The economies of the five Lower Mekong countries range from those still developing beyond a reliance on agriculture and natural resources to more diverse export-oriented economies.
The combined total GDP for the Lower Mekong in 2017 is estimated to be US$757 billion, according to the International Monetary Fund.1 Estimated GDP per capita figures for 2017 range from US$1326 and US$1330 for Cambodia and Myanmar respectively, to US$2169 for Laos, US$2286 for Vietnam and US$6357 for Thailand.2 For the 2017 fiscal year, the World Bank categorized Cambodia, Laos, Myanmar and Vietnam as “lower-middle-income” economies and Thailand as an “upper-middle-income” economy. These categories use gross national income (GNI) per capita to group countries into four different levels.3
The least developed of the five Lower Mekong countries have the highest rates of GDP growth: Cambodia’s economy is forecast to grow by 6.8 percent in 2017, Laos by 6.7 percent, Myanmar by 6.4 percent, Vietnam by 6.3 percent and Thailand by 3.5 percent.4
Current account balance is the sum of net exports of goods and services, net primary income, and net secondary income. Laos, Cambodia and Myanmar have had deficits in recent years, while Vietnam has had a positive current account balance each year from 2011 to 2015. Thailand’s performance has been unique, going from a deficit of US$ -4.845 billion in 2013 to USD$ 32.149 billion in 2015.5
Total merchandise exports from the Lower Mekong more than doubled in the ten years from 2005 to 2015 (2005: US$150.73 billion; 2015: US$384.77 billion). Almost half of all exports (46.9%) from the five Lower Mekong countries in 2015 went to high-income countries, down from 63% in 2003.6 Top export partners for the three countries with available data—Cambodia, Thailand and Vietnam—included the United States, China and Japan.7
Apart from Thailand, which began repaying its development loans in 2000, the other economies in the region rely heavily on aid and development assistance. Myanmar’s economy has had greater access to aid and development assistance since its former military government announced moves towards more democratic processes in 2012, lifting long-standing embargoes on trade from Western governments.
Tourism revenue is important to the economies of Lower Mekong countries, especially Cambodia, where tourism income from international visitors accounts for 29 percent of the value of the country’s total export earnings.8 For Laos, Thailand and and Myanmar the figures ranged from 16 to 19 percent, while for Vietnam it contributed just under 5 percent. Over 85 percent of tourists visiting developing East Asian countries come from within the broader East Asia region.
With the sole exception of Thailand, the proportion of Lower Mekong adults with bank accounts is low. The lowest is Cambodia (22 percent) then Myanmar (26 percent), Laos (29 percent) and Vietnam (31 percent).9 The situation in Thailand is completely different, with 82 percent of adults having accounts. Among Thais with accounts, 62 percent use their accounts to make digital payments.
There is no appreciable gender gap in ownership for Cambodia, Myanmar or Vietnam, with men slightly more likely than women to hold accounts in Laos and Thailand.
Wealthier people are more likely to have accounts than poorer people. In Vietnam, for example, 4 out of 10 who are among the richest 60 percent of the population have accounts, while among the poorest 40 percent, just 2 out of 10 do.10 This can change relatively quickly, however. In Thailand, the gap shrank by almost half between 2014 and 2017, from 12 percentage points to 7 percentage points.
Not having an account does not necessarily mean someone is excluded from using a service where many customers use online payments. In Vietnam, more than 80 percent of adults who bought something online paid in cash on delivery.
Domestic remittances – sending money to or receiving it from a relative or friend within the country – is particularly important in Cambodia and Thailand. In developing economies on average, 27 percent of adults report having used remittances within a 12-month period, while the figure was around 40 percent for Cambodia and Thailand.11 Cambodians mostly used a non-bank over-the-counter service for this, while Thais mostly used accounts.
The region’s wealth of resources, young populations, improving infrastructure, and expanding markets, make it attractive for investors. However, while the Lower Mekong is seen as an area of potential growth and foreign investment opportunity, individual scenarios in some countries—for example, Myanmar’s internal conflicts with various indigenous and ethnic groups, Thailand’s military coups and civil unrest, Vietnam’s maritime territorial dispute with China, and Cambodia’s well-publicized land conflicts—have seen investor confidence fluctuating in recent years. The low rankings of some countries on corruption indices, such as Transparency International’s annual Corruptions Perception Index 12, may also affect investment.
Myanmar is eager to capitalize on the new trade freedom it has experienced since 2012. While the government has set goals to improve infrastructure in order to encourage both tourism and foreign investment, continuing sectarian and domestic conflict in the country is still a concern for tourists and investors alike.
The relatively recent emergence of China as a major investor has had a big impact on Lower Mekong countries. China’s outward FDI was less than US$1 billion in 2000 but had reached US$183 billion by 2016. In developing East Asia, Thailand is the second-biggest destination of Chinese outward FDI, taking 32 percent, or US$3.18 billion in 2015.13
Of the five Lower Mekong countries, Thailand has by far the strongest ranking in 2017–2018 Global Competitiveness Index, at 32nd out of 137 countries.14 Both Thailand and Vietnam improved their positions from a year earlier (to 32nd from 34th and 55th from 60th, respectively).15 Both Cambodia and Laos fell from a year earlier: Cambodia to 94th from 89th, and Laos to 98th from 93rd. The Index is a project of the World Economic Forum.
Transport, a regional investment priority, was highlighted in the Greater Mekong Subregion Strategic Framework for 2012-2022, developed by representatives of China and the five Lower Mekong nations in 2011.16 It identified 92 projects costing an estimated US$30 billion, 90% of which were transport sector projects. The expansion of transport is considered key to increasing trade in the region.
While past economic development policy has emphasized open markets and large-scale trade, a few more recent pro-poor development initiatives have pushed for policy aimed at removing inequalities in income and living standards.17
- 1. International Monetary Fund. World Economic Outlook. http://www.imf.org/external/pubs/ft/weo/2017/01/weodata/download.aspx. Accessed 20 May 2017.
- 2. Ibid
- 3. The World Bank. 2017. “Country and Lending Groups.” Accessed 20 May 2017. https://datahelpdesk.worldbank.org/knowledgebase/articles/906519
- 4. The World Bank 2017. East Asia and Pacific Economic Update October 2017. The World Bank, Washington D.C. http://www.worldbank.org/en/region/eap/publication/east-asia-pacific-economic-update Accessed 30 October 2017.
- 5. World Bank. http://data.worldbank.org/indicator/BN.CAB.XOKA.CD?end=2015&locations=KH-LA-MM-TH-VN&start=2010 Accessed 21 May 2017.
- 6. The World Bank. 2015. “World Development Indicators, Direction of Trade of Developing Economies.” Accessed 21 May 2017. http://wdi.worldbank.org/table/6.4.
- 7. Global Edge. “Trade Insights by Country.” Accessed 21 May 2017. http://globaledge.msu.edu/global-insights/by/country.
- 8. The World Bank 2017. East Asia Pacific Economic Update October 2017. The World Bank, Washington D.C. http://www.worldbank.org/en/region/eap/publication/east-asia-pacific-economic-update Accessed 30 October 2017.
- 9. World Bank Group 2018. The Global Findex Database 2017. Accessed 28 September 2018. https://globalfindex.worldbank.org/
- 10. Ibid
- 11. Ibid
- 12. Transparency International. 2016. “Corruptions Perceptions Index 2016.” Accessed 21 May 2017 https://www.transparency.org/news/feature/corruption_perceptions_index_2016.
- 13. The World Bank 2017. East Asia Pacific Economic Update October 2017. http://www.worldbank.org/en/region/eap/publication/east-asia-pacific-economic-update Accessed 29 November 2017.
- 14. World Economic Forum 2017. The Global Competitiveness Report 2017–2018. Geneva. http://www3.weforum.org/docs/GCR2017-2018/05FullReport/TheGlobalCompetitivenessReport2017%E2%80%932018.pdf Accessed 29 October 2017.
- 15. World Economic Forum. “Country/economy profiles: Cambodia.” Accessed 31 May 2017. http://www3.weforum.org/docs/GCR2016-2017/05FullReport/TheGlobalCompetitivenessReport2016-2017_FINAL.pdf Accessed 29 October 2017.
- 16. Asian Development Bank. 2011. The Greater Mekong Subregion Economic Cooperation Program Strategic Framework (2012-2022). Manila: ADB. Accessed 30 March 2015. http://www.adb.org/documents/greater-mekong-subregion-economic-cooperation-program-strategic-framework-2012-2022.
- 17. Hill, Hal. 2014. Is There a Southeast Asian Development Model? Germany: University of Freiburg. Accessed 21 July 2015. http://www.vwl.uni-freiburg.de/iwipol/discussion_papers/DP26_Hill_Is_There_a_Southeast_Asian_Development_Model.pdf.