet to be done to create an environment conducive to private sector participation in infrastructure development.
B. Financial difficulties stemming from currency devaluation
35. The second major impact has arisen from the currency devaluations. In order to address significant shortfalls in infrastructure, countries have encouraged foreign investment and borrowed heavily in foreign currency. In general, however, infrastructure and its immediate outputs are not traded. Consequently, there is a mismatch between revenues which are received in domestic currency and costs which are incurred in foreign currency. Clearly, in cases where measures had not been taken to insure against exchange rate changes, financial difficulties have resulted. A second mismatch arises between the short-term maturity of loans available and the longevity of infrastructure assets. Typically, projects are financed with short-term loans which are rolled over on maturity. However, with the onset of the financial crisis, lenders have been less willing to roll loans over and interest rates have risen significantly, further exacerbating financial difficulties.
36. It would appear that floating or managed exchange rates will replace the relative stability of exchange rates which has been a feature of recent decades. Consequently, means of dealing with exchange rate fluctuations and long-term debt instruments need to be developed.
C. Delays in implementation, postponement and cancellation of projects
37. Prior to the current financial crisis, countries were making significant progress in developing their capital stock of infrastructure assets after decades of neglect of the sector. However, with the onset of the crisis, cuts in governmental budgets have been demanded and private sector interest in infrastructure development has been restrained. As a result, there have been delays in implementation, postponement and cancellation of projects.
38. The crisis has had a considerable impact on production and incomes. It is expected, therefore, that there will be visible signs of reduced pressure on infrastructure facilities and services. However, when consideration is given to the current levels of traffic congestion in major cities, the adequacy of industrial water supply, or statistics on power consumption this year compared with previous years, there is still considerable pressure on the infrastructure sectors.
39. There may be a case for the delay, postponement or cancellation of some of the so-called "grandiose" infrastructure projects. However, as such infrastructure may support a country's underlying growth, a number of issues need to be borne in mind. First, the development of infrastructure includes the formation of both new and replacement assets. In other words, in order to supply existing infrastructure levels, some replacement of worn-out and uneconomic infrastructure is required. Second, the gap between infrastructure supply and demand has not yet been bridged. Third, recovery from the crisis, international competitiveness and participation in the globalization process all require adequate infrastructure.
40. To the extent that budgetary constraints allow, it is imperative that programmes to provide essential infrastructure not be delayed or postponed significantly.
D. Reduced expenditure on the maintenance of existing infrastructure assets
41. The fourth significant impact is the reduction of expenditure on the maintenance of existing assets. In times of economic boom, the maintenance of infrastructure assets tends to be neglected: in times of economic crisis it tends to be ignored. Such oversights could in fact have more serious repercussions than the previous three impacts. One example of this arises in the highway sector. Some countries of the region have in recent years implemented inter-urban road construction programmes. Today, on many of these roads, overloaded trucks refuse to use the inside lane because the pavement has failed, the centre lane is deteriorating rapidly and the overtaking lane is used as the principal carriageway. When road surfaces begin to fail, traffic congestion, travel times and transport costs increase as the effective capacity of the road is reduced. As a result, for example, policies to promote spatial equity through encouraging higher valued agricultural production in rural areas are frustrated as transport costs increase and agricultural produce is spoilt through excessive transit times and vehicle vibration caused by irregular road surfaces. In the global context, inadequate maintenance of transport infrastructure increases the costs of exports and affects the country's competitiveness.
42. If adequate maintenance is undertaken and axle-load regulations enforced before pavement failure, the net present value of the provision of transport infrastructure is considerably reduced. Consequently, there is a need to ensure that adequate resources are devoted to the maintenance of the countries' stock of infrastructure assets.
E. Need to review commitment and take positive steps towards improving efficiency of delivery of infrastructure facilities and services
43. Improving the efficiency of the delivery of infrastructure facilities and services is an issue during both boom and crisis. However, in times of crisis and additional budgetary constraints, it often provides the only means of increasing the supply of infrastructure through increased productivity.
44. In view of the current crisis, renewed attention needs to be placed on improving efficiency through, inter alia, involving all stakeholders in the decision-making process, developing human resources, introducing more commercially oriented practices into the administration, management and operation of State-owned infrastructure enterprises, and promoting and facilitating the active participation of the private sector.
45. The preceding discussion has indicated that the set of actions at the national level and supporting actions at the regional level contained in the New Delhi Action Plan on Infrastructure Development in Asia and the Pacific are equally valid in times of boom and crisis. There are, however, some areas in which renewed commitment to proposed actions could play a significant role in a sustainable recovery from the economic difficulties. The Commission may wish to reiterate that high priority should be accorded to those activities within phase I (1997-2001) of the regional action programme that could play a significant role in recovering from the current crisis, as well as to introduce additional activities and elements that could contribute substantially to the process of recovery.
V. ISSUES FOR CONSIDERATION
46. The Commission may wish to consider the following issues:
(a) The Commission may wish to reiterate its request to member countries to consider the possibility of acceding to the international conventions listed in resolution 48/11, if they have not already done so;
(b) The Commission may wish to request member countries which have not yet done so to provide to the secretariat: (i) nomination of national focal points for the implementation of the New Delhi Action Plan on Infrastructure Development in Asia and the Pacific; (ii) identification of 20 priority activities from the 64 activities in the regional action programme, indicating the top five priorities; and (iii) information concerning national-level action being taken in relation to the 64 activities;
(c) The Commission may wish to urge subregional organizations to take an active interest in reviewing the implementation of the New Delhi Action Plan;
(d) The Commission may wish to urge donor countries, donor agencies and intergovernmental and non-governmental organizations to provide financial and technical support for the implementation of resolution 51/8;
(e) The Commission may wish to consider and endorse the approach proposed by the secretariat for the preparation of the review;
(f) With a view to assisting member countries in coping with the financial crisis, the Commission may wish urge them to renew their commitments in the following areas:
(i) Developing instruments for addressing mismatches between currencies and loan maturities;
(ii) Continuing investment in key strategic economic infrastructure;
(iii) Maintaining the existing stock of infrastructure capital;
(iv) Improving the efficiency of delivering infrastructure facilities and services;
(v) Creating an environment conducive to infrastructure development.
Annex. Status of countries and areas of the ESCAP region in respect of the international conventions listed in Commission resolution 48/11, as of January 1999
Notes: x Acceded.
xx Acceded after the adoption of resolution 48/11.
Two dots (..) indicate that data are not applicable.
1. Country reports on infrastructure development for Bangladesh, China, India, Indonesia, Kazakhstan, Lao People's Democratic Republic, Myanmar, Nepal, Philippines, Republic of Korea, Sri Lanka, Thailand, Vanuatu and Viet Nam are available on ESCAP Internet Web site http://www.unescap.org/tctd/ctyrpt.htm.