 Chapter 6
Wide-Ranging Transport Infrastructure Development within
the ASEAN Region― Multilayered development, high hopes for economic
spillover effectIkumo Isono
Research Fellow, Economic Integration Studies Group, Inter-disciplinary Studies
Center, Institute of Developing Economies【Key Points】
 The original ASEAN Member States and Vietnam have achieved highcompetitiveness through the development of infrastructure from major
economic cities to gateway ports or gateway airports. Meanwhile, Cambodia,
Laos, Myanmar, and rural areas of the original ASEAN Member States still
have problems with vulnerable infrastructure.
 The development of infrastructure is carried out on multiple levels: theASEAN level, subregional, bilateral, and country-by-country. Among theASEAN Member States, Indonesia and Vietnam have many projects planned.
Among these projects, Vietnam has a relatively high number of projects thathave progressed to more than the “construction stage.” Companies have also
started to use land transportation in the Greater Mekong Subregion.
 According to the geographical simulation analysis, if transportation
infrastructure developed in the ASEAN region, not only would it bring positive
spillover effect to the region, but also to outside the region such as Japan,
China, South Korea, and India. The transportation routes within the ASEAN
region that are expected to have the greatest effects are
Thailand-Cambodia-Vietnam and Thailand-Myanmar.

Japan Center for Economic Research, 2014 “Asia Research” Report 81

Progress on Transport Infrastructure Development by Country
200
under study (international)
FSステージ以下（国際）180

under study (icomestic)FSステージ以下（国内）160

建設ステージ以上（国際）under construction(international)

140

建設ステージ以上（国内）
under construction(domestic)

120
100
80
60
40
20
0

Note: International projects that connect multiple countries are counted on a country-basis as well.
Source: Created by the author based on ERIA Comprehensive Asia Development Plan Follow-Up Database.

1. Foreword
ASEAN is attracting a lot of attention as a player in the “workshop of the world”
and as a market that has been rapidly growing in recent years. Particularly in the Mekong
Subregion, there have been many movements that could change the relationship ofeconomic dependency. These movements include the establishment of the ASEAN
Economic Community by 2015, the Thailand +1 strategy, and the political reforms in
Myanmar. This chapter will examine the current situation of the transportation
infrastructure, changes that could be seen in 2015 or post-2015, and the impacts of thedevelopment of the region-wide transportation infrastructure.
Vietnam, Indonesia, and the Philippines (sometimes referred to as the VIP
countries) still have serious problems with infrastructure in rural areas. The picture in
figure 1 vividly illustrates this problem. The location shown in the picture is the mostdifficult point to travel between Myawaddy and Kawkareik (both are in Myanmar) on the
East-West Economic Corridor. The Myawaddy-Kawkareik road is part of a major landtransportation route that connects Bangkok and Yangon and is used to transport household
goods from the Thailand side to the Myanmar side. Although it is a major route, themountainous region between Myawaddy and Kawkareik has vehicles run each way on
alternate days, East from West on one day and West from East the next day. Since many of
Myanmar’s trucks and passenger vehicles are old, a single vehicle breakdown could block
the road for all cars traveling between this section. This part of the road has been abottleneck, interfering with the smooth transportation between Bangkok and Yangon.
82 Japan Center for Economic Research “Asia Research” ReportFigure 1: Myawaddy-Kawkareik Section on the East-West Economic Corridor(Myanmar, 2013)

Source: Photographed by the author.

2. The development of ASEAN-wide infrastructure
2.1 Multilevel development of infrastructure
A characteristic of the development of ASEAN’s infrastructure is that there havebeen projects on multiple levels, such as projects that were intra-regional, subregional,
bilateral, and country-by-country. Intra-regional refers to the development of soft and hard
infrastructure led by ASEAN. Subregional refers to initiatives that are smaller than ASEAN.
For instance, the Greater Mekong Subregion (GMS), the Indonesia-Malaysia-Thailand
Growth Triangle (IMT-GT), and the Brunei Darussalam-Indonesia-Malaysia-Philippines
East ASEAN Growth Area (BIMP-EAGA) are all subregional projects. Bilateral refers toprojects between countries that share a land border, mainly Thailand-Laos andLaos-Vietnam.
The Comprehensive Asia Development Plan (CADP) formulated by the Economic
Research Institute for ASEAN and East Asia (ERIA) in 2010 is one example of an attempt
to cover these projects in a comprehensive and strategic manner. The CADP listed 695
projects for ASEAN and its surrounding area. Furthermore, the CADP categorized projects
into three categories: Top Priority, Priority, and Normal according to the level ofimportance and urgency, and called to the ASEAN Member States and to the donors for theneed to strategically prioritize the development of infrastructure.

Chapter 6 | Wide Transport Infrastructure Development within the ASEAN Region 83

When comparing the number of domestic projects that are completed within the
country and the number of international projects that connect multiple countries, thenumber of domestic projects is much larger. When planning new projects on an ASEAN
level or a subregional level, it is essential to take into consideration the fact that projects
that connect places within a country are still very important to many of the Member States.
2.2 ASEAN projects
On the ASEAN level, ASEAN Member States have designated transport projects1
that are laid out in various plans such as the ASEAN Economic Community Blueprint, theMaster Plan on ASEAN Connectivity (MPAC) that was endorsed in 2010, and the ASEAN
Strategic Transport Plan (ASTP).
In terms of arterial roads, the ASEAN ministers designated projects for the
ASEAN Highway and the transit transport routes. Specifically, the completion of themissing links and the upgrade of low-standard roads of the ASEAN Highway Network islisted as the first priority project in the MPAC.
With regard to the Singapore-Kunming Rail Link, the MPAC states that theconstruction of the missing links should be completed by 2020. In terms of hardtransportation infrastructure, MPAC includes the study on the roll-on/roll-off (RoRo)shipping network and although JICA has completed the feasibility study, the actual use of
the RoRo network is not included in the goals by 2015.
In terms of soft infrastructure, the priority projects of the MPAC are the full
implementation of the Member States’ respective National Single Windows (NSWs), thedevelopment and implementation of mutual recognition arrangements (MRAs), theestablishment of common rules for standards and conformity assessment procedures,phased reduction of investment impediments, and the operationalization of the ASEAN
Agreements on transport facilitation.
An important point here is that even in projects such as arterial roads or theSingapore-Kunming Rail Link, the individual section of the domestic hard infrastructure
would be a project that each country is responsible for and the section that connects twocountries could also be counted as a bilateral project. For instance, the completion of themissing links and the upgrade of the low standard roads of the ASEAN Highway Network
listed in the MPAC are mostly located in Myanmar and Laos, which reflects the capacity
gap between countries.
There are more benefits to ASEAN integration than just the completion of hard
infrastructure. The implementation of standardized mutual recognition, common rules for1

A comprehensive review by Kasuga (2013) is available in Japanese.

84 Japan Center for Economic Research “Asia Research” Reportstandards, and the ASEAN Agreements on transport facilitation (specifically, the ASEAN
Framework Agreement on the Facilitation of Goods in Transit (AFAFGIT), which connects
more than three countries) are the real benefits. However, progress on the development ofsoft infrastructure has generally been slow.
2.3 Subregional projects
Subregions such as the GMS, IMT-GT, and the BIMP-EAGA are also drawing andpromoting various projects.
In the GMS, an economic corridor is being planned and the GMS Cross-Border
Transport Facilitation Agreement (CBTA) is also being promoted. The three economic
corridors – the East-West Economic Corridor, the North-South Economic Corridor, and theSouthern Economic Corridor – are established as names. For example, the Second
Thai-Lao Friendship Bridge over the Mekong River was constructed with high priority
with the help of JICA at the end of 2006 in the East-West Economic Corridor. Anotherdeliverable in the GMS CBTA is to improve the implementation of a single-stop inspection
mechanism, which allows border control authorities of two countries to jointly conduct
one-stop inspections at inbound checkpoints. This will allow cargo trucks travelingbetween three countries to group the rules, export procedures of the export country, and theimports procedure of the import country into a single inspection. Parts of the single-stop
inspection mechanism are already being carried out. As stated in Umezaki (2014), theEast-West Economic Corridor has been evaluated as a success.
In the BIMP-EAGA, air-transport liberalization was implemented before ASEAN
implemented those measures. This generated many air routes that connect local cities,
particularly on the Borneo Island (Kalimantan).
2.4 Bilateral projects
ASEAN also carries out a number of bilateral projects. One example is the Third
Thai-Lao Friendship Bridge over the Mekong River that links Nakhon Phanom Province inThailand with Thakhek in Laos. In accordance with an agreement between the Thaigovernment and the Lao government, the project was funded unilaterally by the Thaigovernment and Italian-Thai Development PCL, a general contracting company inThailand, was contracted to carry out the construction of the bridge. The bridge wascompleted in 2011. Meanwhile, the construction of the Fourth Thai-Lao Friendship Bridgethat connects the Chiang Khong District in Thailand with Ban Houayxay in Laos was
jointly funded by Thailand and China and the construction was also carried out by Thai andChinese companies. The bridge was completed in 2013.
Chapter 6 | Wide Transport Infrastructure Development within the ASEAN Region 85

Currently, there are many bilateral projects in Myanmar. One such project isfunded by the Thai government to build a bypass that secures two lanes in the section
between Myawaddy and Kawkareik. Another project, which is supported by the Thaigovernment, is to construct a new bridge at the border to link Myawaddy and Mae Sot
District in Thailand, and to allow large trucks to pass. The restoring of the bridge that links
the section between the Moreh/Tamu border to Kalewa in Myanmar on the Asian Highway
or the ASEAN Highway 1 is planned to be financed by India.
2.5 Projects by countries
Many of the projects are domestic projects. In Myanmar, the development of an
expressway between Yangon and Mandalay is merely the beginning. After the transition
from military rule to civilian rule, Myanmar has been restoring main arterial roads andconstructing overpasses within the city limits of Yangon at a rapid pace.
Road maintenance as means to relieve traffic jams in big cities is a particularlypressing issue for each country. Indonesia announced the Master Plan for Acceleration andExpansion of Indonesia’s Economic Development (MP3EI) in 2011. An important part ofthis plan is to identify and develop six domestic economic corridors in a comprehensive
and strategic manner. The Metropolitan Priority Area (MPA) for Investment and Industry in
the Greater Jakarta Area was also established. The objectives of this plan are theconstruction of the Jakarta Mass Rapid Transit (MRT) and the new Cilamaya Port.
According to the simulation analysis by the author (Isono & Kumagai, 2012), theconstruction of the new Cilamaya Port would bring a huge economic benefit to Indonesia
by relieving traffic jams on the Jakarta-Cikampek Toll Road. The current situation forces
people to travel through the center of Jakarta to go to Tanjung Priok Port from the industrial
estates concentrated along the Jakarta-Cikampek Toll Road. Therefore, constructing thenew port east of the industrial estates would not only would it relieve traffic jams on the
Jakarta-Cikampek Toll Road but also relieve further congestion in Jakarta city to a certain
extent. According to the simulation, if the construction of both the Cilamaya Port and thebypass (to the Tanjung Priok Port) of the Jakarta-Cikampek Toll Road were to be pushed
back from 2020 to 2030, it would cause an average loss of $8.57 billion annually to
Indonesia’s economy.
2.6 Impact of the development of infrastructure
What kind of impact would the infrastructure development, particularly the
infrastructure development that links two countries, have? The trade value by trade acrossland borders that links Thailand and Laos shows that from 2003 to 2013, trade across land
86 Japan Center for Economic Research “Asia Research” Reportborders drastically increased. In general, exports from Thailand to Laos have been growing
about three times more compared to imports for a period of time; however, imports haverecorded a significant growth as well.
The borders used for exports and imports vary. For instance, there are two routes
used for trade from Thailand to Laos. One route is from Nong Khai to Vientiane via theFirst Mekong Friendship Bridge, and the second route is from Mukdahan to Savannakhet
via the Second Mekong Friendship Bridge in the East-West Economic Corridor. Meanwhile,
the primary route used for trade from Laos to Thailand is the route from Savannakhet to
Mukdahan using the Second Mekong Friendship Bridge. One reason for this is that thedemand for Thai products is extremely high in Vientiane, a huge consuming region.
Therefore, the route from Nong Khai to Vientiane is mainly for the flow of Thai products.
Another reason why the Second Mekong Friendship Bridge is used more is because thistrade value includes trade in the East-West Economic Corridor, such as trade from Thailand
to Vietnam or China, or trade from Vietnam or China to Thailand. Therefore, the Second
Mekong Friendship Bridge between Mukdahan and Savannakhet is used for thiscommerce.
In terms of exports, trade via Mukdahan saw an increase in 2008. They were hit by
the Global Financial Crisis in 2009, but they also have seen a rapid increase since 2010.
Meanwhile, imports already resulted in a huge growth since 2006. It is likely that this isdue to the completion of the Second Mekong Friendship Bridge that opened in 2006.
3. New movements to use infrastructure
3.1 Use of Thailand +1 and Mekong Economic Corridor
In recent years, there have been movements for Thailand +1 – a strategy to movethe labor intensive production process from Thailand to a branch plant of neighboring
countries that have lower wages, and then return the completed parts to Thailand. In orderfor this type of strategy to be viable, there needs to be a relatively big wage difference,
sufficiently low service link costs (including the transportation cost and the information
costs of managing the transportation and the production processes at the branch plant), andno free flow of laborers between countries (ERIA 2010).
Figure 2 shows specific examples of operations that are carried out in the transportroute with Mekong region’s Bangkok in the center. Black dotted lines indicate borders.
The first example is the route from Bangkok to Hanoi via the Second Mekong
Friendship Bridge/East-West Economic Corridor. Compared to the sea transport route thatis currently dominant, this land transport route is three to four times more expensive in cost,
Chapter 6 | Wide Transport Infrastructure Development within the ASEAN Region 87

but the lead time is reduced to less than half. Therefore, it is attracting attention as analternative route that is faster than sea transport and cheaper than air transport. In this firstexample, a Thai container truck departs from Bangkok, crosses the Thai/Laos Border, andarrives in Savannakhet. At a container terminal in Savannakhet, the container istransshipped to a Vietnamese container truck that came from Vietnam. The Vietnamesecontainer truck will cross the Dansavan/Lao Bao border and finally arrive in Hanoi.
The second example is the route from Bangkok to Ho Chi Minh City. Similar to
the first example, a Thai container truck crosses the Aranyaprathet/Poipet border and at thecontainer terminal in Poipet, the container is transshipped to a container truck from
Cambodia. The Cambodian container truck then crosses the river on a ship in Nak Loeung.
At a container terminal in Bavet, the container is transshipped to a Vietnamese container
truck. This Vietnamese container truck crosses the Bavet/Moc Bai border and arrives in Ho
Chi Minh City.
The third example concerns the transport of household goods from Bangkok to
Yangon. A Thai container truck that departed from Bangkok transships onto a different Thaisix-wheel truck on the road in Mae Sot before crossing the border. This six-wheel truck
travels on the bridge that crosses the border of Mae Sot and Myawaddy and at a container
terminal in Myawaddy, the container is transshipped to a six-wheel truck from Myanmar.
This six-wheel truck from Myanmar travels to Yangon.
Why are there transport changes in these routes? One reason is that certain
vehicles cannot travel in some areas. For instance, in the first example, Thai vehicles cantravel to Dong Ha in Vietnam,2 but cannot travel to Hanoi under the CBTA. On the other
hand, Vietnamese vehicles traveling from Hanoi can only travel to Khon Kaen in Thailand.
Because of this, as long as Thai and Vietnamese vehicles are used, containers need to betransshipped at some point. As previously mentioned, the Mae Sot/Myawaddy border has abridge that cannot physically allow the passing of large vehicles due to the problem with
the integrity of the bridge. Therefore, containers need to be transshipped onto a smaller
six-wheel truck. The second reason for transport changes is the difference between rightand left-hand traffic. Rather than having a Thai car that has the steering wheel on the rightside drive in Laos, where traffic drives on the right-hand side, it is more convenient for aVietnamese car that has the steering wheel on the left to drive in Laos. The third reason isthat countries decide not to allow cars from other countries to be driven in order to avoid
various operational troubles, even if it is institutionally possible.

2

In reality, Thai vehicles can travel to Da Nang, but on the Bangkok-Hanoi route, it is up to Dong Ha.

88 Japan Center for Economic Research “Asia Research” ReportFigure 2: Current Situation of Cross-Border Transport[Bangkok-Laos-Hanoi]
MukdahanLao Bao

Moc BaiCambodia customs Container

Vietnam customs

Hanoi

Vietnam customs

Bavet

Container
terminal

Laos customs

Laos customs

Thailand customs

BangkokThailand’s
container truck

DansavanSavannakhet

Vietnam’scontainer truck

Containers aretransshipped[Bangkok-Cambodia-Ho Chi Minh City]
Aranyaprathet Poipet

Vietnam’scontainer truck

Ho Chi Minh City

terminal

Cambodia’s
container
truck

Container

Cambodia customs terminal

Thailand customs

BangkokThailand’s
container truck

Containers aretransshipped

Containers aretransshipped[Yangon-Bangkok]
Myawaddy trade zone

Transshipment

BangkokThailand’s six‐wheel
truck

Mae Sot

Thailand customs

terminal

Myanmar customs Container

YangonMyanmar’s
six‐wheel truck

Myawaddy

Thailand’s
container truck

Transshipment on
the road

Source: Created by author using sources announced by the Nippon Express Company at the JICA Seminar inJune 2014.

Chapter 6 | Wide Transport Infrastructure Development within the ASEAN Region 89

What kind of improvements could be made with regard to the examples listed infigure 2?
First, Lao vehicles can run on all sections from Bangkok to Hanoi; therefore, if
Lao vehicles are used, containers do not have to be transshipped all the way from Bangkok
to Hanoi. In reality, there are logistics providers who are working on transport between thethree countries using Lao vehicles. Furthermore, in 2013, since the range of the CBTA,
which covers the East-West Economic Corridor, was agreed to be expanded from
Bangkok’s Laem Chabang Port to Hanoi’s Haiphong Port, the use of these regions will also
be anticipated.
There are also cases in Cambodia in which Thai vehicles travel all the way from
Bangkok to Phnom Penh. Once the transport operations in Cambodia move smoothly, it
would be possible to transship a container from a Thai vehicle to a Vietnamese vehicle in
Cambodia and decrease one time of transshipping from figure 2.
The section between Bangkok and Yangon can be improved immensely. If the newbridge between Mae Sot and Myawaddy opens, then there is no need to transshipcontainers on the road of Mae Sot. Additionally, if the bypass between Myawaddy and
Kawkareik is completed, the section between Myawaddy and Yangon will also be available
for container trucks.
With regard to the connection between transport facilitation and Thailand +1, Thaivehicles already travel directly to the plants in Vientiane and Savannakhet in Laos. Similarcases can be seen in Phnom Penh. In these cities, people will easily be able to engage incommerce due to border facilitation under the CBTA in the East-West Economic Corridor
and the Southern Economic Corridor.
In Myanmar, Thai vehicles can travel to Myawaddy, which is in the same
East-West Economic Corridor. But since Burmese people can move relatively easily from
Myawaddy to Thailand, wages are pulled toward Mae Sot in Thailand. Because of this,wages are high in Myawaddy compared to other cities in Myanmar. This has led investors
to think that there is no reason to build plants in Myawaddy. Meanwhile, some investors
and experts consider Hpa-An, a city located away from the Myawaddy- Kawkareik section,
to be promising. This is because wages in Hpa-An – which is over the mountains are not as
rapidly rising as they are in Myawaddy. It is necessary for a few institutional changes tohappen for commerce to flow smoothly. For instance, the new bridge between Mae Sot andMyawaddy needs to open, the bypass between Myawaddy and Kawkareik needs to becompleted, and Thai trucks should be able to directly travel to Hpa-An.

90 Japan Center for Economic Research “Asia Research” Report4. Geographical simulation analysis
4.1 What is a geographical simulation model?
This section will examine how the development of transport infrastructure in
ASEAN will make an impact on each ASEAN Member State using the geographicalsimulation model (GSM). The GSM is one of the spatial computable general equilibrium
models that are continuing to be vigorously developed by leaders in international trade,
regional science, and urban economics. The GSM can graphically show how industries
cluster and disperse, and how economic activities change because of the development of
infrastructure.
The GSM has its unique economic model, program, and data set and can givetheoretical underpinnings to the decisions in the selection of important infrastructure,prioritization of projects, and the selection of combinations in the CADP. Moreover, theGSM is used in policy recommendation documents such as the MPAC, the ASEAN
Strategic Transport Plan (ASTP), the Indonesia Economic Development Corridor (IEDC),
and the Myanmar Comprehensive Development Vision (MCDV), which all have the same
framework as the CADP.
A significant characteristic of the GSM is that it examines economic development
on a subnational level, smaller than a country level. This allows economic effects of road
construction, border facilitation, FTAs, and a combination of the above to be analyzed
using a single framework. In the simulation model, each company takes into consideration
monetary cost and time cost, and selects a mode of transportation such as trucks, ships, airtransport, railway, or a combination of modes. In addition to physical infrastructure, theGSM has tariff data and estimates policy and cultural barriers. Policy and cultural barriers
cover everything from non-tariff barriers to preferences on food. Companies and people
move to regions with higher profits or higher indirect utility from their livelihood anddifferent scenarios produce different industrial distribution.
In the simulation, first, the scenario in which development only partially occurs isused as a baseline. Then, a scenario with development is used. The results of these twosimulations are used to calculate the difference in for instance, the GDP (gross domestic
product) or the GRDP (gross regional domestic product), which indicate the economic
effects.
4.2 Economic effects of improving ASEAN connectivity
In this section, the results of the economic effect analysis of the improvement of
ASEAN connectivity will be introduced. The results were based on joint research carried
Chapter 6 | Wide Transport Infrastructure Development within the ASEAN Region 91

out by the GSM team at the IDE (including the author of this paper) and the Thammasat
University in Thailand. This project discusses what kind of impact the AEC would have on
the economies of Thailand and ASEAN countries (and particularly on industrial relocation).
This project simulated not only the impact that the development of transportation
infrastructure would have, but also the impact that the AEC measures in general would
have on ASEAN.
In the baseline scenario, it assumes that the following measures would becompleted by 2015: the reduction and elimination of tariffs in the AEC; the Third and the
Fourth Mekong Friendship Bridge (which have already been completed); road maintenancein Laos; road maintenance in Myanmar including the Myawaddy-Kawkareik section; theNeak Loeung Bridge over the Mekong River, which is currently being built; and theconstruction of the Friendship Bridge that connects Pakxan in Laos and Thailand.
The development scenario is noted in the footnote.3 Here, major infrastructure3[Thailand]
 NSW completed in 2020.
 Section between Aranyaprathet and Sisophon in Cambodia on the Singapore-Kunming Rail Link
completed in 2020.
 Congestion worsens at borders, major ports, and airports along with the increase in traffic in 2020.
Additional expansion of infrastructure in 2025, five years after, eases congestion.
 The following items will be implemented in 2025.
Road maintenance from Kanchanaburi to Dawei in Myanmar.
Road maintenance from Prachuap Khiri Khan to the Myanmar side.
Commencement of RoRo route to Phuket and Belawan in Indonesia.
Completion of the Pak Bara Port.
Completion of the State Railway of Thailand.

[Indonesia, the Philippines, Vietnam, and Brunei] Commencement of the RoRo route between General Santos (the Philippines) and Bitung (Indonesia).
 Congestion worsens at borders, major ports, and airports along with the increase in traffic in 2020.
Additional expansion of infrastructure in 2025, five years after, eases congestion.
 Completion of NSWs in 2025 (2020 for Brunei).
 Commencement of the RoRo route between Zamboanga (the Philippines) and Muara (Brunei), Johor(Malaysia) and Sintete (Indonesia), Tawau (Malaysia) and Tarakan (Indonesia), Dumai (Indonesia) and
Malaka (Malaysia), and Belawan (Indonesia) and Penang (Malaysia).
[Singapore and Malaysia]
 Completion of the Kuala Lumpur-Singapore High Speed Rail in 2025.
(It is assumed that additional infrastructure expansion meets the increase in demand; therefore, there is no
assumption that congestion will worsen)[Cambodia, Laos, and Myanmar] Additional reduction of non-tariff barriers from 2015.
 Technological improvement in Phnom Peh and Sihanoukville due to the SEZ in Phnom Peh andSihanoukville in 2015.
 Technological improvements in Vientiane and Savannakhet due to the SEZ in Vientiane andSavannakhet.
 Congestion worsens at borders, major ports, and airports along with the increase in traffic in 2020.
Additional expansion of infrastructure in 2025, five years after, eases congestion.
 Technological improvement in Yangon and Mandalay due to the SEZ in Yangon and Mandalay in

92 Japan Center for Economic Research “Asia Research” Reportprojects of the ASEAN Member States and the expansion of major ports and airports of theASEAN countries are taken into consideration aside from the projects listed in the MPAC.
Figure 3 shows the economic effects of the development scenario. In this figure,an index called the impact density is used. Impact density is calculated by the value of theeconomic effect of each region divided by the area of each region. By using this index, it ispossible to compare regions or countries with a lot of economic effect. The regions that are
darker have a high positive economic effect, while regions with hashed lines result in anegative economic effect. The darkest region will have an economic effect that is more than$100,000 per 1 square km. The negative economic effect here means that the GRDP in thedevelopment scenario is lower than the GRDP in the baseline of 2030. Therefore, it does
not mean that the regions would have a negative economic growth from 2014 to 2030.
Figure 3: Economic Effects from the Improvement of ASEAN Connectivity (2030,
Impact Density)

Source: Result of the simulation calculation by
IDE‐GSM.




2015.
Completion of NSWs in 2025.
Section between Phnom Peh and Ho Chi Minh City on the Singapore-Kunming Rail Link completed in
2025.

Chapter 6 | Wide Transport Infrastructure Development within the ASEAN Region 93

Impacts on ASEAN by country show that positive economic effect will beconcentrated in Bangkok and the surrounding areas, especially in industrial estates
including Chonburi and Rayong in Thailand. Vientiane in Laos will also see an extremely
positive economic effect. In Cambodia, in addition to Phnom Penh and its surrounding area,
Sihanoukville, an entry port, will also have a concentrated positive economic effect. In
Vietnam, positive economic effects will concentrate in the industrial estates mainly around
Ho Chi Minh City. In Myanmar, two major cities, Yangon and Mandalay, will see positive
economic effects. In Malaysia, economic effects will be positive in Kuala Lumpur (and its
surrounding areas), Penang, and along the high speed rail that goes to Singapore. In thePhilippines, only the Metropolitan Manila area will see a high positive economic effect. In
Indonesia, not only Jakarta and its surrounding areas, but also many areas such as Riau andManado (Bitung) (which are connected by the RoRo) will have concentrated positive
economic effects.
Economic effects are not only limited to ASEAN Member States. For instance, inJapan, prefectures in the Tokaido corridor such as Tokyo, Saitama, Kanagawa, Aichi, andOsaka will have high economic effects. In the development scenario, Japan would not
develop infrastructure or facilitate trade, but the simulation results imply that through tradewith the ASEAN Member States and through the economic growth of the ASEAN Member
States, positive economic effects would spillover. This coincides with the idea of
integrating ASEAN’s economic growth into Japan. Similarly, positive economic effects will
be seen with large cities and industrial areas in the center in South Korea, China, and India.
Figure 4 shows the traffic volume in the development scenario. This figure showschanges in traffic volume between the baseline traffic volume and the traffic volume in thedevelopment scenario between each land section. Here, the estimate is that a huge growth
could be seen in the Mekong region. For instance, the route from the border of Thailand to
Singapore via Malaysia, the radial route with Bangkok in the center, the route that goes toChina on the North-South Economic Corridor, and the routes that link Thailand andVietnam such as the Laos National Route 9, 12, and 8 could all see growth.

94 Japan Center for Economic Research “Asia Research” ReportFigure 4: Change in Traffic Volume due to the Improvement of ASEAN Connectivity

Lastly, with regard to the assumptions of the simulation: the development scenario
assumes that the congestion around borders, major ports, and airports will worsen by 2020,
but that congestion in those areas will improve by 2050. This is because the simulation
assumes that the efforts made by the individual countries and donors would ease congestion
over time. If these conditions are not met and congestion worsens, positive economic
outcomes will not be achieved. At that point, a new plan and strong leadership in policy
will be required to swiftly develop urgent projects.

Chapter 6 | Wide Transport Infrastructure Development within the ASEAN Region 95

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