Development of Economic Corridor and its impact to the future prospects of cross border trade in Greater Mekong Subregion (GMS)

Build · Compete · Grow
1
2016
Development of
Economic Corridor
and its impact to the
future prospects of
cross border trade in
Greater Mekong
Subregion (GMS)
Presented by:
Chukiat Wongtaveerat
14 June 2016

Build · Compete · Grow2 consulting.bc@ipsos.com
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1.5 3 4
2012 Nov 2014 May 2016

1. Greater Mekong Subregion (GMS) at a glance
2. Thailand as the center of trade in GMS
3. Where to invest in GMS
4. GMS economic corridor and development
5. Benefit of cross border trading from supply chain perspective
6. Key implications

GLANCE OF GREATER MEKONG SUBREGION
Thailand
GDP: $1,108 billion
GDP per capita: $16,100
Population: 67.9 million
Myanmar
GDP: $283 billion
Vietnam
GDP: $552billion
Laos PDR
GDP: $37 billion
Greater Mekong Subregion
GMS (excluding China)
GDP: $ 2,034 billion
Population: 241 million
Cambodia
GDP: $54 billion
Vietnam
Laos
Cambodia
Thailand
Myanmar
Source: Ipsos Analysis, World Bank, IMF, CIA World Fact Book and Asian Development Bank (ADB)

KEY ECONOMIC INDICATORS
GDP PPP
2015
(Billion $)
Population
(Million)
GDP/Capita
2015 ($)
GDP Growth
in 2015 (%)
Urban Ratio
(%)
% Industrial
on GDP
Thailand 1,108 67.9 16,100 2.50 50.4 37.7
Cambodia 54 15.7 3,500 7.00 20.7 27.9
Laos 37 6.9 5,300 7.50 38.6 33.4
Myanmar 283 56.3 5,400 8.50 34.1 22.3
Vietnam 552 94.3 6,100 6.50 33.6 38.8
Source: Ipsos Analysis, World Bank, IMF, CIA World Fact Book and Asian Development Bank (ADB)

THAILAND AS “THE BIG BROTHER” IN THE REGION
FDI Flow in 2015
(Million USD)
Thailand Position
in FDI Rank
Accumulated
Investment
(Billion USD)
Thailand Position
in Accumulated
FDI Rank
77 3 1.1 6
550 3 6.8 3
845 3 11.7 3
414 7 6.9 10
Cambodia
Laos
Myanmar
Vietnam
Source: Ipsos Analysis, Bank of Thailand, Government Statistic from Cambodia, Laos, Myanmar and Vietnam

VARIOUS TYPE OF INVESTMENT FROM THAILAND
Cambodia Laos Myanmar Vietnam
Thermal Power
Hydropower, Thermal
Power
Hydropower Thermal Power
Energy Energy, Zinc Energy, Tin Energy
Palm oil, Sugar, Rice Food
Processing
Sugar, Coffee, Rubber, Rice
mill, Wood processing
Animal feed Animal Feed, Rice
Industrial Zone, Resort &
Casino
Shopping Mall
Dawei SEZ,
Industrial Park
Industrial Park
Cement, Textile
Furniture, Plastic,
Fertilizer
Beverage, Textile
Cement, Fertilizer, Shoe,
Food, Beverage, Textile
Banks, Healthcare,
Tourism
Banks, Healthcare,
Logistic, Tourism
Banks, Tourism,
Healthcare
Banks, Logistic, Health
Infrastructure
Mining &
Energy
Agriculture
Real Estate
Manufacturing
Service
Source: Ipsos Analysis, Bank of Thailand, Government Statistic from Cambodia, Laos, Myanmar and Vietnam

THAILAND REPAIR CHANNELS OVERVIEWBORDER TRADE
Country
Permanent
Points
Check
Points
Value of Border
Trade in 2014
(Billion THB)
Cambodia 6 10 114
Laos 17 30 151
Myanmar 7 14 214
Total 30 54 479
Thailand – Myanmar border gate: 7 Locations
Thailand – Laos PDR border gate: 17 Locations
Thailand – Cambodia border gate: 6 Locations
Source: Ministry of Commerce and International Institute for Trade and Development

THAILAND CHANNEL STRUCTURE MAPPINGBORDER ECONOMIC ZONE
Province
Country
Border
Border
Economic Zone
(Phase 1)
Tak Myanmar Mae Sot
Sra Kaeo Cambodia Aranyapathet
Trat Cambodia Khlong Yai
Mukdahan Laos Muang
Border Special Economic Zone Phase 1 (Operation
started on 2015)
Border Special Economic Zone Phase 2 (Operation
expected to start by 2016)
Source: ADB, Ministry of Commerce and International Institute for Trade and Development

THAILAND REPAIR CHANNELS OVERVIEWWHERE TO INVEST IN CLMV???
Cambodia Laos Myanmar Vietnam
Special
Economic Zone
(SEZ)
31 10 3 -
Industrial Zone - - 26 295
Export
Processing Zone
- - - 4
High Tech Zone - - - 3
Source: Ipsos Analysis, ADB, Ministry of Commerce and International Institute for Trade and Development

THAILAND REPAIR CHANNELS OVERVIEWSPECIAL ECONOMIC ZONE IN CAMBODIA
Total of 31 Special Economic Zones (SEZ) in CambodiaSource: ADB, Ministry of Commerce and
International Institute for Trade and Development

THAILAND REPAIR CHANNELS OVERVIEWKEY SPECIAL ECONOMIC ZONE IN CAMBODIA
Source: ADB, Ministry of Commerce and

THAILAND REPAIR CHANNELS OVERVIEWSPECIAL ECONOMIC ZONE IN LAOS
Total of 10 Special Economic Zones (SEZ) in Laos PDR
Source: Guide for SEZ in the Laos PDR, ADB, Ministry of
Commerce and International Institute for Trade and
Development

THAILAND REPAIR CHANNELS OVERVIEWSPECIAL ECONOMIC ZONE IN MYANMAR
Naypyidaw
Yangon
Kyaukphyu SEZ
Thilawa SEZ
Dawei SEZ
Dawei SEZ
Thilawa
SEZ
Kyaukphyu
SEZ
Area
(hectares)
20,000 2,400 1,600
Main
Developer
Thailand Japan China
Key
Industries
Petro
Chemical,
Energy
High-tech
Textile
Petro
Chemical
Total of 3 Special Economic Zones (SEZ) in MyanmarSource: ADB, Ministry of Commerce and

THAILAND REPAIR CHANNELS OVERVIEWKEY INVESTMENT AREAS IN VIETNAM
Currently there is no Special Economic Zones (SEZ) in Vietnam
Source: ADB, Ministry of Commerce and

THAILAND CHANNEL STRUCTURE MAPPINGGMS ECONOMIC CORRIDOR – GATEWAY TO THE NEW ERA OF
TRADE
Southern Corridor
East-West Corridor
North-South Corridor

THAILAND CHANNEL STRUCTURE MAPPINGNORTH-SOUTH CORRIDOR (65.5% COMPLETION)
North-South Corridor
• Consist of 3 subcorridors
1. Western Subcorridor (From Kunming –
Chaing Rai – Myanmar – Laos – Bangkok)
2. Central Subcorridor ( From Kunming –
Hanoi joint with A1 Highway through Ho
Chi Minh City)
3. Eastern Subcorridor ( From Nanning to
Hanoi
• Level of completion ( As of June 2015)
– Infrastructure (65.5%)
• Roads (81%)
• Rail (25%)

EAST -WEST CORRIDOR (50% COMPLETION)
• Connecting Myanmar (Mawiamyine) – Thailand (Mae-Sot, Phitsanulok, Mukdahan) – Laos (Lao Bao)
– Vietnam (Dong Ha)
• Total of 1,530 KM distance
– Infrastructure (50%)
• Roads (50%)
East-West Corridor

THAILAND CHANNEL STRUCTURE MAPPINGSOUTHERN CORRIDOR (50% COMPLETION)
• Consist of 2 main corridors
1. Southern Corridor (From Dawei – Bangkok – Aranyaprathet- Siem Reap and Quy Nhon ) and (
From Bangkok – Phnom Penh – Vung Tau)
2. Southern Coastal Corridor ( From Bangkok – Preah Sihanouk – Nam Can)
• Total of 1,940 KM distance
– Infrastructure (50%)
• Roads (57%)
• Rail ( 50%)
• Power (33%)
Southern Corridor

RAILWAYS STRUCTURE AND DEVELOPMENT

THAILAND CHANNEL STRUCTURE MAPPINGTHAILAND IS LIKELY TO GAIN THE MOST BENEFITS FROM
GMS ECONOMIC CORRIDORS DEVELOPMENT
1. All key corridors have main routes pass
Thailand which situated in the center
of gravity for GMS Economic Corridors
2. By 2020, Intra-ASEAN trade (trade
between 10 ASEAN countries) is
expected to reach 30% of ASEAN’s
total trade. Mainly driven by GMS
region and Indonesia.
3. The integration of AEC will benefit
from FTA to remove import tariffs in
many products.

THAILAND CHANNEL STRUCTURE MAPPINGTHAILAND IS LIKELY TO GAIN THE MOST BENEFIT FROM
GMS ECONOMIC CORRIDOR DEVELOPMENT (CONTINUED)
4. The most developed infrastructure in
the region will strengthen the
importance of Thailand in GMS
5. Thailand will benefit from the growth
of neighboring countries which grew
more than 6.5%, comparing to world
economics growth rate at 1-2%.
6. More trade between Myanmar and
Laos, Cambodia and Vietnam will
increase the benefit of Thailand as the
gate way to other countries in CLMV
from Myanmar.
7. Logistics costs from Thilawa to
Bangkok, Bangkok to Phnom Penh and
Phnom Penh to Ho Chi Minh is
expected to reduced from 10% to
15%* depends on type of goods and
period.
Source: Logistic Barriers in ASEAN paper by The Logistic Institute Asia Pacific
* Primary Interviewed with GMS-EOC and Linfox

CASE SCENARIO: AUTOMOTIVE PARTS INTEGRATION IN ASEAN
Complementary
Production Network
within ASEAN
Investment
from outside of
ASEAN
Investment
from outside of
ASEAN
Investment
from outside of
ASEAN
Investment
from outside of
ASEAN
 Transmission
 Front-wheel
drive shaft
 Finished Car
 Plastic/ resin parts
 Diesel engines
 Hybrid Battery
 Engine computers
 CKD computers
 Gasoline
engines
 CKD for MPV
 Transmissions
1. Multiple production
bases across ASEAN
and GMS
2. With no tariff within
the ASEAN
community
3. Lower logistic cost
due to the
development of
infrastructure.
4. Leverage BOI benefit.
5. Ease of procurement
processes.
Source: Ipsos Analysis

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