The current GMS cooperation covers seven major areas: transport, energy, telecommunications, environment, tourism, human resource development, and trade and investment.
 
The financial sector needs to be strengthened to provide a platform to support these key sectors. 

Starting from realistic assessments of current levels of economic development and trade in Vietnam, Laos, Myanmar and Cambodia, there should be further research into how best to provide easy access and mutually beneficial capital flows among the ASEAN member states as well as a new system for bank settlements. The ultimate goal is to create a diversified, multi-level and multi-functional e-finance platform for the ASEAN region.
 
The financial sector needs to be actively involved in researching relevant GMS laws, regulations and policies, including those on currency exchange, in order to produce workable and forward-looking financial support planning.
 
GMS development efforts are aimed at building an economic community and   free-trade zone. They look to make this an area of trade and investment facilitation as well as economic policy integration. But development in this region also involves issues of cooperation with a number of other neighboring countries and this needs to be taken into account. Moreover, policy-making can not be carried out by government alone.
 
Governments of countries within the region need to solicit a wide range of opinions and recommendations in order to formulate preferential policies to attract and encourage developed counties, international organizations and private capital to participate in the GMS development. Private capital (including capital from China’s private enterprises) is needed and various forms of participation such as BOT, BOOT and BTO need to be considered to achieve this goal.
 
Firstly, financial authorities need to make long term plans of 5 to 10 years or even longer to provide effective support for GMS cooperation. Making the “overall financial support plan” is aimed at promoting optimal use of resource among provinces, cities, districts and enterprises of GMS countries. This requires the promotion of a rational flow of productive capacities and the effective use of human resources, funds and natural resources. It should ultimately lead to enhanced productivity and strengthened ability for GMS countries to compete on an international footing. The World Bank, the ADB and the Overseas Cooperation Bank of Japan are currently helping the region achieve these goals with generous amounts of funding.
 
Secondly, enterprises are a key force in GMS development, and development cannot be accomplished without them. China’s “going out” policy, which encourages domestic companies to take advantage of investment opportunities abroad, provides a favorable climate for Chinese enterprises to strengthen cooperation and expand  investment in GMS countries.
 
China welcomes GMS countries to invest in China and it encourages Chinese enterprises to invest and set up factories in GMS countries. It encourages domestic companies to provide management expertise as well as technology and capital to GMS countries to meet the objective of achieving common prosperity through resource integration. In the development of border and barter trade, the non-state owned segment of the economy has shown its advantage in flexibility, expanding  economic ties between countries. As more enterprises invest and set up factories in Southeast Asia, investment and trade in the GMS region is bound to increase, in turn leading to stepped up flows of capital, personnel, technology and equipment.
 
However, industrial enterprises, especially large and medium-sized state-owned enterprises, are still having difficulties in taking advantage of opportunities outside the country. This is due partly to a lack of funds, and there is an urgent need to establish multi-channel systems of export financing. Therefore, the financial sector must provide better services to support enterprises in developing economic and trade cooperation with Southeast Asian countries.
 
Thirdly, we suggest that the financial sector should pay more attention to human resource development and intermediary service agencies in GMS cooperation.
 
Paul Romer, the founder of the new growth theory, said that the growth of some Asian countries mainly stems from the technical knowledge they gained from industrial countries and the application of this knowledge to the domestic economy to boost productivity.
 
This shows the importance of the absorption, use and creation of knowledge and human resource development, which will in turn help develop high-technology, make better use of comparative advantages and help make great strides in developing GMS cooperation.
 
At present, entrepreneurs have only limited opportunities to participate in the study. If the financial sector participates in setting up two-way training networks linking  entrepreneurs and managers, this will greatly promote the formation of a GMS cooperation mechanism.
 
Intermediary service agencies contributing to GMS cooperation need to rely on government support while using market-oriented principles, provide service to enterprises and make full use of high-technology. The financial sector should actively support such development, providing market information, business credits, project evaluation and other intermediary services for enterprises to participate in the joint development of GMS cooperation. It should also contribute to cooperative efforts in setting up and operating development zones abroad and developing regional enterprise groups that conduct business outside the home country and  can develop border trade, make offshore investments.
 
Fourthly, the financial sector can pay attention to the information network construction of GMS cooperation.
 
The development of modern information technology, particularly the development of a network economy which is characterized by e-commerce, has greatly changed the modes of production, trade and competition. Enterprises need to solve the problem of a lack of information if they want to speed up the pace of “going out” into the global market.
 
According to survey data from consultants McKinsey & Co, the trade volume of e-commerce in Asia in all of 2003 reached 270 billion US dollars, accounting for 27 pct of the total volume of the world e-commerce trade. But most of this was concentrated in Japan, Singapore, China Taiwan and Hong Kong and the share of GMS countries was minimal.
 
Therefore the construction of GMS information networks and e-commerce focusing on tourism and logistics will certainly be a priority. If large-scale data communication networks can be built in the GMS countries, the process of globalization will be speeded up considerably
 
Fifth, the financial sector should play a role in GMS cooperation through the setting up of special economic zones to promote border trade.
 
The pilot construction of “technology demonstration areas” and “free trade zones” will be useful in strengthening exchanges and cooperation in science and technology and GMS trade and investment overall.
 
Simplified trade procedures and reduced non-tariff barriers in the demonstration zone can effectively attract external and internal investment. In short, through such pilot development, the GMS economies can make use of technical and capital advantages of developed countries.
 
Sixth, the financial sector should actively support regional innovation and protection of the environment, helping the GMS economy ensure sustainable development. Today, the regional innovation theory, which refers to knowledge, is the core element of regional development. Innovation is a strong engine for regional economic development. The GMS has the advantage of biodiversity and a favorable environment. In the process of cooperative development, each country should attach importance to the protection of biodiversity by setting up forest protection systems in the Lancang-Mekong drainage area, the Red River drainage area, the Irrawady River drainage area and the Salween River drainage area to control soil erosion. At the same time they need to set up a natural conservation network to protect rare species and effectively reduce environmental pollution.
 
GMS economic cooperation is the basis for the implementation of China’s foreign policy of demonstrating friendship with neighboring countries. It is an important part of the strategy to extend the opening up of China’s own economy. It has also made a significant contribution to the development of the nation’s western region. In the pursuit of these policy objectives, the financial sector has an important role to play.