Effects of ASEAN Transport Connectivity Enhancement

Smith, Michael, Gunasekera, Don, Wimalasuriya, Rukman, Newth, David, and Voak, Adam (2019) Effects of ASEAN Transport Connectivity Enhancement. Australasian Agribusiness Review, 27. 7. pp. 148-176.

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There is a recognition that trade costs along domestic and international supply chains can be significantly reduced by improving the logistics performance in each mode of transport involved in various chain transactions. These improvements may be conveniently facilitated by the optimisation of the transitioning strategies from unimodal to multimodal (or combined) transport services. In this context, we examine here the status of current multimodal connectivity in freight transport practiced in the ASEAN region. We have focussed on the potential economic impacts of enhancing the levels of supply chain multimodal connectivity on the emerging economies of this region. Our methodology has two stages. First, we estimated a ‘multimodal transport index’ for ASEAN economies, using available data on performance indicators for maritime, air and land transport, combined with indicators of current logistics competence. Second, the Global Trade Analysis Project (GTAP) economy-wide model is used to estimate the economic impacts of ongoing transport connectivity enhancements in the ASEAN region, focussing on the emerging ASEAN members such as Cambodia, the Lao PDR, Myanmar and Viet Nam. It is important to note in this respect that the 10 ASEAN member economies are heterogeneous in nature in terms of economic growth and development. There are, for example, the more advanced economies such as Singapore and Malaysia, which contrast with the four emerging economies in the region.

Our analysis of logistics performance in the ASEAN economies shows that (i) Singapore leads in performance indicators related to maritime transport, road density and logistics, (ii) Indonesia leads in primary airports and secondary airports, while (iii) Viet Nam has recorded the highest score in rail density. In addition, with respect to the performance indicators for maritime, primary airports, secondary airports and road density, there is a wide gap between the regional leader and most the other ASEAN member economies, whilst our analysis of the logistics competence indicator shows moderately good performance in all of the ASEAN economies.

Of particular interest to this investigation, is our analysis of the estimated multimodal transport index which indicates that, although Singapore appears to be leading in overall multimodal transport performance, Indonesia’s economy has drawn almost level. Their performance is followed closely by Thailand, Viet Nam and Malaysia. The Philippines and Myanmar have modest, and similar levels of multimodal transport performance, whilst at the other end of the spectrum, the Lao PDR, Cambodia and Brunei have relatively low levels of multimodal transport performance. The economy-wide analysis shows that all else being equal, a 1.0 per cent improvement in factor productivity of the transport services in ASEAN will likely raise the real GDP in Cambodia, the Lao PDR, Myanmar and Viet Nam by 0.26, 0.15, 0.12 and 0.09 per cent respectively. Furthermore, it is estimated that a 1.0 per cent improvement in factor productivity of the transport services will increase consumer welfare in Cambodia, the Lao PDR, Myanmar and Viet Nam by US$ 28.9 million, US$ 11.7 million, US$ 73.5 million, and US$ 168.6 million respectively.

Item ID: 77451
Item Type: Article (Research - C1)
ISSN: 1883-5675
Keywords: ASEAN, transportation, productivity gains, economy-wide modelling
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Date Deposited: 16 Feb 2023 00:58
FoR Codes: 38 ECONOMICS > 3801 Applied economics > 380117 Transport economics @ 50%
35 COMMERCE, MANAGEMENT, TOURISM AND SERVICES > 3509 Transportation, logistics and supply chains > 350999 Transportation, logistics and supply chains not elsewhere classified @ 50%
SEO Codes: 15 ECONOMIC FRAMEWORK > 1501 International trade policy > 150199 International trade policy not elsewhere classified @ 50%
27 TRANSPORT > 2799 Other transport > 279902 Multimodal transport @ 50%
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