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Thailand Region’s Top Logistics Hub Leading to AEC Trade As the logistics hub of Southeast Asia, Thailand offers entrepreneurs smooth connectivity for efficient business. Whether by road, waterway, rail or air, the country gives investors affordable transport of goods and personnel at the heart of the world’s fastest-growing economic region. The bottom line is that Thailand’s logistical capability helps manufacturers save costs, resulting in lower product prices and greater competitiveness. About 86% of Thailand’s cargo is currently moved by road, 12% by ship, 2% by train and the rest via air freight. To bolster the country’s investment attractiveness and meet the business demands of the future, the Thai government is committed to continued improvement of each method. Vehicular conveyance of goods and personnel is very efficient with Thailand’s extensive network of 191,000 kilometers in well-developed roads. Along with this, the country is already a vital link in the Greater Mekong Subregion’s (GMS) East-West Economic Corridor to connect China’s Yunnan Province and Vietnam, Cambodia, Laos, Myanmar and Thailand overland to the Andaman Sea. The GMS North-South Economic Corridor road project between Bangkok and China’s Kunming passing through Laos and Myanmar also creates profitable business possibilities for companies operating in Thailand.


To foster balanced geographic development in Thailand and boost connectivity with border areas, the Cabinet has given the green light to a multi-billion baht budget for 128 new logistics projects in the country’s high-potential northern region. These include a 150 kilometer trans-provincial motorway cutting travel time between Chiang Mai and Chiang Rai from six to just three hours, in addition to water resource works, tourism development, expansion of the Chiang Mai international airport, and a 774 kilometer Bangkok-Chiang Mai high-speed electric train to facilitate more convenient and faster business travel with the North. Scheduled for completion by 2017, this “bullet” line might also be extended to China. Another planned high-speed rail would facilitate swift passage between the financial capital Bangkok and Rayong in the Eastern Seaboard industrial area. Enterprises that set up in Thailand are in the perfect place to access growing opportunities throughout the Association of Southeast Asian Nations (ASEAN). To strengthen the country’s role as the investment gateway to the region, the Thai government is especially promoting larger development of border economic zones, again mainly in the North. Thailand’s border trade with neighboring countries is expected to double to 2 trillion baht by 2015 as one big result of the forthcoming ASEAN Economic Community (AEC). That year the 10 member countries of ASEAN are to drop trade tariffs among them to zero and liberalize investment sectors, enabling the free flow of goods, services, investment, capital and people across the regional bloc. Collectively, this massive single market comprising Thailand, Vietnam, Cambodia, Laos, Myanmar, Brunei, Malaysia, Singapore, Indonesia and the Philippines presents entrepreneurs with seamless access to a whopping 600 million consumers. Southeast Asia’s rising middle class of considerable buying power makes this one of the world’s best places for doing lucrative business. The government is in the process of developing a motorway from Bang Bua Thong to Kanchanaburi. This route aims to link with another road at the border to help facilitate logistics with Myanmar’s US$80 billion Dawei Port project. Various road and rail projects could even connect Dawei all the way to Thailand’s Eastern Seaboard. That would add vibrancy to the GMS corridor, shortening freight distance and cost. A memorandum of understanding to support the Dawei project was signed in July 2012 by Thai Prime Minister Yingluck Shinawatra and Myanmar President Thein Sein.


Studies are also looking at the feasibility of opening overland routes from Thailand and China through Myanmar to reach India and Pakistan. Enormous potential is seen there for increased people-to-people contacts and trade in everything from food to textiles to pharmaceuticals. Furthermore, plans are in the works for boosting the logistical and economic prospects of southern Thailand, especially along coastal areas of the Andaman Sea. Among many other projects, these include construction at the Pak Bara deep-sea port and a Phuket-Phang Nga-Krabi travel center. For transport by water, Thailand provides a network of worldclass facilities with six international deep-sea ports and two river ports. The most important of these is the Laem Chabang Deep-Sea Port of Chonburi Province in the country’s Eastern Seaboard region. Ranked 22nd among the busiest international container ports by the World Shipping Council, Laem Chabang currently handles 7.7 million TEUs per year or 54% of Thailand’s overall exports and imports. Right now the facility is operating 15 of its 18 berths, with berth lengths of 500 and 700 meters. Already it can accommodate extra-large ships such as the Post Panamax and the Super Post Panamax at 80,000 deadweight tons (dwt). In June this year, the government announced plans to expand capability at Laem Chabang under efforts to further reduce logistic costs for manufacturers, importers and exporters, increasing the global competitiveness of enterprises in Thailand. The secondphase expansion project will augment capacity to 10.8 million TEUs a year with the additional three berths going into service by 2019. Third-phase expansion targets 18.8 million TEUs, 2.568 million metric tons of general cargo and 1.95 million vehicles per year. This will keep up with Thailand’s robust economy and trade requirements in the following two decades and beyond. The Map Ta Phut Industrial Port, likewise in the East, is also a high-capacity facility. It supplies logistics mostly to heavy industry at the area. In the nation’s capital, Bangkok Port is another major cargo facility, handling 1.34 million TEUs per year. It has 18 berths for vessels 172 meters long with a maximum draft of 8.2 meters. Ranong Port, a main port of marine cargo shipment in the South along the Andaman coast, links trade routes with member countries of BIMSTEC (Bay of Bengal Initiative for Multi-Sectoral Technical and Economic Cooperation), or Bangladesh, India, Myanmar, Sri Lanka, Bhutan, Nepal and Thailand. The multipurpose Ranong terminal can


accommodate two cargo vessels of less than 500 gross tons each at the same time. Cargo vessel capability is 12,000 dwt. Two other ocean-going ports around the country are in Phuket at the Andaman Sea and in Songkla on the Gulf of Thailand.


The main river ports are in the North at Chiangsen and Chiangkong, with 90% of its ships coming from Laos. For very cost-effective hauling, Thailand has 4,044 kilometers of railway network, including international connections to Malaysia and Singapore. Of this, 234 kilometers feature double-track lines and more such rails are proposed to advance national capacity for heavier loads. In Bangkok, the commuter train system moves people swiftly via the city’s popular Skytrain and underground MRT. More urban mass-transit lines are under construction to convenience passengers from outlying areas. The master plan calls for 12 lines covering 509 kilometers by 2029. Opened in 2010, the Airport Link train gives express service between downtown and Suvarnabhumi airport. Thailand is home to six international airports, affording access to all regions. A state-of-the-art facility located in the outskirts of Bangkok, Suvarnabhumi currently services 116 airlines and in 2011 handled 47.9 million passengers. Its ongoing phase-two project will uplift capacity to 60 million passengers. Suvarnabhumi has been ranked as the 10th best airport globally by the Londonbased aviation research institute Skytrax. Other international airports are spread throughout the country in Chiang Mai, Chiang Rai, Phuket, Hat Yai and Udon Thani. There are also 27 domestic airports for expedient alternatives. As encouraged by the government’s “Smart Thailand” development program, the country’s is also seeing its informationtechnology infrastructure grow with lightning speed. Mobile, broadband and fixed-line infrastructure now covers 87% of the total population. While local businesses, state agencies and households go digital, Thailand currently has 24 million Internet users and 69 million mobile phone users. The local explosion of mobile computing is pushing the market value of the Thai software industry toward US$2.3 billion and annual exports to US$150 million. Continued advancement in local software designing will keep the country at the cutting edge of digital logistics for the benefit of industries from education and tourism to manufacturing and agriculture. Strong and Getting Stronger To help add more muscle to the country’s infrastructure, the Thailand Board of Investment (BOI) grants generous tax and non-tax incentives to logistics projects. Among the many eligible activities are logistics parks, distribution centers, concession roads, transport of bulk goods, international trading companies, and trade and investment support offices. The BOI also provides


benefits to projects in loading and unloading facilities for sea transport, ocean marina services, container yards, cable cars, commercial airports, satellite communications, data centers, industrial and service zones, agro-industry processing zones, mass transit systems, and regional operating headquarters. Manufacturers are a principal beneficiary of Thailand’s logistical progress. The country now has over 60 modern industrial estates, zones and parks across every region. The clusters in electronics, automotive, food, energy and rubber put assemblers in proximity to their material and parts suppliers, accelerating delivery and production and cutting costs. Second only to the service sector, manufacturing accounted for 38% of the nation’s GDP in 2011 on output valued at 5.59 trillion baht. Thailand’s excellent logistics infrastructure and central location to markets in Asia have helped power the country to the forefront of production and exports. Thailand is the world’s top producer of natural rubber, hard disk drives, cassava products, canned pineapple, pineapple juice, processed chicken, rice, canned and frozen seafood, and processed shrimp, and is the second biggest sugar maker. It is also one of Southeast Asia’s largest assembly centers for integrated circuits and semiconductors. Moreover, the nation’s vibrant automotive industry is projected to break into the global top 10 by 2015. With Thailand ready for an AEC trade and production boom, opportunities for investment in logistics continue to crop up locally. According to property experts, warehousing is one of the particularly attractive sectors as production growth spurs demand for warehouse space.


AEC Trade