Thai Government Programs Emphasize Transportation and Logistics
Thailand’s robust growth of a few years ago has since slowed. Its gross domestic product growth has trailed its regional neighbors in recent years, hitting a three- to four-percent stride since 2015, while Vietnam is growing at close to seven percent.
The government has embarked on programs in an effort to turn that around. Thailand 4.0 envisions a new economic model for the country to bring it to the forefront of the global digital economy. Development of the Eastern Economic Corridor (EEC) involves investments in high-tech megaprojects and including major improvements to the regional logistics infrastructure.
Logistics investments in the EEC aim to create seamless transportation systems linking roads, rails, sea routes, and air transportation. EEC projects include the Bangkok-Rayong high-speed train system linking three airports; expanding U-Tapao International Airport, developing it into a regional aviation MRO hub; and the further development of the Laem Chabang and Mab Ta Phut sea ports.
Development of Phase 3 of the Laem Chabang Deep Sea Port aims to expand its capacity to handle three million auto exports and 18 million TEU per year. “We want Laem Chabang to rank among the world’s top ten ports,” Pailin Chuchottaworn, Thailand’s Deputy Minister of Transport, told a seminar attended by investors and reporters in Bangkok in March 2018.
Map Ta Phut port is projected to be the beneficiary of over $1 billion in public and private investments over the next five years to development an infrastructure for handling petrochemicals.
Development of double track rail lines is part and parcel of the port expansion plans, according to Kanit Sangsubhan, secretary general of the Eastern Economic Corridor Office. “The double-track track rail lines will connect industrial zones nationwide to the three main ports,” he said. “This will increase the capacity to handle more liquid materials and natural gas.” There are also plans to build highways to access the ports.
On the aviation front, the Thai government has plans to expand U-Tapao International Airport, a facility that opened a little more than a year ago. “Thailand’s Ministry of Transport is offering incentives to grow aircraft maintenance facilities and expand the aircraft parts manufacturing industry,” noted Chuchottaworn.
The incentives include allowing the private sector to invest in airports via public-private partnerships (PPP), while foreign companies will be eligible to handle airport management and hold a share of more than 51 percent in the MRO centers. Airbus is considering investing in an aircraft maintenance center in Thailand at U-Tapao under a memorandum of understanding signed with Thai International Airways earlier this year. The MOU covers conducting a feasibility study with Thai on opening a regional MRO hub at the airport.
The government’s plan for the EEC includes targeting 116 industries, including sectors whose growth can be accelerated by the application of digital technologies, activities supporting science and technology, and basic infrastructure. Targeted industries qualify for exemptions to corporate income tax for two years longer than others—for a total of up to eight years—as well as a 50-percent tax reduction for an additional five years.
These measures are all about “strengthening Thailand’s position in the global market,” Thai Deputy Prime Minister Somkid Jatusripitak told the investment seminar, and “transforming Thailand into an advanced economy.”