Thailand Planning More Border SEZs

Thailand Planning More Border SEZs

Khmer Times/May Kunmakara Sunday, 13 March 2016 

A Thai study being carried out on special economic zones (SEZ) in 15 provinces along the country’s borders has been welcomed by Cambodian and foreign businessmen, who say both countries can benefit, but some uncertainty remains over exactly where and when the zones will be built. 

According to a report in the Bangkok Post, Pasu Loharnjun, the Director-General of Thailand’s Industry Ministry’s Department of Industrial Works, is conducting a study on industrial zoning to find appropriate locations for industrial estates in special economic zones (SEZs).

Mr. Pasu said industrial estates played a big role in SEZs and a zoning plan would help find appropriate locations that included the participation of nearby villagers. The initial studies would be conducted in two provinces, Narathiwat and Nakhon Phanom, which are in the second phase of developing SEZs.

Industrial zoning is meant to accelerate progress of the second phase of SEZs, he said. The first phase, which started early last year, comprises five provinces: Tak, Trat, Sa Kaew, Mukdahan and Songkhla.

“We are conducting these studies to ensure investors and villagers that with proper management, factories can operate harmoniously with communities, especially if the SEZs are well managed,” he said. Studies are also planned in 15 other provinces with strong potential and that are appropriate for industry. Those provinces are Ranong, Pathum Thani, Ratchaburi, Nakhon Sawan, Chiang Rai, Chiang Mai, Phitsanulok, Kamphaeng Phet, Roi Et, Udon Thani, Nong Khai, Ubon Ratchathani, Chumphon, Surat Thani and Krabi. Mr. Pasu said last year that studies were carried out in the 15 provinces, including five that are in the first phase of SEZ development.

Hiroshi Uematsu, the CEO of the Phnom Penh Special Economic Zone who is now working to develop 53 hectares of land in Poipet for a new special economic zone, told Khmer Times that the newly proposed SEZs in Thai provinces bordering Cambodia would give both sides mutual benefits. 

“We understand that both the Cambodian and Thai governments are coordinating on how to mutually develop both sides of border towns Poipet and Aranyaprathet. We believe that both SEZs can grow together by differentiating the production functions,” said Mr. Uematsu. 

He added that the high-tech and machine intensive production will remain in Thailand, while labor intensive production for car and electronic parts will move to Poipet due to the relatively cheap and young labor force. 

During the second Cambodia-Thailand Joint Cabinet Retreat in Bangkok in late December last year, both prime ministers pledged to increase bilateral trade to $15 billion by 2020 – an increase of 30 percent annually. 

Hiroshi Suzuki, the CEO and chief economist for the Business Research Institute for Cambodia, said the Thai government would employ cheap Cambodian labor if they decided to build an SEZ on the Cambodian side of the border. 

“From the viewpoint of factories in Thailand, a Thai SEZ near the border is not so big an advantage. They can enjoy lower labor costs if the SEZ is located in Cambodia. If the SEZ is on the Thai side, their advantage is limited by the number of Cambodian workers,” he said. 

“However, from the viewpoint of the Cambodian workers, the advantage is the opposite. If they work in Thailand, they can enjoy much better wages. So, some companies in Thailand which are facing difficulties finding good numbers of workers and who would not like to go out of Thailand would select the SEZ on the Thai side,” he added. 

“I believe that the SEZs on the Cambodian side still have more advantages than SEZs on the Thai side.” 

However, he said it would be essential for Cambodia to lower the risk factor for companies in Thailand which would like to shift factories to Cambodia. 

“The risk means; the quality of the SEZ, the quality and cost of the infrastructure such as electricity, safety, labor problems, speed and transparency, customs clearance etc.,”  he added.  

Mr Uematsu said he is now leveling land on a 53 hectare site in Poipet and will also begin work on roads this month and hopes to complete phase 1 and have 25 hectares ready by the end of the year. “After the completion of the project, we are expecting some car and electronic parts factories to invest in our SEZ in Poipet. However, we have to make sure we are able to provide reliable energy, especially electricity and water, at a reasonable price. We must also contend with the high logistical costs from Poipet to Bangkok,” he said. 

Cambodia is Thailand’s 22nd largest trading partner and the eighth largest in ASEAN. Bilateral trade was worth $5.1 billion in 2014, up 11 percent from the $4.6 billion in 2013, according to the Thai Embassy in Phnom Penh.