Given its centralized geographic position, much attention has been given to Thailand’s prowess to become the logistic hub in ASEAN. And in the light of the upcoming ASEAN Economic Community (AEC) by 2015, the country of which logistic competency ranks the 3rd in Southeast Asia region as of 2012 (just behind Singapore and Malaysia) is expected to experience a change in the competitive landscape of the transportation, logistic and trade industries in the country - fuelling a strong growth momentum on all trades via Thailand linkage with CLMV (Cambodia, Lao PDR, Burma, and Vietnam) countries.
Thailand's Decreasing Logistic Costs
Thailand's logistics sector potentially generates about 300 billion baht added value to the economy annually, and the country has been witnessing a decline of share of logistic costs to GDP over the last few years.
Domestically, Thailand still relies heavily on land transport (accounting for 83% share) despite the increase in oil price which impacts transportation costs. Fuel subsidies are likely to be maintained over the near future as the government tried to contain inflationary pressures from soaring global oil prices in 2012. The government is now also working on improving its trade systems, such as an e-logistics system which is intended to cut logistics cost, reduce paperwork and the time spent on import and export..
The Impending Changes Brought by AEC 2015
The AEC which will come into realization in 2015 will increase the demand for logistics services in Thailand. Goods and services will be more freely transferred, especially for border and transit trade which are expected to expand substantially. The distribution of raw materials, goods, and labor will also increase significantly - boosting the demand for logistics services throughout the supply chain.
The AEC is expected to bring various benefits for ASEAN's logistics industries in terms of legal aspects and others such as simplified and harmonized customs procedures, improved road network, reduced tariffs/free trade agreement.
As for the trade of goods, CLMV countries will provide more opportunities in the export market over the next period due to the tariffs reduction.
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We are a leading Asia-centric B2B growth strategy advisory firm with full fledged presence in China - India - Indonesia - Malaysia - Myanmar - Singapore - Thailand - Vietnam. Our core forte is to help multinational corporations to accelerate their growth in the automotive and logistics sectors in Asia. www.solidiance.com