Tanit Sorat, a vice-chairman of the Federation of Thai Industries, said free trade in Asean and logistics among countries in the Greater Mekong Subregion (GMS) will pose challenges for Thai firms.

Trade will be upgraded from border-to-border to city-to-city, and local activity will be scaled down and replaced with international activity.

Rising production costs have already forced relocations to cheaper countries, but some Thai investors are still reluctant to go abroad. (See table.)

Many firms will see their production base in Thailand endangered by competitive global trade, so expansion is a must to ease the impact of the rising daily minimum wage and external risks.

Mr Tanit said Thai private firms in neighbouring countries can also enjoy tariff privileges under the Generalised System of Preferences.

He suggested six sectors consider relocation: industries that use local content material; the textile industry, which is labour-intensive; spare parts; electrical and electronic equipment, which benefits from the value chain; household furniture made from natural materials; and the agricultural processing industry.

But the government must give priority to linking the GMS countries.

Mr Tanit said local authorities may not have the capability to handle more trade volume. Thus, skill development is needed among officials as well.

He suggested the government fix missing logistics links, standardise regulations for goods and transport, and tackle illegal immigrant and environmental problems.

In related news, the cabinet yesterday approved the establishment of a one-stop service centre at the Ban Phak Kat checkpoint in Chanthaburi province to accommodate increased cross-border trade and visitor traffic ahead of the Asean Economic Community in 2015.

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via FTI tells firms to spread wings | Bangkok Post: business.