cross border thailand

Development of the cross border from / to Thailand

Border Trade: A Future Direction or the Thai Economy in ASEAN

The near future, it seems certain that Thailand will 11 become a hub for land-based trade in Southeast Asia and a gateway for the movement of goods through the region, because of its strategic location at the heart of the ASEAN Economic Community. As a result, the country will enjoy an increase in the value of cross-border trade transactions as well as more tourist arrivals, consequently boosting the Thai economy.

Exchanges in ASEAN

This optimistic forecast is based on my belief that land transport through Customs checkpoints along Thailand’s borders will overtake marine transport as the main channel for regional trade because trucks and trains take less time.

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Docshipper Remark : Moreover, the ronde of trade will evolve from simple border trade to exports and imports across borders as well as transit trade that passes through one or several countries on road to its destination.

These are not new claims and I do believe that business operators and the private sectors generally may be skeptical about the preparedness of Thailand’s government agencies to cope with this major and complex trend in order to take full advantage of it.

In making the forecasts, I am taking into account the context and environment of regional collaboration; the direction in which our neighboring countries and other ASEAN nations are developing; investment flows from the world’s biggest economies to Thailand and other ASEAN Member States; and the preparation of Thailand’s public sectors in terms of infrastructure, amendments of laws and regulations to facilitate the business, and simplification of working procedures for the ease of doing business.

Docshipper Info : Furthermore, the government’s policy of pushing ahead with plans to establish special economic zones in the border provinces of Tak, Mukdahan, Sa Kaew, Trat, Songkhla, Chiang Rai, Nong Khai, Nakhon Phanom, Kanchanaburi and Narathicoateill also help to escalate the value of border, cross-border and transit trades.

Significantly, the value of Thailand’s border trade has continued to increase (see the Tables below), despite of a slowdown in the global economy brought about by the economic downturn in China and a consequent weakening of the Japanese economy. Trade and investment in Thailand and other ASEAN Member States continue to expand. Before elaborating on the preparations already made by the public sectors for this transformation in regional trade, I will lay out some background.

Docshipper Info : The Association of Southeast Asian Nations (ASEAN) had five founding Member States: Indonesia, Malaysia, the Philippines, Singapore and Thailand, with an objective of promoting political economics and social collaboration. The Association later gained other five Member States: Brunei, Vietnam, Laos, Myanmar and Cambodia, to make the present total of 10 members.

In 2003, ASEAN Concord II named the ‘three pillars’ that, when created, would cement the association of the 10 nations: the ASEAN Security Community (ASC); the ASEAN Economic Community (AEC); and the ASEAN Socio-Cultural Community (ASCC). In 2006, the ASEAN Economic Ministers agreed to speed up establishment of the AEC to implementation by the end of 2015.

ASIA Cross border Map – KART

cross-border-thailand-asean

The Physical AEC and Future Economic Trends

At the end of 2014, the population of the 10 ASEAN Member States that were a year away from becoming the AEC was about 637 million. In descending order of numbers, this comprised Indonesia, about 254 million; the Philippines, 108 million; Vietnam, 93million; Thailand, 68million; Myanmar, 56million; Malaysia, 30 million; Cambodia, 15 million; Laos, 7 million; Singapore, 6 million; and Brunei, 400,000. It seems likely that in the future the economic integration of the 10 ASEAN Member States will be extended to include China, South Korea and Japan, a grouping that is currently known as ASEAN+3. This will entail a quantum leap in market size.

Docshipper Info : Furthermore, future negotiations may bring Australia, New Zealand and India into an enlarged economic community, currently known as ASEAN+6.

This would create a trading bloc with a population well in excess of three billion. Bilateral and multilateral free-trade pacts have been a major feature of increasing levels of economic integration within the geographic region encompassing the ASEAN+6 grouping.

These trends have stolen the limelight from the development of regional transport networks and economic-development zones along three major ‘economic corridors’, which include:

  • The East-West Economic Corridor, which stretches 1,500 km from Myanmar through Thailand and Laos to Vietnam (Mawlamyine to Myawaddy in Myanmar; Mae Sot to Phitsanulok, Khon Kaen, Kalasin and Mukdahan in Thailand; Savannakhet in Laos to long Ha and Danang in Vietnam).
  • The North-South Economic Corridor, which spans 1,280 km from China to Myanmar, Thailand, Laos and Vietnam over several routes (from Kunming to Jinghong and Daluo, in China; Kengtung to Tachileik in Myanmar; and from Mae Sai to Bangkok in Thailand. Alternatively, from Kunming to Jinghong in China; Boten to Louang Namtha and Houayxay in Laos; and from Chiang Khong to Bangkok in Thailand. The third route extends from Kunming in China to Hanoi and the port city of Haiphong in northern Vietnam.
  • The Southern Economic Corridor, which connects Thailand, Cambodia and Vietnam by three routes: Bangkok to Aranyaprathet

Poipet and Phnom Penh in Cambodia and Ho Chi Minh City to Vung Tauin Vietnam – a distance of 1,005 km: Bangkok to Trat in Thailand, Koh Kong to Ste Ambel and Karnpot in Cambodia, Thence to Ha Tien, Ca Mau and Nam Can in Vietnam – a distance of 907 km; and from Bangkok in Thailand through Siem Reap, Stung Treng and Oyadav, in Carnbodia’s Ratanakiri province to Pleiku and Guy Nhon in Vietnam – a distance of 1,150 km. Many related transport and other agreements have been signed and sealed in preparation for exponential growth in land-based trade.

These include the following bilateral pacts:

  • Thai-Laos Road Transport Agreement:
  • Memorandum of Understanding between Thailand and Malaysia Regarding the Movement in Transit of Perishable Goods by Road from Thailand through Malaysia to Singapore:
  • Agreements on the Facilitation of Goods and Passenger Transport at the Lao Bao-Dansavan h Border Checkpoint between Vietnam and Laos, and that between Savannakhet in Laos and Mukdahan in Thailand;
  • Initial Implementation of a Cross-Border Transport Agreement for the Aranyaprathet-Poipet Checkpoint between Thailand and Cambodia; and
  • Initial Implementation of a Cross-border Agreement between Thailand and Myanrnar for the Mae Sot-Myawaddy and Mae Sai-Tachileik Checkpoints. Multilateral agreements have already been signed regarding recognition of domestic driving licences issued by ASEAN Member States and recognition of commercial vehicle inspection certificates. Further transport agreements that will be enforced in the future include the ASEAN Framework on the Facilitation of Cross-Border Goods Transport, the Greater Mekong Subregion Cross-Border Transport Agreement and the Protocol on Inspection and Quarantine Requirements for Imports and Exports of Fruits between Thailand and China through Third Countries.

All of these developments are creating a momentum that is reflected in recent figures for the value of Thailand’s border trade:

Value of Cross-Border Goods Imports Border

BORDER 2013 2014 2015 TOTAL
Thailand-Myanmar 117,512,66 121,702,16 102,406,02 321,620,84
Thailand-Cambodia 10,135,86 18,233,50 17,348,16 45,717,52
Thailand- Laos 23,536,06 27,145,62 32,964,15 83,645,83
Thailand- Malaysia 144,761,38 148,123.19 120,547.63 413,432.20
TOTAL 295,295.95 315,204.47 273,265.96 884,416.39

Value of Cross-Border Goods Exports

BORDER 2013 2014 2015 TOTAL
Thailand-Myanmar 79,429.56 93,964.59 82,268.23 255,662.38
Thailand-Cambodia 84,395.33 96,715.51 86,087.87 267,198.71
Thailand- Laos 108,639.88 124,233.72 106,221.34 339,094.95
Thailand- Malaysia 139,512.88 142,864.78 111,263.14 393,640.80
TOTAL 411,977.66 457,778.60 385,840.59 1,255,596.85

Docshipper Note : As the pace has risen, every involving government agencies has developed and adjusted their work.

The Customs Department, the main tasks of which are to facilitate and control cross-border trade, protect society and environment, collect tax revenues as well as investigate and suppress illegal Customs-related activities, has issued numerous measures to support border, cross-border and transit trades. These measures also implement under the ASEAN Economic Cornmunity, e.g. the elimination of tariff and non-tariff barriers, amendments of rules of origin, revision/update of regulations/working procedures, etc.

The Department’s trade facilitation measures that will help to out transaction costs of doing business include:

  • Provide advance rulings on Customs valuation, classification and rules of origin;
  • Introduce the Customs Automation System, including the National Single Window, ASEAN Single Window and Tracking Systems;
  • Introduce CCTV system and other technologies for Customs control purposes
  • Introduce X-ray Inspection System for cargo inspection;
  • Establish Customs checkpoints and prototype checkpoints to promote border trade by separating areas for cargo and people inspection; and
  • Introduce information and communication technologies to the Department’s general administrative work and Customs services, Other measures to facilitate trade and promote international trade include the provision of post clearance audit. In addition the Customs Act was also amended, in line with the Cross-Border Transport Facilitation Act B.E.2556, to allow Customs to work in Common Control Areas, or those areas where joint Customs operations involve officials from bordering countries.

As a result, Thai Customs officials will be able to work with Customs officials from neighboring countries in Common Control Areas, enabling “single stop inspections” and cargo clearances. The Mukdahan-Savannakhet checkpoint, the border of Thailand and Laos, will be the first area to implement the Common Control Area concept, following the creation of the Common Control Area at the Lao Bao-Dansavanh checkpoint, the border of Vietnam and Laos.

Docshipper Remark : To prepare infrastructure and Customs checkpoints, the Customs Department set up a working group to study the evolution of border trade, develop and redesign certain Customs Houses to launch Common Control Area related pilot projects, taking into account the enhancement of border trade and the creation of Special Economic Zones.

In this connection, eight Customs Houses under the said pilot projects are located in Aranyaprathet, Klong Yai, Mukdahan, Mae Sot, Sadao, Padang Besar, Chiang Khong and Nong Khai, with four key elements:

  1. Provide designated areas for cargo clearance, which are separated from immigration procedures and equipped with Information and Communication Technology.
  2. Provide “One-Stop Services”(OSS), following the international standard; automation systems , for example, the National Single Window which allows the interface with relevant agencies to exchange information e.g. licenses, certificates, etc. and public service manuals with diagrams detailing working processes, types of documents, and expected service times.
  3. Apply cross-border trade-facilitation and promotion measures e.g. incentives under Customs and other related laws, advisory and consultancy services on the Customs related activities.
  4. Conduct, and coordinate-Corporate Social Responsibility (CSR) activities within their communities.

The Customs Department is also planned to renovate Customs Houses and border checkpoints, construct new office buildings, including working facilities for Customs officials to enhance the efficiency of existing services for business operators and people in general.

Docshipper Info : The infrastructure and Customs House projects under the 1st phase of the Special Economic Zones include the construction of the second Customs Houses at the Mae Sot and Aranyaprathet checkpoints, new Customs House in Sadao, and the renovation of the Padang Besar Customs Houses and the construction of a cargo inspection yard and building facilities at the Mae Sot Customs House.

In addition, new Customs/Immigration Quarantine facilities are planned to be established at the Klong Luk border checkpoint, an office building will be constructed at the Klong Yai border checkpoint, and extra facilities at the Mukdahan Customs House. The infrastructure and Customs-facilities projects under 2stphase of the Special Economic Zones include the construction of a Customs House and cargo inspection yard in Nong Khai, along with the development of the Nong Khai border checkpoint.

New Customs Houses, in some cases with associated facilities, will be built in Chiang Khong, Nakhon Phanom, Chiang San, the Ban Pu Nam Ron permanent checkpoint in Kanchanaburi province, and the Chiang Khong Customs House. Furthermore, opening and closing times of border crossings have been extended to match those of permanent border checkpoints to facilitate the movement of both cargo and travel.

Docshipper Remark : Hence, a major effort is under way to not only provide the infrastructure for increased land-based trade, but also to enable trading across the entire region faster and more convenient.

The international commitment to this massive integration is attracting increasing flows of investment from the world’s biggest economies into Thailand and other ASEAN Member States. It is difficult, in the light of all these factors, to be anything but optimistic for the future.

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ASEAN Community

ASEAN Economic Community

« Economic Integration has arrived. We must make the most of it »

The 10 nations of ASEAN are putting the final touches on their creation of a single market and production base with a population greater than either the European Union or North America, and the Permanent Secretary of Thailand’s Ministry of Commerce, Chutima Bunyaphraphasara, says the Kingdom must now strive to make the best use of the new régional economic integration.

For much of the past decade, the leaders of Thailand’s *tic- and private-sector organizations have been preaching the benefits and opportunities promised by the implementation at the end of 2015 of the ASEAN Economic Community (AEC).

As that time arrived, the ASEAN nations had almost perfectly achieved their mission of forming a single market and production base, one of the four major elements of the AEC, by reducing tariff and non-tariff barriers, facilitating intra­regional trade, harmonizing standards, rules and regulations, liberalizing trade, services and investment and allowing a free flow of skilled labor.

The single big message from the Ministry of Commerce’s Permanent Secretary, Chutima Bunyapraphasara, is that the time has come; the benefits and opportunities are here for the taking, and it behoves all in Thailand who may enjoy them to make the best use of them.

Moreover, Thailand has a significant geographic advantage. Since the country is centrally located at the heart of ASEAN, Thai companies can conveniently trade with their counterparts in neighboring countries that share borders with Thailand, as well as investing in these countries. Thailand can also serve as a gateway to ASEAN for countries outside the region that wish to do business, export or invest in ASEAN.

“Thanks to our strategic location, Thailand can become a (trading and investment] gateway for our neighboring countries by utilizing the AEC program,” Chutima said.

Clearly, the benefits of economic integration have been growing for some years. ASEAN is already Thailand’s No.1 trading partner for both exports and imports. The Kingdom’s exports to ASEAN have grown consistently, year by year. Total shipments to ASEAN member countries exceeded $59 billion in 2014, accounting for 26 per cent of Thailand’s total exports.

In reality, the market for Thai companies has expanded from 69 million people in the past to 600 million people throughout the ASEAN region.

The new economic community obviously presents a jewel of an opportunity for Thai business operators to overcome constraints such as tabor shortages, higher production costs and lost trade privileges. They can now take advantage of ASEAN’s “single production base” by moving some of their production to neighboring countries where these issues are not a problem.

To ensure that the country fully utilizes the benefits of the AEC, the government has initiated many projects, including the enhancement of its trade and investment policies to better facilitate business, such as hastening the completion of the “National Single Window” project; investing in road and rail infrastructure to improve connectivity with neighboring countries; promoting border trade by removing obstacles and facilitating trade at border checkpoints; providing special tax and non-tax privileges to projects situated in Special Economic Zones; and enhancing the capabilities of Thai enterprises, especially small- and medium-sized enterprises. It has also assisted the development of human resources in various occupations in order to prepare them for the challenges of the AEC.

“The Ministry of Commerce has been working closely with other parties on these initiatives and we are confident that they will bring Thailand into the forefront of ASEAN and thus our vision of ‘Think ASEAN, Think Thailand’ will materialize,” Chutima said.

ASEAN-community

Challenges and Opportunities

Some of the main benefits of the AEC will be the ability of member countries and their businesses to complement their strengths and weaknesses and gain in local and global competitiveness.

“We can utilize benefits from the integration of Asean’s supply chain,” Chutima said. “As tariff and trade barriers are removed, importing raw materials from our neighboring countries will become more convenient than shipping them from outside the region. We can also bring in labor from neighboring countries to help meet our needs because we are entering an ageing demography. We can also bring in management and know-how from neighboring countries if they excel in particular fields.

“At the same time, we can utilize the transport infrastructure which has been developed to help bring down the costs of our business sector and enhance the competitiveness of our exported goods in Asean and other global markets,” she said.

The 10 Asean member countries have finalized their ninth package of commitments under the Asean Framework Agreement on Services. They are now moving Onto the 10th package, although the completion schedule for this package has been postponed by two years to 2017.

Nevertheless, the member countries have already given priority to the logistics sector, among other sectors, and have opened up their markets in accordance with earlier commitments. This is because of the importance of logistics as a trade facilitator that helps to boost trade and investment and promotes the single market principle.

Logistics is now one of the major service sectors on which the Ministry of Commerce has focused its promotional efforts, along with other industries such as tourism and healthcare services. The AEC will present distinct opportunities for Thai logistics service providers. They will be able to expand their operations by establishing warehouses, distribution centers and transport services in other Asean countries.

So far, Thailand has not undertaken to open up its logistic sector more than what is stipulated in current domestic laws. However, Chutima said the sector could be opened up ahead of the AEC’s framework because of its important influence on the competitiveness of Thai goods.

“In the meantime, we can unilaterally open up our logistics sector to support our policy of becoming a trading hub of the region,” she said.

Chutima said that Thai logistics service providers still needed to enhance their competitiveness to some the country’s mission of becoming a regional trading hub. A study commissioned by the World Bank has shown that the Kingdom has relatively high logistics costs – 14.1 to 14.7 per cent of gross domestic product, compared to 8.2 per cent of GDP in the United States and 7.2 per cent in the European Union. Thailand is ranked 35th on the World Bank’s Logistics Performance Index, which rated 160 countries around the world. It is lower down the index than two other Asean members – Singapore and Malaysia. The Logistics Performance Index indicates three areas that Thailand should tackle urgently: customs procedures, infrastructure and the competency of its logistics service providers.

Chutima said the government had already announced massive investments in infrastructure projects and was currently making a big effort to improve its customs procedures. On the matter of enhancing the competitiveness of logistics service providers, she said the private sector, especially the Thai International Freight Forwarders’ Association, should take a leading role.

“The government sector is very pleased to lend our support if there is a concrete plan proposed to us, since it is our policy to work closely with the private sector,” she said.

The Ministry of Commerce’s Departments of International Trade Promotion and Business Development implemented several projects to help Thai logistics service providers in 2015, she said. These including training and advisory services to help with organizational management and cost reductions; organizing seminars to disseminate knowledge on various topics such as innovations, “green logistics” and ISO standards; appraising organizations’ capacity to achieve ISO standards; holding international conferences on connecting logistics to facilitate the AEC; organizing an Excellent Logistics Management Award; helping local logistics service providers to meet and build networks with overseas governments and their foreign counterparts; and providing space for logistics firms to showcase their services at international trade fairs such as BIG+BIH and THAIFEX in Bangkok.

Further information, visit the official website : ASEAN

ASEAN-Oppotunities

DocShipper info: Do you like our article today? For your business interest, you may like the following useful articles :

DocShipper Advise : We help you with the entire sourcing process so don't hesitate to contact us if you have any questions!

  • Having trouble finding the appropriate product? Enjoy our sourcing services, we directly find the right suppliers for you!
  • You don't trust your supplier? Ask our experts to do quality control to guarantee the condition of your goods!
  • Do you need help with the logistics? Our international freight department supports you with door to door services!
  • You don't want to handle distribution? Our 3PL department will handle the storage, order fulfillment, and last-mile delivery!

 

SIAM Shipping | Procurement - Quality control - Logistics

 

Alibaba, Dhgate, made-in-china... Many know of websites to get supplies in Asia, but how many have come across a scam ?! It is very risky to pay an Asian supplier halfway around the world based only on promises! DocShipper offers you complete procurement services integrating logistics needs: purchasing, quality control, customization, licensing, transport...

Communication is important, which is why we strive to discuss in the most suitable way for you!