A highway from Kunming in Yunnan to Bangkok is to be completed in 2007 and Beijing has pledged to build a 141km rail link in a regional network that will cost 4.5 billion yuan for the China section.

Many anticipated the infrastructure project would yield enormous development potential for the region's people, but the expected flood of investment has not materialised.

When asked whether there has been any sign of growth in line with the nation's rapid economic expansion, Mengla county vice-magistrate Qin Zongmo said: 'Common prosperity? Not at all.'

And several senior officials agreed with Mr Qin.

'We face more challenges than opportunities,' said Dao Linyin , vice-governor of the Xishuangbanna Dai Nationality Autonomous Prefecture.

Ms Dao cites competition from neighbouring economies, the lack of a manufacturing industry, insufficient infrastructure that needs a huge injection of cash and a dearth of talented professionals as the key challenges the prefecture faces.

Since the free-trade area was initiated in 2002 at the first GMS summit in Phnom Penh, the region - known to contain the world's few remaining bio-diverse natural forests - has not seen any zeal on the investment front.

'We can only say that we are positioned to benefit from the GMS and China-Asean FTA framework when we have overcome these difficulties,' Ms Dao said, in a cautiously optimistic note on the area's prospects.

The border region - also known as the 'Golden Triangle', a hub for the global drugs industry, from growing the crops to manufacturing - is immersed in poverty because of its geographic isolation from key economic centres.

'Opening up borders will force us to face competition from regional economies that have produced almost the same agricultural products and fruits which have been the pillars of our local economy,' Ms Dao said.

With heavy tariffs on agricultural produce from border nations, Xishuangbanna yields a good income from selling native produce exclusively in mainland markets.

'As the central government cuts tariffs, competition will mount and prices will go down,' said Mr Qin.

During the GMS summit this month, Premier Wen Jiabao announced that Beijing would further cut tariffs and expand preferential treatment to more products from Laos, Myanmar and Cambodia from January 1, marking another concrete step to stronger ties. Since 2002, China has cut or exempted tariffs for 600 products from the three most underdeveloped GMS countries.

Trade relations between China and the other GMS members have grown quickly since 2002.

Bilateral trade volume last year between China and its GMS neighbours reached US$25.82 billion, almost double that of 2002, and the average annual growth rate reached 41 per cent. China's exports reached US$11.55 billion, up 37 per cent year on year, while imports reached US$14.27 billion, a 44 per cent increase.

However, bilateral trade between Xishuangbanna and border nations during the same period was just a fraction of the nation's, at US$181.69 million, a 12 per cent increase from 2003.

The prefecture's border trade was US$173.40 million last year, up 11.5 per cent from 2003, customs figures show.

Local customs and trade officials said border trade of native produce had decreased since the central government announced it would open its market to neighbouring nations.

'We are less competitive and cost-efficient in our land-link transport and business management compared with the sea transport and with trade firms in developed regions,' said An Yongxiang , deputy director of the Mohan Border Trade Area.

The border trade between the area and neighbouring countries was 647 million yuan last year, or up 3 per cent compared with 2003, which was much lower than the 45 per cent national growth in trade in the same period.