Developing Cross-Border Economic Zones between the People's Republic of China and Viet Nam

Transcription

1 Technical Assistance Report Project Number: Regional Policy and Advisory Technical Assistance (R-PATA) September 2009 Developing Cross-Border Economic Zones between the People's Republic of China and Viet Nam (Financed by the Regional Cooperation and Integration Fund under the Regional Cooperation and Integration Financing Partnership Facility) The views expressed herein are those of the consultant and do not necessarily represent those of ADB s members, Board of Directors, Management, or staff, and may be preliminary in nature.

2 ABBREVIATIONS ADB Asian Development Bank ASEAN Association of Southeast Asian Nations CBEZ cross-border economic zone CBTA Cross-Border Transport Agreement GMS Greater Mekong Subregion NSEC North South Economic Corridor PPP public private partnership PRC People's Republic of China SFA-TFI Strategic Framework for Action on Trade Facilitation and Investment TA technical assistance UNDP United Nations Development Programme TECHNICAL ASSISTANCE CLASSIFICATION Type Regional policy and advisory technical assistance (R-PATA) Targeting Classification General intervention Sector (subsectors) Industry and trade (trade and services, industry and trade sector development) Themes (subthemes) Economic growth, regional cooperation and integration, capacity development (promoting economic efficiency and enabling business development, trade and investment, institutional development) Location impact Rural and urban (medium), national and regional (high) NOTE In this report, "$" refers to US dollars unless otherwise stated. Vice-President C. Lawrence Greenwood, Jr., Operations 2 Director General K. Gerhaeusser, East Asia Department (EARD) Director N. Chakwin, Financial Sector, Public Management and Regional Cooperation Division, EARD Team leader Team member Y. Zhang, Regional Cooperation Specialist, EARD R. Butiong, Senior Regional Cooperation Specialist, SERD In preparing any country program or strategy, financing any project, or by making any designation of or reference to a particular territory or geographic area in this document, the Asian Development Bank does not intend to make any judgments as to the legal or other status of any territory or area.

3 I. INTRODUCTION 1. The Greater Mekong Subregion (GMS) Economic Cooperation Program strives to create an integrated, harmonious, and prosperous subregion. This vision is being pursued through a "3Cs" strategy of enhancing connectivity, improving competitiveness, and promoting a greater sense of community. To implement this strategy, the GMS countries have adopted an economic corridor approach. Under this approach, the GMS countries will expand key transport corridors within the GMS to boost economic activity and link the subregion with major markets in East and Southeast Asia. Nodal points within these corridors will serve as the primary centers for business development. The North South Economic Corridor (NSEC) has been designated as a flagship program. The Third GMS Summit, held in Vientiane, Lao People's Democratic Republic in March 2008, called for enhanced efforts to transform transport corridors into economic corridors. During the summit, GMS ministers signed a memorandum of understanding pledging to work together to develop economic corridors in the subregion. An NSEC Strategy and Action Plan 1 was formulated subsequently, and endorsed by the Fifteenth GMS Ministerial Meeting held in Cha-Am, Thailand, on 19 June One of the key recommendations of the NSEC Strategy and Action Plan was the creation of cross-border economic zones (CBEZs) along the corridor. 2. This regional policy and advisory technical assistance (TA) project is designed to support the implementation of the NSEC Strategy and Action Plan by developing CBEZs along the border between the People's Republic of China (PRC) and Viet Nam, specifically at two border crossing points: Hekou Lao Kai and Pingxiang Dong Dang. Periodic consultations were conducted with the PRC's and Viet Nam's GMS national focal points to determine the impact, outcome, outputs, and implementation arrangements for the TA project, in particular during the GMS Special Senior Officials' Meeting and the Task Force Meeting for the GMS Economic Corridors Forum held in March 2009 in Kunming, Yunnan Province, PRC. A fact-finding mission was also fielded to the Guangxi Zhuang Autonomous Region (Guangxi) of the PRC in August 2009 to seek the views of the local authorities, particularly those in the border areas. Broad agreement was reached on key aspects of the TA project, and support was obtained for its design and implementation. The design and monitoring framework is in Appendix 1. 2 II. ISSUES 3. The PRC and Viet Nam are active participants in various regional cooperation and integration initiatives, including the GMS Economic Cooperation Program. Both countries have embraced the principles of, and demonstrated strong commitment to, regional cooperation. The PRC Country Partnership Strategy identified regional cooperation as one of the four thrusts of ADB assistance, whereby ADB's regional cooperation and integration programs will be used to enhance infrastructure connectivity and facilitate cross-border trade and investment. Regional cooperation is also a cross-cutting theme in the Viet Nam Country Strategy and Program , 4 and is regarded as an important means of reducing poverty and sustaining economic growth by promoting competition and encouraging cross-border trade and investment. 1 ADB Toward Sustainable and Balanced Development: A Strategy and Action Plan for the GMS North South Economic Corridor. 2 The TA first appeared in the business opportunities section of ADB's website on 6 May ADB Country Partnership Strategy : People's Republic of China. Manila. 4 ADB Country Strategy and Program : Viet Nam. Manila.

4 2 4. The governments of the PRC and Viet Nam, under the broader framework of cooperation between the Association of Southeast Asian Nations (ASEAN) and the PRC, 5 have launched a "Two Corridors and One Circle" 6 initiative to encourage economic cooperation between the two countries. The physical orientation and the strategic objectives of the Kunming Hai Phong and Nanning Hai Phong corridors under the initiative match those of the NSEC. 7 More recently, the two governments reached consensus on jointly establishing CBEZs in the PRC's Yunnan Province and Guangxi, and in Viet Nam's Lao Cai and Lang Son provinces. Moreover, the PRC and Viet Nam have ratified the GMS Cross-Border Transport Agreement (CBTA) and its annexes and protocols. To implement the CBTA, the two governments have expanded the scope of their bilateral transport agreement. The border crossing points at Hekou Lao Cai and Pingxiang Dong Dang were included in the scope of the pilot implementation of the CBTA at the Third GMS Summit. They are all located in the CBEZs along the NSEC. 5. Developing economic corridors entails concerted efforts in the areas of transport, trade facilitation, and investment. It requires improvements in physical infrastructure and an enabling policy environment that will generate additional economic activity. Investments to improve physical connectivity must be complemented by efforts to facilitate transport, trade, and investment particularly within the framework of the CBTA and the GMS Strategic Framework for Action on Trade Facilitation and Investment (SFA-TFI). 6. It is also critically important to identify and address the weakest links in the corridors. One common finding from various studies on GMS transport and economic corridor development including the latest study on the NSEC Strategy and Action Plan is that the weakest links in economic corridors tend to be at the border. Nodal points within corridors, particularly key border cities or towns, have strategic importance as centers for economic activity, including business development, trade expansion, and investment. However, the development of most of border crossing points, including those in the NSEC, is still constrained in terms of both physical infrastructure and the policy environment. This situation, if not addressed, will prevent the NSEC from realizing its full potential. 7. While the physical connectivity within the NSEC has been improved as a result of major investments in road infrastructure in recent years, problems still remain in some areas, especially at border points where the physical facilities are still substandard. For example, the physical layout of the common control area at the border and the related processing facilities do not meet the needs of single-window or single-stop inspection schemes. Border control facilities lack modern information technology and communication equipment. In PRC-based and especially Viet Nam-based sections of the NSEC, the logistics infrastructure remains insufficient, leading to relatively high logistics costs in terms of money, time, and reliability. This discourages traders and investors from using the NSEC. 8. The policy environment for the NSEC also needs improvement. Despite repeated calls for accelerated implementation of the CBTA by GMS ministers and leaders, pilot implementation along the NSEC has been delayed or stalled for a variety of reasons. Multi-step, redundant, and 5 The full implementation of the ASEAN PRC Free Trade Agreement will start in January 2010 and will generate tremendous opportunities for trade and investment cooperation between the PRC and Viet Nam. 6 The initiative, announced in 2004 by the two countries' top leadership, seeks to facilitate trade and investment along the two transport corridors from the PRC's Kunming to Viet Nam's Hai Phong via Ha Noi and from the PRC's Nanning to Hai Phong also via Ha Noi, and to build an economic circle along the Beibu Gulf. Commitments to this goal were reiterated during the subsequent ASEAN PRC summits and the PRC Viet Nam summit meetings. 7 NSEC consists of three subroutes: (i) the Kunming Chiang Rai Bangkok route via the Lao People's Democratic Republic, (ii) the Kunming Ha Noi Hai Phong route, and (iii) the Nanning Ha Noi route.

5 generally uncoordinated procedures for processing of goods, vehicles, and people by various agencies remain the norm at most border checkpoints. The cost of delayed implementation is high. A recent analysis shows that in the NSEC, border crossing and transit fees account for 60% of the trade cost, while border crossing time is about 15% of total corridor time. 9. Capacity constraints also exist. Implementing the CBTA and developing the NSEC require the participation of various stakeholders not only central governments, but also local government agencies and private sector players. However, local government officials and local entrepreneurs, particularly those in border areas, lack sufficient awareness, knowledge, and skills in transport, trade, and investment facilitation. This has hindered the growth of trade and investment in the NSEC. 10. There are also institutional constraints. Coordination among transport, trade, and investment agencies at the central and local level is weak. Cross-border coordination at the local and border level is even weaker. Local authorities and communities need to be more involved in NSEC development. Institutional arrangements should be put in place to coordinate and sustain cross-border initiatives along the NSEC. 11. Private sector participation in NSEC development remains limited because of many factors, particularly: (i) lack of information for private sector on NSEC, CBTA, and SFA-TFI initiatives; (ii) inadequate investment in cross-border trade logistics facilities and services; (iii) poor access to financing, particularly for cross-border investments; and (iv) the absence of a forum for dialogue between the public and private sector stakeholders. These constraints must be addressed to improve the environment for cross-border trade and business development. 12. Promoting cross-border investment is critically important to transforming transport corridors into true economic corridors. However, investment cooperation along the NSEC has been poor. Few concrete initiatives with definite outputs have been implemented. The Fifteenth GMS Ministerial Meeting discussed steps to address this deficiency. The meeting identified promotion of cross-border investments and border-area investments along key GMS corridors as a priority. 13. The Third GMS Summit endorsed a comprehensive approach to integrating initiatives in the areas of transport, trade facilitation, and investment. The Fifteenth GMS Ministerial Meeting called for "quick wins". This TA is designed to address the constraints identified above by focusing on developing CBEZs at the two aforementioned important border crossing points along the NSEC. 3 III. THE TECHNICAL ASSISTANCE A. Impact and Outcome 14. The impact of this TA is the establishment and effective management of the CBEZs in the border provinces of the PRC and Viet Nam, contributing to the development of the NSEC under the GMS Economic Cooperation Program. 15. The TA outcome will be the effective functioning of PRC Viet Nam CBEZs. The key measurable results, expected by the end of 2011, include the drawing up of a master plan for and key investment plans in the Hekou Lao Kai and Pingxiang Dong Dang CBEZs, strengthened human and institutional capacity for CBEZ management in the PRC and Viet Nam, and stronger private sector participation in CBEZ development.

6 4 16. The impact and outcome of the TA will be achieved through the delivery of the following outputs: (i) establishment of the PRC Viet Nam joint committee, and subcommittees if deemed necessary, for developing and managing the Hekou Lao Kai and Pingxiang Dong Dang CBEZs; (ii) formulation of a CBEZ master plan as well as key investment plans in priority sectors; (iii) improvements in the environment for cross-border business development in the CBEZs; (iv) enhanced capacity of the PRC and Viet Nam government agencies in CBEZ development and management; (v) enhanced private sector participation and strengthened public private partnership (PPP) in the development of CBEZs; and (vi) lessons learned about CBEZ development disseminated among GMS countries and elsewhere. B. Methodology and Key Activities 17. The TA will undertake the following activities: (i) (ii) (iii) (iv) (v) organizing conferences and consultations to help the PRC and Viet Nam establish a joint committee, and subcommittees if necessary, for developing and managing the CBEZs; conducting studies and organizing workshops to help the two countries formulate a master plan for the joint development of CBEZs and key investment plans in priority sectors in a coordinated manner; conducting studies and workshops to recommend policy measures to decision makers, particularly those responsible for trade facilitation and investment promotion in the border provinces, for improving the environment for crossborder business development in the CBEZs, including streamlined cross-border procedures, enhanced access to financial services for enterprises, and timely provision of business and investment information; conducting training and capacity building activities, including workshops and study tours, to enhance the capacity of the PRC and Viet Nam government agencies, particularly those at the provincial and border levels, in developing and managing the CBEZs; and organizing public private sector dialogues and business forums to address private sector needs and develop PPP opportunities, particularly in the areas of improving trade logistics services and border crossing facilities. C. Cost and Financing 18. The TA is estimated to cost $900,000 equivalent, of which $800,000 equivalent will be financed on a grant basis by the Regional Cooperation and Integration Fund under the Regional Cooperation and Integration Financing Partnership Facility. 8 The central and provincial governments of the PRC and Viet Nam will each make in-kind contributions of about $50,000 equivalent by providing counterpart staff; office space; support for training, seminars, and conferences; and other administrative and logistical services. Details of the cost estimates and financing plan are in Appendix 2. 8 Established by ADB.

7 5 D. Implementation Arrangements 19. A total of 12 person-months of international and 13 person-months of national consultant services will be required to provide advisory and technical services under the TA project. The consultants and resource persons will be specialists in the areas of integrated transport, trade, and investment facilitation; development planning and strategy formulation; private sector and business development; and institutional and capacity building. Because the TA project will involve varied activities, consultants and resource persons will be selected and engaged by ADB as individuals based on their qualifications and experience in accordance with ADB's Guidelines on the Use of Consultants (2007, as amended from time to time). The outline terms of reference for consultants and resource persons are in Appendix 3. Office equipment will be procured in accordance with ADB's Procurement Guidelines (2007, as amended from time to time), and will be transferred to implementing agencies upon completion of the TA project. The proceeds of the TA will be disbursed in line with ADB's Technical Assistance Disbursement Handbook The TA will be implemented over 27 months, from October 2009 to December ADB will be the Executing Agency. The implementing agency in the PRC will be the Ministry of Commerce supported by the Department of Commerce in Yunnan and Guangxi. The implementing agency in Viet Nam will be the Ministry of Planning and Investment supported by the Provincial People's Committee in Lang Son and Lao Cai provinces. Other government agencies, including those responsible for transport, customs, and other border-crossing activities, will also be involved. Private sector entities in the two countries, particularly in the border provinces concerned, will be actively engaged. The Financial Sector, Public Management and Regional Cooperation Division of ADB's East Asia Department will administer and implement the TA project in close collaboration with ADB's Southeast Asia Department and the resident missions in the PRC and Viet Nam. Special attention will be paid to collaboration between this TA project and GMS corridor and border town development projects and transport projects in Yunnan, Guangxi, and northern Viet Nam that are ongoing or under preparation. Lessons learned from those projects will be applied in the implementation of this TA project. Efforts will also be made to strengthen partnership with other international organizations, particularly the United Nations Development Programme (UNDP), to ensure a coordinated approach to CBEZ development. The monitoring of implementation progress and outcome will be carried out through periodic reviews in accordance with the design and monitoring framework. 21. The TA project outputs, particularly the findings and recommendations from the key studies, will be disseminated through workshops, seminars, conferences, publications, and the media. Where appropriate, representatives of the secretariats of other regional cooperation bodies will be invited to dissemination events. IV. THE PRESIDENT'S DECISION 22. The President, acting under the authority delegated by the Board, has approved the provision of technical assistance not exceeding the equivalent of $800,000 on a grant basis for Developing Cross-Border Economic Zones between the People's Republic of China and Viet Nam, and hereby reports this action to the Board. 9 ADB Technical Assistance Disbursement Handbook. Manila.

8 6 Appendix 1 DESIGN AND MONITORING FRAMEWORK Design Summary Impact CBEZs in the border provinces of the PRC and Viet Nam will function effectively Outcome PRC Viet Nam CBEZs will be established and managed well, contributing to the development of the NSEC Performance Targets/Indicators Policy framework for CBEZ development improved by 2011 Increase in crossborder trade and investment between PRC and Viet Nam Hekou Lao Cai and Pingxiang Dong Dang CBEZs established by 2011 Human and institutional capacity in the PRC and Viet Nam for managing CBEZs enhanced by 2011 Data Sources/Reporting Mechanisms GMS regional cooperation strategy and its updates Governments' economic development strategies TA completion report GMS ministerial meeting reports and senior officials meetings reports GMS economic corridor development progress reports Governments' investment plans TA completion report Assumptions and Risks Assumptions The PRC and Viet Nam governments are committed to regional and bilateral cooperation. Assumptions Implementing agencies take a strong lead in the TA project implementation The PRC and Viet Nam governments coordinate effectively Risks Weak government capacity, particularly in border provinces, may affect the TA project implementation Outputs 1. Establishment of the PRC Viet Nam joint committee, and subcommittees if necessary, for developing and managing the CBEZs at Hekou Lao Kai and Pingxiang Dong Dang 2. Formulation of CBEZ master plan and key investment plans in priority sectors The joint committee formed by 2010 (and subcommittees if necessary by 2011), and committee meetings conducted regularly Master plan formulated by 2010, and key investment plans in priority sectors by 2011 Review missions Committee reports Government investment plans Consultant reports Perception of unequal benefit sharing may delay strategy and master plan formulation Assumptions Both the PRC and Viet Nam governments are willing to reform crossborder trade and investment regimes Regulators will gain clear understanding of CBEZs Risks The PRC and Viet Nam governments may not be able to agree on some key cross-border legal issues

9 Appendix 1 7 Design Summary 3. Improvements in the environment for cross-border business development Performance Targets/Indicators Studies on policy measures for improving business environment (including environment for small and medium enterprise development) completed by 2011 Data Sources/Reporting Mechanisms Consultant reports Review missions CBTA implementation reviews Assumptions and Risks Lack of support and capacity on part of the governments of the border provinces may adversely affect the TA project progress Cross-border procedures further streamlined in line with CBTA by Enhanced capacity for the PRC and Viet Nam government agencies with regard to CBEZ development and management At least two training programs conducted each year Course completion reports Training evaluation reports Review missions 5. Enhanced private sector participation and strengthened PPP in the development of CBEZs Dialogues and forums held on regular (at least semi-annual) basis PPP opportunities identified by 2011 Committee reports Review missions 6. Lessons learned about CBEZ development Activities with Milestones Dissemination workshops held in GMS countries CBTA implementation reviews NSEC progress reports 1.1 Consulting PRC and Viet Nam governments to obtain no-objection letters and agree on the terms of reference for consulting services and implementation approaches by March Preparing the TA project implementation plans by March Establishing a PRC Viet Nam joint committee for developing and managing CBEZs by 2010, and subcommittees if necessary by Organizing committee meetings regularly (at least twice a year) 2.3 Recruiting and monitoring the performance of consultants Inputs ADB: $800,000 (Regional Cooperation and Integration Fund under the Regional Cooperation and Integration Financing Partnership Facility) PRC central and border provincial governments: $50,000 (staff time and other in-kind

10 8 Appendix 1 Activities with Milestones 3.1 Formulating the CBEZ master plan by Formulating priority investment plans by Recruiting and monitoring the performance of consultants 4.1 Conducting studies and organizing workshops to recommend policy measures for improving the environment for cross-border business development (including improving financial services for enterprises in CBEZs) and further streamlining crossborder procedures by Recruiting and monitoring the performance of consultants Inputs contributions) Viet Nam central and border provincial governments: $50,000 (staff time and other inkind contributions) 5.1 Conducting training programs 5.2 Organizing overseas study tours 6.1 Organizing semi-annual public private sector dialogues and business forums 6.2 Identifying PPP opportunities in the CBEZs 7.1 Organizing workshops to disseminate lessons learned in the TA project 7.2 Publishing reports from key studies ADB = Asian Development Bank, CBEZ = cross-border economic zone, CBTA = Cross-Border Transport Agreement, GMS = Greater Mekong Subregion, NSEC = North South Economic Corridor, PPP = public private partnership, PRC = People's Republic of China.

11 Appendix 2 99 COST ESTIMATES AND FINANCING PLAN ($'000) Total Item Cost A. Asian Development Bank Financing a 1. Consultants a. Remuneration and Per Diem i. International Consultants ii. National Consultants b. International and Local Travel c. Translation, Reports, and Communications b Equipment c Training, Seminars, and Conferences d a. Facilitators (Interpreters and Translators) b. Training, Seminars, and Conferences Resource Persons e Miscellaneous Administration and Support Costs 6. Publications Contingencies Subtotal (A) B. Government Financing f 1. Office Accommodation and Transport Counterpart Staff, Administrative Support, and Translation 3. Others Subtotal (B) Total a Financed by Regional Cooperation and Integration Fund under the Regional Cooperation and Integration Financing Partnership Facility established by the Asian Development Bank (ADB). b Including cost of written translation of documents. c Including laptop computers, scanners, and other small office equipment. d The resources allocated for these items will be administered by Financial Sector, Public Management and Regional Cooperation Division, East Asia Department, ADB. e Resource persons will be engaged to assist in the preparation of and attend or present to the in-country consultations, sector workshops, and targeted training events. In an exceptional case where an ADB staff member acts as a resource person, travel costs will be charged to the TA only if he or she acts as a resource person. f Imputed value of staff time, use of government facilities, and other in-kind contributions by the governments of the People's Republic of China and Viet Nam. Source: Asian Development Bank estimates.

12 10 Appendix 3 OUTLINE TERMS OF REFERENCE FOR CONSULTANTS 1. A total of 12 person-months of international consultants and 13 person-months of national consultant inputs will be required to provide technical services to realize the objectives of the regional policy and advisory technical assistance (TA) project. Given that some of the activities are still being planned, flexibility will be allowed and more detailed terms of reference for specific tasks may be revised at a later stage. The consultants will report to, and be supervised by, the Asian Development Bank (ADB) task manager(s) for the TA project, who will also be responsible for the overall coordination of the project activities. The reporting requirement for international consultants engaged will include (i) an inception report that includes a work schedule, within two weeks of mobilization; (ii) a draft final report two weeks before end of contract, for review and comments by ADB and the governments; and (iii) a final report in both hard and soft copies, incorporating all comments. The final reports and the appendices if deemed necessary will be translated into national languages. A. International Consultants (12 person-months) 1. Development Economist and Regional Cooperation Specialist (5 personmonths) 2. An international development economist/regional cooperation specialist will be recruited to help formulate a master plan for and priority investment plans in the cross-border economic zones (CBEZs). The consultant must have (i) good understanding of development and regional cooperation in the Greater Mekong Subregion (GMS) countries and proven ability to capture the related strategic issues; (ii) demonstrated ability to formulate a strategy to address the identified issues; (iii) at least 15 years of working experience in development; (iv) post-graduate degrees in economics or other fields of development; (v) familiarity with the issues and institutional arrangements for economic cooperation in the GMS; and (vi) ability to work effectively with national counterparts and consultants. The consultant will undertake the following tasks: (i) (ii) (iii) (iv) (v) review the trends and institutional arrangements of regional cooperation and integration, in the context of the GMS and cooperation between the Association of Southeast Asian Nations (ASEAN) and the People's Republic of China (PRC), to analyze and cultivate a good understanding of opportunities and challenges for PRC Viet Nam cooperation, particularly at the local level and across the border; review existing reports and studies on GMS economic corridor development, GMS Cross-Border Transport Agreement (CBTA) and Strategic Framework for Action on Trade Facilitation and Investment (SFA-TFI) implementation, and identify key issues facing the North South Economic Corridor (NSEC), particularly in the PRC and Viet Nam; review the existing laws, regulations, and policies in the two countries regarding the development of special or free economic zones, identify key issues relevant to the CBEZs, and recommend measures to address these issues; review the existing economic development plans and strategies in the projectaffected provinces of the PRC and Viet Nam to identify constraints on cross-border trade and investment, particularly in the CBEZs, and recommend measures to coordinate such development plans and strategies; review the urban development planning processes in the PRC's Hekou and Pingxiang and Viet Nam's Lao Cai and Dong Dang, and identify areas where harmonization can be achieved, with a view toward improving cross-border infrastructure connectivity and facilitating cross-border trade and investment;

13 Appendix 3 11 (vi) (vii) (viii) formulate a strategy and program for establishing the Hekou Lao Cai and Pingxiang Dong Dang CBEZs that will cover key issues (including vision, goal, size and scale, and industrial layout of the CBEZs), address key social risks, and ensure harmonized approach across the border; identify priority areas for investment in the CBEZs and prepare a list of major investment projects, including projects that will improve border checkpoints and logistics facilities; define the criteria (with due attention to the need to address associated social risks) for inclusion of projects in the list; and draw up a list of domestic and foreign investors that are active and interested in the project-affected provinces, including private sector investors; and help organize workshops to disseminate the lessons learned in the TA implementation. 2. Private Sector and Business Development Specialist (4 person-months) 3. An international private sector and business development specialist will be engaged to conduct studies and recommend actions to improve the environment of cross-border business development. The consultant will (i) have a good understanding of the private sector's needs and constraints in the GMS; (ii) be familiar with the major institutional arrangements for economic cooperation in the region; (iii) have at least 10 years of experience working on trade and investment facilitation; (iv) have extensive knowledge of business development and support services; and (v) have a postgraduate degree in economics, business, law, or related fields. The consultant will perform the following tasks: (i) (ii) (iii) (iv) (v) (vi) (vii) (viii) consult with private investors and business executives, government officials, local chambers of commerce, and other partners to identify major constraints in the crossborder business and investment environment, and propose measures to address the constraints; identify opportunities and facilitation activities to promote private sector participation in CBEZ development, particularly in key projects and priority sectors; help organize public private sector dialogues and business forums, and recommend cross-border institutional arrangements that will be tailored to the needs of the private sector in the context of CBEZ development; identify specific problems in the implementation of the CBTA and SFA-TFI that are relevant to private sector participation in the development of CBEZs, and recommend solutions to these problems; identify public private partnership (PPP) opportunities in the development of the CBEZs, and help design innovative financing schemes; recommend policies and measures to improve access to financing for the private sector, especially for small and medium enterprises; design a system for the timely sharing of business- and investment-related information between the public and private sectors; and help organize workshops to disseminate the lessons learned in the TA implementation. 3. Institutional Development and Capacity Building Specialist (3 personmonths) 4. An international institutional development and capacity building specialist will be hired to conduct capacity building activities and help form the PRC Viet Nam joint committee (and subcommittees if necessary) for developing and managing the CBEZs. The consultant should

14 12 Appendix 3 have (i) at least 10 years of experience in cross-border trade and investment facilitation, (ii) a post-graduate degree in economics, business, law, or related fields, and (iii) good knowledge of the issues and institutional arrangements related to economic cooperation in the GMS, including those related to economic corridor development. The consult will perform the following tasks: (i) (ii) (iii) (iv) (v) (vi) review international best-practices in cross-border special or free economic zone development and management, and recommend those that could be adapted to the CBEZs under the TA project; review the exiting mechanisms in the PRC and Viet Nam regarding special or free economic zone management, identify gaps, and recommend solutions; help design the architecture and implementation arrangements for the PRC Viet Nam joint committee, and subcommittees if necessary, for the sustainable management of the CBEZ, including drawing up the terms of reference, institutional and membership structure, and operational modalities; assess the capacities of the PRC and Viet Nam governments, particularly at the local and border levels, with regard to cross-border trade and investment facilitation and CBEZ development, and determine the training needs in these areas; design and help organize well-targeted workshops and other training activities for the PRC and Viet Nam government agencies and other stakeholders; and prepare training materials for CBEZ management, including manuals, guidelines and procedures, and instructions. B. National Consultants (13 person-months) 5. National consultants will be recruited to assist the international consultants on various assignments by researching and compiling government policies and procedures, collecting relevant data, translating documents, and ensuring that the work produced by the international consultants meets regional and national needs. They should also have good contacts with the public and private sectors. The national consultants will be supervised by the international consultants and by ADB task managers. 1. Development Economists (8 person-months in total, with 4 person-months each for PRC and Viet Nam) 6. A PRC national consultant (4 person-months) and a Viet Nam national consultant (4 person-months) will be hired to assist the international development economist and regional cooperation specialist in preparing the CBEZ master plan and priority investment plans in the CBEZs. The consultants should have (i) good understanding of the key development issues facing their country, particularly regarding trade and economic cooperation with neighboring countries; (ii) familiarity with the issues and institutional arrangements for economic cooperation in the GMS; (iii) at least 5 years of working experience in development; (iv) university (preferably postgraduate) degrees in economics or other fields of development; and (v) good command of both spoken and written English. The PRC and Viet Nam national consultants will help the international consultant undertake the following tasks: (i) review the national policies of the PRC and Viet Nam regarding cooperation between the two countries particularly in the GMS and ASEAN+PRC contexts and analyze the opportunities and challenges surrounding cooperation between the two countries, particularly at the provincial and border levels;

15 Appendix 3 13 (ii) (iii) (iv) (v) review the existing laws, regulations, and policies in the PRC and Viet Nam regarding the development of special or free economic zones; identify key issues relevant to the CBEZs; and recommend measures to address these issues; review the existing economic development plans and strategies in the projectaffected provinces of both countries; and identify constraints on cross-border trade and investment, particularly in the CBEZs; review the urban development planning processes in the PRC's Hekou and Pingxiang and Viet Nam's Lao Cai and Dong Dang, and identify areas where crossborder harmonization can be achieved, particularly with a view toward improving infrastructure connectivity and facilitating cross-border trade and investment; and identify priority areas for investment in CBEZs and prepare a list of major investment projects; draw up a list of domestic and foreign investors that are active and interested in project-affected provinces; and formulate a strategy and program for developing the Hekou Lao Cai and Pingxiang Dong Dang CBEZs. 2. Private Sector and Business Development Specialists (5 person-months in total, with 2.5 person-months each for PRC and Viet Nam) 7. A PRC national consultant (2.5 person-months) and a Viet Nam national consultant (2.5 person-months) will be hired to assist the international private sector and business development specialist. The consultants should have (i) good understanding of the private sector's needs and constraints in the PRC and Viet Nam; (ii) at least 5 years of experience in business development and support services; (iii) good knowledge of trade and investment facilitation; (iv) a university (preferably postgraduate) degree in economics, business, law, or a related field; and (v) good command of both spoken and written English. The PRC and Viet Nam national consultants will help the international consultant undertake the following tasks: (i) (ii) (iii) (iv) (v) (vi) consult with private investors and business executives, government officials, and local chambers of commerce in the PRC and Viet Nam to identify major constraints in the cross-border business and investment environment, and propose measures to address the constraints; identify opportunities and measures to promote participation of the local private sector in the development of the CBEZs; organize public private sector dialogues and business forums, and recommend cross-border institutional arrangements tailored to the needs of the private sector in the context of CBEZ development; and help design a system for sharing businessand investment-related information between the public and private sectors; identify specific problems in the implementation of the CBTA and SFA-TFI in the PRC and Viet Nam border provinces that are relevant to private sector participation in the development of CBEZs, and recommend solutions to these problems; identify PPP opportunities in the CBEZs, and help design innovative financing schemes; and recommend measures to improve access to financing for the private sector, especially for small and medium enterprises. C. Resource Persons (international and national) 8. Resource persons may be engaged to assist in the preparation of, attend, or present to conferences, seminars, and training events organized under this TA project. In exceptional cases, ADB staff members with special knowledge and experience related to the TA project may be engaged as resource persons.