Greater Mekong Subregion: From Geographical to Socio-economic Integration

10. The Challenges of GMS Regional Integration: Case Study of Governance of the Logistics Industry in Thailand

10 the chaLLengeS oF gmS regionaL integration case Study of governance of the Logistics industry in thailand Narong Pomlaktong, Chaiyasit Anuchitworawong, Rattana Jongwilaiwan, and Prakai Theerawattanakul With the initiative and assistance of the Asian Development Bank, the Greater Mekong Subregion (GMS) economic cooperation programme was established in 1992 to promote closer economic cooperation among the GMS countries, which include Cambodia, the Lao People’s Democratic Republic, Myanmar, Thailand, Yunnan province of China, and Vietnam. The GMS countries so far have a strong political will to foster closer cooperation through intergovernmental collaborations in such areas as agriculture, energy, telecommunications, tourism, transport infrastructure, and the like. However, different country backgrounds, objectives, and intentions among the GMS countries tend to create political impediments to cooperation and emerging innovative development. In recent years, governance has emerged as a discipline for fostering development and cooperation because good governance theoretically and practically will deliver effective public service and create economic efficiency 172 Governance of Thailand’s Logistics Industry 173 and equity for long-term and sustainable development of an economy. However, governance issues are likely to be much more complicated at an international level. To show that governance is an important element when discussing regional economic activities, this study therefore provides case studies in the logistics industry to demonstrate that governance is an important mechanism that should be promoted not only at a national level, but also at the regional level when dealing with development issues in the GMS. The cross-border governance issues in the logistics industry become increasingly important as ASEAN moves towards the ASEAN Economic Community (AEC) in 2015 because the industry will be related to regional public goods provision which require effective national road infrastructure and coherent coordination of transport infrastructure policies across the GMS countries’ borders. In tackling the problems that might occur, improved governance and a favourable policy and regulatory framework, along with capable institutions, will be the key factors for successful regional economic development and integration. To investigate the governance issues in the logistics industry in Thailand and its importance at the regional level, this chapter explores the inefficient pricing framework, as well as weak regulatory and law enforcement in the Thai transport industry, and bottlenecks in cross-border transport in the GMS. Specifically, the chapter is divided into six sections. The next section gives an overview of governance in Thailand and other GMS countries. The section that follows discusses the challenges of the domestic transport market in Thailand. In this section, we attempt to show that weaknesses in pricing, regulatory and law enforcement, and corruption at the national level, are an output of bad governance of a weak institutional and regulatory framework, resulting in high transaction costs, poor quality of service provision, and reduced national competitiveness. The problem of national governance is a cornerstone for strengthening regional governance, which will certainly impinge on interstate transport and regional trade agreements.The next section provides an overview of the international road transport market in Thailand and further points out that weak governance caused by a poor institutional and regulatory framework will bring about an unfair allocation of costs and benefits, and high transactions costs of the cross-border transport market. Even worse, this will lead to poor public service provision and inefficiency in the market. Lastly, the concluding section provides some recommendations for policymakers and the GMS governments to help promote good governance practices in the provision of regional public goods and eventually help achieve the ultimate goals of sustainable development and regional integration. 174 Narong Pomlaktong et al. overview oF governance in thaiLand and other gmS countrieS This section provides an overview of governance in Thailand and other GMS countries based on the World Bank’s report of its Worldwide Governance Indicators (WGI) that identify six dimensions of governance indicators for 212 countries and territories (Kaufmann D., A. Kraay, and M. Mastruzzi 2009). The six dimensions of governance indicators include: 1. Voice and Accountability (VA): This measures the extent to which citizens are able to participate in selecting their government and to enjoy freedom of expression, freedom of association, and a free media. 2. Political Stability and Absence of Violence (PV): This measures the perceptions of the likelihood that the government will be destabilized or overthrown by unconstitutional or violent means. 3. Government Effectiveness (GE): This measures the quality of public and civil services, the degree of their independence from political pressures, the quality of policy formulation...