With its strategic location in the center of ASEAN with emerging markets, including Cambodia, Laos, Myanmar, Malaysia and southern China, on its border, Thailand is well position to connect investors to new opportunities arising from the increasing border trade and the region’s rapid economic growth.
Growing border trade
In the first nine months of 2017, statistics from Thailand’s Department of Foreign Trade showed that value of border trade (Malaysia, Myanmar, Laos, and Cambodia) and goods crossing the borders (from Singapore-southern China and Vietnam) totaled 971.42 billion baht, an increase of 9.68% from 885.71 billion baht in the same period in the previous year.
Out of this, border trade value was 800.52 billion baht while value of goods crossing the border was 170.90 billion baht, a significant increase of 25.5%.
While cross border trade is growing, strong economic growth in those neighboring countries is also significant.
World Bank’s East Asia and Pacific Economic Update forecasted strong GDP growth in CLMV countries with Cambodia leading the group with 6.8% GDP growth, followed by Laos of 6.7%, Malaysia of 5.2% and Thailand of 3.5% for example.
SEZ – customized to available local resources
Benefiting from the strong trend are businesses and investors running business in the “Special Economic Zones (SEZ)” in 10 provinces around Thailand, including Tak, Mukdahan, Sa Kaeo, Trat, Songkhla, Chiang Rai, Nong Khai, Nakorn Phanom, Kanchanaburi, and Narathiwat.
The SEZ policy was first launched in 2015 based on the government’s belief in the strong potential of the 10 areas to connect with the neighboring countries in terms of trade, economy and investment. With their proximity to neighboring countries, SEZ enjoy the benefit from the large pool of labor in the nearby area.
The Thai government has also relaxed the rules on foreign labors to support SEZs
In addition, specific target industries for each SEZ have been clearly identified based on unique geographical strength and locally available resources. Most of the target industries are labor-intensive ones, including garment, agricultural and agricultural processing, fishery, furniture, logistics distribution center, bonded warehouses and tourism.
Since then, growing investment flow into these SEZs. In 2015, total investment in SEZ was 280.1 million baht before it jumped to 8.31 billion baht in 2016. Most of the businesses investing in SEZ are garment and garment and textile manufacturing, coconut oil production, plastic bottles and bags, animal feed, ready mixed concrete, plastic fiber for fishing net production, rubber gloves, palm oil and metal parts, for example.
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