NEW 'CORRIDOR' TO LINK REGION
The Tico Times (Costa Rica)
www.ticotimes.co.cr
1 October 1999

by Guillermo Escofet

Three modern highways running through Central America from Mexico to Panama, and swift customs procedures to speed the flow of goods and people across the region's many borders. This is the dream Central America's governments have of making economic integration a reality by 2005. Billed as the region's biggest ever multinational project, the Central American Logistical Corridor will link the isthmus' ports and economic hubs with 5,600 kilometers of new or repaved roads, and unclog its infamously slow border crossings with automated systems and new customs rules.

The initial estimated cost is $1 billion, and the time frame for its completion five years. Although it may sound like a pipe dream, the aim is to get the private sector to put up most of the money through public-works concessions. Taiwan has offered to get the project off the ground by paying for a preliminary feasibility study costing $6 million.

"We need to move beyond the theory of multilateral trade agreements, and build the infrastructure necessary to facilitate economic and political integration," said Costa Rican Vice-President Astrid Fischel, who was in charge of presenting the idea to Taiwanese President Lee Teng-hui at a Central American-Taiwanese summit last month in Taipei.

Fischel announced the ambitious project to the media and Central America's ambassadors to Costa Rica at a press conference last week in the Casa Presidencial. The guest of honor, Taiwanese Ambassador Kao-Wen Mao, was unable to attend because of the emergency in his country following the strong earthquake that struck Taipei earlier that day.

Central America's poor transport links are considered one of its biggest obstacles to development. Although the distance between Panama and Guatemala is about the same as that between Miami and New York, it takes a truck three times as long (nearly 72 hours) to cover it, explained Agriculture Minister Esteban Brenes. This means perishable goods that could be traded from one Central American country to another often have to be imported from outside the region because of the time and costs involved intra-regionally he said.

Conversely, access is limited to some important gateways for imports and exports, explained Fischel. According to Professor Carlos Manuel Barahona of Harvard-affiliated Central American business school INCAE, the need to eliminate the inefficiencies in the region's transport system is all the more urgent in the aftermath of Hurricane Mitch, which devastated large parts of Central America last year-not only to facilitate rescue efforts in future natural disasters, but also to speed up recovery of the productive capacity destroyed by Mitch. INCAE's Latin American Center for Competitiveness and Sustainable Development has for the past four years been working closely with the region's governments to identify the factors holding back Central America's economic potential. It was from this that the idea for the Central American Logistical Corridor was born.

The proposal is still very bare-bones, and needs to be fleshed out with a feasibility study to work out how exactly it can be put into practice. Once that's done, contracts will be put out to tender for the public works and services needed. In terms of infrastructure, the aim is to have three parallel highways covering the length of the Central American isthmus-one along the Pacific basin, from Tecún Umán in Mexico to Panama City; one running down the center, measuring 1,400 km; and another on the Caribbean side, measuring 1,350 kilometers. These will be linked to transverse highways linking both Pacific and Caribbean coasts at four strategic points.

According to Barahona, the Pacific and central highways are largely constructed already-the latter coinciding with the Inter-American Highway-although some stretches still need to be built, and others rebuilt. Much more work will be needed in the Caribbean, Central America's most neglected and underdeveloped region, where highways are few and far between. Brenes was enthusiastic about the opening of an eastern overland route between Costa Rica and Nicaragua, arguing that, since Nicaragua has no major port on the Caribbean, it could boost business for Costa Rica's Atlantic port of Limón.

With three alternate ways to travel up and down the isthmus, there will also be a higher likelihood of at least one access route remaining open during a natural disaster, added Barahona. However, building new roads is only half the battle to improving Central America's transport system. As Barahona explained, cargo movements in the region are just as hampered by outdated and inefficient customs procedures as they are by bad roads. Goods must go through five different borders to get from one end of the isthmus to the other, waiting to be checked each time and go through paperwork.

The idea is to introduce a uniform customs system for the whole region that will cut out all paperwork and make cargo inspections discretionary. These changes are under way already. In 1996, INCAE presented a customs reform plan to Central America's heads of state, and all five countries have since began to make internal changes.

Barahona explained that a lot of time is wasted under the current system because customs officials must check all goods coming into each country to determine their value and duties. Under the new system, the person bringing in the goods will give their description and value, and inspections will be carried out only at random.

Apart from this, a single computer network will link all customs offices and handle all their paperwork. Barahona said that in Singapore, all cargo permits and payments are handled on screen. Transport companies, warehouses and customs agencies will also be allowed access to this computer network.

According to Barahona, the biggest challenge to turning the Central American Logistical Corridor into a reality will be overcoming the region's chronic difficulties to implement ideas. "For example, Costa Rica has been building the costañera [central Pacific highway] for the past 30 years," Barahona noted.