Post-Pandemic Recovery Cooperation in Lancang-Mekong Sub-region: Issues and Solutions

Good afternoon everybody,

I am Ms. Aye Mar Way, Researcher at Myanmar Institute of Strategic and International Studies. I feel grateful to participate in this presentation of GCMS. My presentation’s title is “Post-Pandemic Recovery Cooperation in Lancang-Mekong Sub-region: Issues and Solutions”

As everybody knows, most of the world’s countries have suffered severe setbacks due to the outbreak of Covid 19 pandemic. The countries of Lancang-Mekong Sub-region also have to face severe challenges on the well-being and safety of all our peoples, restraining the socio-economic development. Thus, these countries have also been actively exploring the implementation of socio-economic recovery schemes during and after the pandemic, through joint efforts and intensive cooperation.

The 6th Mekong-Lancang Cooperation Foreign Ministers’ Meeting was held under the theme “Solidary against the COVID -19, Joint Efforts for Post-Pandemic Development”. Although the theme of the 7th Mekong-Lancang Cooperation Foreign Ministers’ Meeting was “Solidarity for Peace and Prosperity”, the meeting included the need for the six member countries to work closely together to help the subregion to rebuild better, greener and smarter in the post-COVID-19 era.

Here, I would like to talk a little about the framework of Lancang-Mekong Cooperation (LMC). Since its inception in 2016, the LMC has been continuously improving and yielded fruitful results. Soon after its establishment, a “3+5” cooperation framework was established. Based on the “3+5” framework, the LMC actively expanded into new cooperation fields and upgrades “3+5” into “3+5+X” during the 2nd LMC Leaders’ Meeting.

The “3+5+X” mechanism of cooperation refers to

The three cooperation pillars of political and security issues, economic and sustainable development and cultural and people-to-people exchanges;

The five key priority areas of regional connectivity, production capacity (Industrial Cooperation), cross-border economic cooperation, water resources management and agriculture and poverty reduction; as well as cooperation in broader areas such as the digital economy, environmental protection, customs and youth. Six joint working groups have been established under the LMC mechanism. By this way, the countries of Lancang-Mekong Sub-region have been cooperating to work together for the development of Sub-region.

1. Major Impacts on MLC countries due to Covid-19 Pandemic Outbreak

The pandemic caused huge socio-economic impacts to the MLC countries.

As of January 13, 2023, a total of 28,096,616 people had contracted the disease and 133,834 died in MLC countries.

The economies of the MLC countries have been severely affected. Due to COVID-19-related concerns, the pandemic has caused difficulties in personnel and goods flows across borders, serious disruptions in regional industrial and supply chains, the surge of commodity prices, and the decrease in global demand. These impacts led huge shocks to national economies of the MLC countries. GDP growth estimates of some MLC countries have been downgraded repeatedly.

Social risks in sub-regional countries have increased. Across the subregion, approximately seven million people became unemployed by mid-2020.

More than 8 million people have been thrust below the poverty line.

Over 340,000 migrant workers have been forced to return home. The gap between the rich and poor is further widened.

In the tourism sector, international arrivals fell by about 80% across the subregion in 2020.

2. Opportunities of Subregion Countries due to Pandemic Outbreak

The pandemic caused huge socio-economic impacts to the MLC countries. However, it also carried some opportunities for that countries.

First-

The economic integration process of the MLC countries has also moved forward. In the first half of 2021, Thailand’s FDI into China reached US$ 31.66 million, ranking third among ASEAN countries. Vietnam’s FDI into China increased by 130% on a year-over-year basis, marking the biggest increase among ASEAN countries.

From January to November 2021, among all countries along the BRI routes, Thailand was the third largest recipient of China’s FDI, while Laos and Vietnam ranked the fourth and sixth respectively.

Currently, China is Thailand’s largest source of foreign direct investment (FDI) applications.

Despite the pandemic’s impact, the trade volume between China and the Mekong countries still increased the trend and reached $323 billion in 2020, $398 billion in 2021, an increase of 23 percent year on year. In the first five months of 2022, the trade volume grew 16 percent.

Second –

Digital economy has become new areas of growth. Digital economy is a key area for MLC with huge potential. The pandemic has accelerated the application of digital services in the MLC countries, such as e-commerce, digital finance and digital government, and the number of Internet users has continued to increase.

3. Greater Mekong Subregion Covid-19 Respond & Recovery Plan (2021-2023)

Since the pandemic caused huge socio-economic impacts to the MLC countries, Greater Mekong Subregion Covid-19 Respond & Recovery Plan (2021-2023) was adopted with three pillars in September 2021. These are –

Pillar 1 – To protect lives with a One Health approach to ensure the health not only of people but also of animals, crops and food products, and urban environments.

Pillar 2 – To protect the vulnerable and poor by offering them opportunities in border areas and GMS economic corridors, as well as supporting the safe and orderly movement of labor.

Pillar 3 – To ensure that borders remain open to (i) accelerate inclusive, green, and resilient economic activity; (ii) facilitate transport and trade; (iii) rebuild agriculture; and (iv) generate safe and seamless tourism opportunities.

The sub-region countries are now developing recovery plans (2021–2023) aimed at rebuilding their local economies and renovating regional and global value chains.

4. Main Areas of Cooperation for the Post-Pandemic Recovery

For the post-pandemic recovery in the sub-region, the following are top priority areas for the MLC countries that would be deepening cooperation, according to the Final Draft prepared by GCMS China and Myanmar Centers titled “Towards an Inclusive and Sustainable Post-Pandemic Recovery in the Mekong-Lancang Subregion”

1. Strengthen cooperation on pandemic control and public health to better protect people’s lives

– Jointly carry out anti-epidemic and vaccine cooperation to strengthen pandemic preparedness and prevention, long-term responses, and cross-cutting cooperation.

– Accelerating the establishment of vaccine distribution centers in selected Mekong countries.

– Strengthen capacity building in public health.

– Promote cooperation on traditional medicine ™.

2. Deepen industrial cooperation and create more integrated and resilient subregional industrial and supply chains

– Improve the layout of industrial parks in the Mekong-Lancang countries.

– Enhance cooperation in subregional industrial and supply chains.

– Deepen cooperation in agriculture and poverty reduction.

3. Enhance connectivity and build a modern, high-quality and sustainable network of infrastructure across the subregion

– Build a multi-dimensional transportation system.

– Promote energy connectivity.

– Enhance cooperation on digital infrastructure building

4. Enhance cross-border economic cooperation, and further promote trade and investment facilitation and liberalization

– Establish and better develop cross-border economic zones.

– Improve trade and investment facilitation.

– Gradually resume and expand tourism cooperation.

5. Expand cooperation on green and sustainable development to accelerate implementation of the UN 2030 Agenda for Sustainable Development

– Expand eco-environmental cooperation

– Develop green economy.

– Deepen cooperation on water resources management and hydrological data and information sharing

6. Uphold an innovation-driven approach and improve cooperation on science and technology innovation and digital economy

– Promote closer cooperation in science, technology & innovation (STI) to reduce the digital gaps among member countries.

– Strengthen cooperation on digital economy

– Develop a digital cross-border trade platform

– Hold a subregional digital governance and cyber security dialogue and deepen the innovative applications of digital technologies.

5. Challenges of Post-Pandemic Recovery Cooperation

The post-pandemic recovery in the subregion would also bring about some challenges.

– The pandemic has caused great difficulty in the cross-border flows of goods and services 

– A number of social and culture cooperation projects under the MLC have to be adjusted or suspended due to the pandemic. 

– The economic impact is significantly huge. Due to the pandemic, the national income of subregional countries has significantly decreased, but the spending has actually increased due to the cost of anti-pandemic and economic stimulus measures.

– With heavier debt burden, the countries might face some difficulties about further investment in many areas.

– In addition, non-traditional security challenges have been increasingly prominent and complex, and compounded problems such as social public health, climate change, water and environmental security, information network crime, illegal arms trafficking, drugs, human trafficking, and wildlife.

6. Tips to Solve Challenges and Difficulties on Post-Pandemic Recovery

We recommend these tips to solve some difficulties on post-pandemic recovery in the sub-region.

1. Establish sn all-round financial system

– Fully utilize the existing financing mechanisms under the framework of China-ASEAN and MLC

– Establish new financing models, such as Mekong-Lancang Development Fund and Mekong-Lancang Development Bank

– Promote communication and financing cooperation with financial institutions such as the World Bank, the Asia Development Bank, the Asian Infrastructure Investment Bank and the Silk Road Fund, and other development partners.

2. Promote coordinated development openly and inclusively

– Align with the latest development strategies of the member countries

– Strengthen exchanges and complementarities with other cooperation mechanisms including the Belt and Road Initiative (BRI), the Global Development Initiative (GDI), ASEAN, the Ayeyawady-Chao Phraya-Mekong Economic Cooperation Strategy (ACMECS), the Greater Mekong Subregion Economic Cooperation Program (GMS), Mekong River Commission (MRC)

– Gradually improve the level of coordination through cooperation forms like project exchange, joint research, data sharing, knowledge sharing

– Promote cooperation in the subregion with multi-level governments, associations, think tanks and enterprises from Japan, Korea, Singapore, European Union, India etc.,

3. Promote coordinated development openly and inclusively

– Encourage practical cooperation under the existing sister-city and sister province relations

– Explore the possibility of establishing new relations, so as to build a cooperation network of governments at local levels in Mekong-Lancang countries

– Support to holding the Forum on Mekong-Lancang Local Government Cooperation

– Deepen cooperation on some sectors such as agriculture, tourism, border trade, e-commerce, industrial parks, media exchanges, scientific and technological innovation within the sub-region

– Encourage the participation of local state-owned companies and MSMEs, as well as business and industrial associations.

4. Enhance Social Supporting system.

– Actively consider orderly resumption of flow of people in the post-pandemic era.

– Continue to promote exchanges in areas such as culture, sports, tourism, think tanks, media and women to build better understanding and develop a sense of community.

– Advance socio-cultural exchanges and education cooperation.

– Enhance academic and research cooperation, and cooperation in vocational education and mutual recognition of diplomas.

– Provide more scholarships to member countries

– Attach more importance to the role of private sector and NGOs.

To conclude, the recovery after the Covid pandemic must focus on the people, their ability to return to work, and reconnect for commercial and personal purposes. Long-term measures must be created and organized. Since economies within sub-region are very much integrated by the movement of the workforce, and of goods and services, we must bring them back to that movement and further enhance it. We must focus on recovery plans which will emphasize more integrated, inclusive, green, resilient, sustainable, and stronger reforms and will facilitate socioeconomic reconstruction within the sub-region.