Special Report: Cross-border trade with neighbours set to flourish ahead of AEC

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In contrast to a sharp economic slowdown in world economy, Thailand’s border trade with neighbouring countries is targeted to increase potentially this year, ahead of the formation of the Asean Economic Community in 2015. 

An Economics lecturer at the University of the Thai Chamber of Commerce (UTCC), Associate Professor Vijitra Chalermchaichana said Thailand’s total border trade value in 2013 is estimated at over 1 trillion baht, a jump from 600 billion baht in 2010.

In 2012, the country’s border trade with Malaysia accounted for 57 percent of the total border trade. However, Malaysia, which is one of the four neighbouring countries with commercial relations with Thailand, is expected to reduce trade activities with the kingdom, due to ongoing unrest in the deep South.

Border trade with the other three including Myanmar, Laos, and Cambodia, meanwhile, is forecasted to reach unprecedented level in the next few years, as analysts speculated that its growth rate will jump by nearly 30 percent. Border towns in the North, Northeast and East are projected to experience robust growth in cross-border trade in the near future.

Associate professor Vijitra made known that as these ASEAN members continue to reduce duties, the Thai government needs to promote cross-border trade to strengthen the economy amid the anticipated global slowdown and ahead of the country’s entry into a single regional common market.

She cited Myanmar’s Dawei deep-sea port and special economic zone development as a bright investment prospect following the US’ lifted bans on investment and financial services. The Dawei project is set to become Asia’s newest regional investment hub nestled between the rising powers of India and China. Italian-Thai has recently signed a 60-year concession to develop Dawei which is expected to require a total investment of 350 billion baht.

Ms Vijitra urged local businesses to speed up expansion plans into nearby markets with strong growth potentials. As the strength of quality Thai-made products is by now recognized in the region, Thai operators should seize the advantage to tap the AEC market and capitalize on neighboring countries’ increasingly high purchasing power.