During 1H14, Thai border trade advanced 6.0 percent YoY to a total of THB480 billion. Following ASEAN's economic integration (AEC) in 2015, border trade's role in our economy will likely be of greater importance. So the government sector needs to be ready for a surge in trade and investment, as well as to prepare for intensified regional competition.
One policy the Thai government is highlighting is the establishment of new special economic zones. Five provinces involved in an initial stage of this pilot program include Tak, Sa Kaeo, Trat, Mukdahan and Songkhla. These zones could help promote trade and investment through benefits to investors operating there. However, the government has yet to finalize comprehensive investment proposals for the program, thus there is a degree of uncertainty.
Looking into the original master plan to develop a special economic zone city of Mae Sot, along with information from other sources, we at KResearch believe that investors will likely get tax benefits equal to those offered by the BOI's Zone 3 Plus on top of other advantages, e.g., support for alien labor employment and one-stop service points, etc. Initially, Thai enterprises would probably benefit more from trade than investment, which requires many supporting factors, including infrastructure, public utilities and smoother border checkpoint management. Businesses with room for growth subsequent to the special zone establishment would include food and beverages (F&B), textiles/apparel, automobiles, construction and construction materials, electronics, etc.
To make strides with this program, the Thai private sector needs to cooperate with the state to develop border provinces of economic importance, turning them into centers of trade, investment and services for the sub-region. Thai enterprises must start making business plans that include greater efficiency in their operations. These steps would help Thai companies become more competitive in situations where both opportunities and risks exist in the new AEC era, which is only about one year away from now.
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