Implementation of a Customs Transit System in the Greater Mekong Subregion: The role of the private sector

Abstract: The Greater Mekong Subregion Program is a multi-billion dollar development project, launched with the assistance of the Asian Development Bank (ADB) in 1992. It brings together 6 states of the Mekong river basin with a common goal of growth and prosperity through economic co-operation. The development of economic corridors is a major trade and transport facilitation (TTF) initiative under the GMS Program. This project requires both the development of physical infrastructure and supporting legal framework. The most important legal instrument within this framework is currently the Cross Border Transport Agreement (CBTA). The CBTA came into force in 2003, but as of December 2010 full implementation was still to materialize. One of the major implementation constraints is the inadequate participation of the private sector. This paper focuses on the participation of transport associations in the Customs Transit System (CTS), an essential TTF component of the CBTA, with the aim to learn how the private sector can contribute to the implementation of the CBTA. The participation of transport associations has been examined and assessed in their roles as issuing/guaranteeing organizations and representatives of the transport industry. The paper concludes with an explanation for the limited effectiveness of private stakeholder participation. These reasons include the widely diverging organizational capabilities of the associations, the lack of a competitive procurement process, significant financial risk, inadequate participation, as well as a lacking sense ownership, economic incentive and trust. The associations are currently not actively working as a united front to find solutions to the implementation difficulties of the CTS. Due to the above factors, a more active participation of the transport associations does not seem to be a viable solution to the implementation of the CTS. Interestingly, this paper also finds that inadequate participation by the private sector is not one of the root causes of non-implementation. This paper aspires to demonstrate that the effective and timely implementation of a multilateral agreement is contingent on inclusive consultation, sufficient participation and capacity-building, both during and well prior to the implementation stage. This would help to ensure that the private, as well as other stakeholders do not find themselves unable and/or unwilling to actively work for the implementation of the agreement.