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Accelerating Thailand’s Special Economic Zones (SEZ) Programme

Since approving its first five pilot locations in 2014, Thailand has made considerable efforts to catch up with its ASEAN neighbours.

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When it comes to developing Special Economic Zones (SEZs), Thailand was something of a late starter.

Since approving its first five pilot locations in 2014, Thailand has made considerable efforts to catch up with its ASEAN neighbours.

Thai Prime Minister Prayut Chan-o-cha has said that the SEZ programme was now an integral part of Thailand 4.0. The countrywide initiative is aimed at manoeuvering the economy out of the “middle-income trap,” a situation in which the local labour force is too well-paid to compete with unskilled workers elsewhere, but lacking the skills and technical resources to contribute higher up the value chain.

The Thailand 4.0 initiative is seen as a forerunner of the wider economic and social reform programme set to be adopted this month as part of the country’s 20-year National Strategy (2017-2036).

In line with this, Thailand 4.0 is designed to transform an economy reliant on heavy industry and export market production into one more focused on smart electronics, biofuels and biochemicals, robotics, aviation and logistics, as well as advanced medical products and services.

Already this year, the transformation strategy has led to the ratification of two bills intended to boost investment in the country’s SEZs.

Investment Incentives

The enactment of the revised Investment Promotion Act in January will see R&D, advanced technology and innovation businesses enjoying 13-year tax incentives as well as tax deductions of up to 300 per cent on R&D-related expenses. Certain businesses may also be entitled to a substantial investment tax allowance.

This was followed in February by the Competitiveness Enhancement Act, which granted eligible businesses an exemption from corporate income tax for up to 15 years. More importantly, it established a US$300 million fund designed to match private-sector investments in R&D, technology and innovation, and human-resource development across 10 targeted industries. It also outlined the availability of specific investments in the biotech, nanotech, advanced materials and digitalbusiness sectors.

As an integral part of its expansive economic master plan, Thailand has identified 10 locations for new SEZs. Significantly, all of these proposed SEZs are to be developed close to the borders of neighbouring ASEAN countries – Chiang Rai, Nong Khai, Nakhom and Mukdahan (in the north and northeast, bordering Laos); Sa Keow and Trat (in the east, bordering Cambodia); Song Khla and Narathiat (in the south, bordering Malaysia); and Kanchanburi and Tak (in the west, bordering Myanmar).

The new SEZs have also been strategically situated to take advantage of Thailand’s geographical location at the heart of Southeast Asia. By using its existing supply chain expertise and developing new transport and communications infrastructure, the country expects these SEZs to boost cross-border trade and employment, while directly connecting Thai-based businesses with ASEAN’s emerging markets along convenient air, land and sea routes.

The SEZ programme also advocates the establishment of a number of super clusters, sites that offer a premium package of incentives to investors in a particular sector, with food and beverages, digital, medical, eco-friendly chemicals and petrochemicals, automotive and electronics, appliances and the telecommunications equipment sectors among those prioritised. A secondary tier of clusters has also been proposed, with a subsequently lower level of incentives. At present, this proposal will apply to the agro-processing, textiles and garment sectors.

Eastern Economic Corridor

The centrepiece of Thailand’s current development programme, however, remains the Eastern Economic Corridor (EEC). Last month, the Thai cabinet approved draft legislation paving the way for the EEC, a vast SEZ spanning the three eastern provinces of Chachoeongsao, Chonburi and Rayong.

With this one-time industrial heartland designated as the country’s new engine of growth, 10 industries have been earmarked for a premium package of incentives. These will include exemption from corporate income tax for up to 15 years and grants from the Thailand Competitiveness Fund, which will match any private-sector investment in these nominated sectors.

A budget of US$43 billion has been allocated to support the expansion of the EEC over the next five years. This will include funding for several benchmark projects, including the development of the U-Tapao International Airport, an upgrade of the Chuk Samet Deep Sea Port and a high-speed rail link between Bangkok and Rayong. The proposed motorway network connecting Bangkok, Chonburi, Pattaya, Laem Cha Bang and Laem Cha Bang-Nakorn Ratchasima will also receive funding as part of the EEC initiative.

Another project considered crucial to the success of the EEC – the development of the proposed third phase of the Laem Cha Bang Port – is also in line for substantial investment. Ultimately, this will see the port established as a regional maritime transportation hub, servicing connections to Myanmar’s Dawei Deep-water Port, Cambodia’s Sihanoukville Port and Vietnam’s Vung Tau Port.

There are also plans to establish an “innovation city” within the EEC, complete with a number of integrated R&D facilities, including fabrication laboratories, test-bed sandboxes and certification centres. This follows the establishment of food, technical and science innovation centres in the central Thai province of Pathum Thani.

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Economics

Thai Exports fell for fifth straight month, down 2.65% in 2019

Thia Exports fell for the fifth straight month in December, resulting in a full-year contraction of 2.65% in 2019

Boris Sullivan

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The Commerce Ministry reported on Wednesday that customs-cleared exports fetched $19.15 billion in December, down by 1.28% 

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Trade

Trade in Asia-Pacific declines for the first time since 2009

For the first time since the 2009 global economic crisis, the value and volume of trade in the region is declining. But the region is expected to bounce back in 2020 with positive trade growth.

Boris Sullivan

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Bangkok (ESCAP news) – Asia-Pacific economies may see positive trade growth in 2020 but are still facing downside risks from the adverse impacts of the United States – China trade tensions, two new trade briefs by the United Nations Economic and Social Commission for Asia and the Pacific (ESCAP) released today have revealed.

Trade in the Asia-Pacific region contracted during 2019

For the first time since the 2009 global economic crisis, the value and volume of trade in the region is declining. Total export volume fell by 2.5 per cent, while import volume decreased by 3.5 per cent.

Oil exporting economies such as Islamic Republic of Iran and Indonesia, as well as Japan, Singapore and Hong Kong, China registered some of the largest declines in export volume.

Merchandise trade in the region also faced strong headwinds in 2018-2019 caused by the worldwide economic growth slowdown and heightened trade tensions.

These have had an adverse effect on trade, particularly in the case of economies closely integrated with China through Global Value Chains (GVCs). Integration of smaller traders into the global and regional economy through GVCs is becoming more difficult. New import barriers increase the cost of production and reduce the competitiveness of companies participating in regional production networks.

Tariff war-related toll could reach $117 billion in the Asia-Pacific region

ESCAP earlier estimated the tariff war-related toll on gross domestic product (GDP) could reach as much as $400 billion worldwide and $117 billion in the Asia-Pacific region. These projections are materializing and could increase unless current efforts to reduce trade tensions are successful.

“For the Asia-Pacific region, the challenge is to increase trade and deepen economic integration to support sustainable development. Looking ahead to 2020, the agreement reached between China and the United States is welcome and should reduce policy uncertainty,”

United Nations Under-Secretary-General and Executive Secretary of ESCAP Armida Salsiah Alisjahbana.

She further underscored the importance of the multilateral trading system to underpin future trade growth.

The new guarantees provided by the implementation of the Phase-I deal reached between China and the United States might boost investor and consumer confidence enough for trade in the region to grow by about 1.5 per cent in 2020.

This growth would be felt more in developing economies, which could see a 1.9 per cent and 2.7 per cent growth in exports and imports respectively in 2020. However, country-level forecasts vary widely and uncertainties are high.

In trade in commercial services, the region again outperformed the rest of the world in 2019.

Relatively slower growth is expected in 2020, with transport services, other business services and goods-related services expected to be the most affected sectors.

The mid to long-term prospects for trade in services – in particular ICT and business services – remain bright, supported by technological advances.

Commercial services trade in Asia and the Pacific continue to be dominated by a relatively small number of economies, namely China, Japan, India, Singapore, Republic of Korea and Hong Kong, China – accounting for over 70 per cent of total commercial services trade in the region.

Increasing business opportunities associated with digital technologies may lead to a further concentration of trade opportunities in those economies.

The ESCAP trade briefs serve as a complement to the Asia-Pacific Trade and Investment Report 2019. They provide in-depth analysis of performance and trends in 2018-2019, and the outlook for 2020 at regional and country levels, with a special emphasis on the impact of escalating trade tensions within and outside the region.

Read the Asia-Pacific Trade in Goods Trends and Outlooks: https://www.unescap.org/resources/trade-goods-outlook-asia-and-pacific-20192020

Read the Asia-Pacific Trade in Services Trends and Outlooks: https://www.unescap.org/resources/trade-commercial-services-outlook-asia-and-pacific-20192020

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Trade

Thailand, the world’s 6th biggest exporter of fruits

Export value of fruit in the first 10 months of this year reached three billion U.S. dollars, making Thailand the 6th largest fruit exporter in the world.

National News Bureau of Thailand

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BANGKOK(NNT) – Known for its good taste and quality, Thai fruits have gained much popularity in foreign countries.

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