Thailand, officially know as the Kingdom of Thailand, is a newly industrialized economy and the second largest in South East Asia. Thailand is recognized by the world Bank as “one of the great development success stories” in social and development indicators.
Thailands geographical location gives it a unique advantage to becoming a future world logistics hub. Sharing borders with Burma, Laos, Cambodia and Malaysia it provides easy accessibility to all major ports in the vicinity, including Japan, China and India as well as emerging economies like Cambodia, Vietnam and Laos.
How foreign logistics companies are positioned
Currently Thailand has good facilities in order to attract foreign investment, with the exception of low-cost operating bases for companies. In order to develop into a logistics hub in the ASEAN region it will need to start offering attractively priced logistics.
The Thailand Board of Investment is currently granting generous tax and non-tax incentives to logistics projects. Among the many eligible activities are logistics parks, distribution centers, concession roads, transport of bulk goods, international trading companies, and trade and investment support offices. Any foreign investors, in particular 3PL’s would be well placed to take advantage of these grants.
Thai Growth is Long Term
Logistics is a huge industry in Thailand, and is responsible for generating about 3.2% of Thailand’s GDP.
Logistics forms an important economic sector on its own and the significance of the logistics industry in the economy is far beyond the afore mentioned contribution to the Thai economy.
Logistics is seen by Thailand as something that will help to facilitate the development of the economy.
Thailand has committed to the South Asia Free Trade Agreement (SAFTA) and the Indo-Thai Free Trade Agreement, which have improved its trade ties within the region. These factors have resulted in the growth of some major ports like Laem Chabang, Klong Toey and Bangkok
Logistics is Critical to Thailand’s Growth
With exports accounting for more than two thirds of its gross domestic product (GDP),
Thailand, as mentioned before is heavily export-dependent, as a result logistics is critical to the development of theThai economy.
Thailands’s Economic Areas
Thailand exports annually in excess of $105(US) billion worth of goods and services and is the world’s no.1 exporter of rice, exporting more than 6.5 million tons of milled rice annually. Whilst rice is the most important crop in the country, other major exports include; textiles and footwear, fishery products, rubber, jewellery, cars, computers and electrical appliances.
Thailand’s Fruit Export Industry
Thailand is often referred to as the worlds food bowl.
Growing exports of Thai fruit to China are creating opportunities for logistics providers along overland routes between the two countries. China’s imports of tropical fruit, particularly from Thailand. (source) http://www.bangkokpost.com/news/asia/322005/china-s-taste-for-thai-fruit-drives-prospects-for-logistics-businesses. View our policies at http://goo.gl/9HgTd and http://goo.gl/ou6Ip. © Post Publishing PCL. All rights reserved.
Thailand’s Logistics Infrastructure
The strategic development of logistics in Thailand has been neglected for a long time. Like many of its Asean neighbours, the country has been affected by issues such as limited infrastructure, traditional cost containment and the lack of awareness about good logistics practices.
About 86% of Thailand’s cargo is currently moved by road, 12% by ship, 2% by train and the rest via air freight. To bolster the country’s investment attractiveness and meet the business demands of the future, the Thai government is committed to continued improvement of each method.
Thailand’s Road Infrastructure
Thailand also has an extensive road network. With a road density of around 125.7 kilometers per thousand square kilometers. With the possibility of a Trans-Asian highway networking most countries on the Asian mainland, this could be the key contributor to Thailand to become a regional logistics hub of ASEAN as it is bordering with countries such as Laos, Cambodia, Malaysia and Myanmar. In addition, the Government has taken initiatives to improve the country’s road and rail infrastructure network to match global standards.
Thailand’s Air Logistics
Thailand is home to six international airports, affording access to all regions. A state-of-the-art facility located in the outskirts of Bangkok, Suvarnabhumi currently services 116 airlines and in 2011 handled 47.9 million passengers. Its ongoing phase-two project will uplift capacity to 60 million passengers. Suvarnabhumi has been ranked as the 10th best airport globally by the London- based aviation research institute.
Thailand’s Logistics Education
Development of Logistics skills and knowledge is critical to Thailand’s future. Companies like Latus are pro-actively positioning themselves to assist in Logistics education and skills development.
There are still very limited numbers of qualified young managers specialised in logistics and supply chain technology in key Thai LSP positions, and those who are qualified are being headhunted at an alarming rate by neighboring countries such as Vietnam.
However specialist foreign logistics companies are also well placed to bring their knowledge and expertise to the Thai market.
Considering Entry to the Thai Logistics Market?
Thailand is still working towards becoming one of the successful logistics hubs, whilst current expenses stand in the way of Thailand’s success. Its proximity to the ASEAN region will ensure that with time and government investment that Thailand could become an economic powerhouse.
Australian, USA and Canadian companies in particular with large ex pat Thai populations should be looking to leverage that resource to investigate the developing market opportunities.
Growth areas in Thailand’s market include; electrical, cold chain storage and transport.
Alternatively undertaking courses like our ASEAN Logistics Intensive enable foreign companies to learn and network with Thai logistics professionals to identify potential opportunities.
Thailand is a developing at a fast rate; its major cities are sophisticated and are expected to become one of the worlds leading logistics epicenters. Foreign logistic companies should be seriously investigating the opportunity Thailand offers for their logistics skills and expertise.