Better transport connectivity in ASEAN: Impacts on commodity trade

Background In order to grow the economy and to improve welfare for the citizens, developing countries need to enhance domestic production and facilitate markets for the produce, while making employment opportunities available through facilitating business investment. Export markets provide incentives to domestic production, and it may be beneficial for a country to import goods and services that a country hasn’t got comparative advantage in producing. To facilitate international trade and business investment, a country needs to take measures to minimise trade costs.

Trade costs comprise financial costs as well as time delays. These trade costs could significantly be reduced by two main ways. By improving logistics performance in each mode of transport and by transitioning from unimodal to multimodal (or combined) transport services. There are practical examples of significant savings in financial costs and delivery times by creating and improving multimodal connectivity.