Investing In The Special Economic Development Zone – Phase 1

 According to state policy aimed at developing areas along Thailand borders that neighbor other friendly ASEAN nations to improve quality of life, promote trade and investment, and prepare for the AEC’s (ASEAN Economic Community) inauguration just around the corner, Special Economic Zones (SEZs) have been declared in ten provinces, namely Tak, Sa Kaeo, Trat, Mukdahan, Songkhla, Chiang Rai, Nong Khai, Nakhon Phanom, Kanchanaburi, and Narathiwat. One-stop service centers and a number of supportive measurements will be in place to facilitate seeking entrepreneurs. Investing in these special economic development zones is necessary as they connect Thailand with Myanmar through Tak and Kanchanaburi; Lao People’s Democratic Republic through Chiang Rai, Mukdahan, Nong Khai and Nakhon Phanom; Cambodia through Sa Kaeo and Trat provinces; and Malaysia through Songkhla and Narathiwat provinces.

     Border trade between Thailand and the four neighboring countries have grown steadily, with average trade value totaling approx. Baht 900 billion per year. Currently, distribution businesses and labor-intensive industries have shown interest in investing in SEZs as it provides access points to immense labor forces and the feasibility of both distributing and importing of goods and raw materials to-from neighboring countries. As the AEC commences, a range of business transactions are bound to take place, as supply chains link raw material to production, and as domestic consumers and border trades develop. SEZ investors and tycoons shall benefit from, in addition to unusual tax benefits in comparison over other areas, a free flowing easily accessible workforce that became available for the development, only recently.

     Business-friendly investments for special economic development zones, include labor-intensive industries, industries that rely on raw materials from neighboring countries, border trades that require warehousing and distribution centers for exporting to neighboring countries, tourism and tourism related  businesses, as well as a wide range of services that support community expansion in Special Economic Development Zones (SEDZs), such as logistics. The zones consists of ten provinces according to the Committee of Special Economic Development Zone’s announcement 1/2558 and 2/2558. This article will discuss SEDZ Phase 1, only, according to Announcement 1/2558.

1. Special Economic Development Zone: Tak Province.

The International Cargo Transshipment Center, Labor-intensive Industry Network, covers 14 sub-districts in three border districts of the province, namely Mae Sot, Phop Phra and Mae Ramat, a total area of 1,419 sq km (equivalent to 886,875 rai or approx. 350,316 acres), 426 km from Bangkok.  Mae Sot border checkpoint serves as a permanent cross-border point linking Thailand with Myanmar at the town of Myawaddy.  Thailand-Myanmar trade volume ranks first. 

Potential and Opportunities: Situated on the East – West Economic Corridor, the West can be a gateway to Yangon, with further connectivities to India and Southern China.

Basic Infrastructure Development is divided into three phases as follows:

>> Under construction: Tenasserim – Kokarek Road and Highway 12 Parts 2-3

>> Urgent: The 2nd Thailand – Myanmar Friendship Bridge and Baan Roem Moei border checkpoint, Mae Sot District as well as Mae Sot Airport’s development and expansion project

>> Long-term: city roadways and cargo terminal

2. Special Economic Development Zone: Mukdahan Province.

The Wholesale and Multimodal Transport Center covers 11 border sub-districts in three districts, namely Mueang Mukdahan, Wan Yai and Don Tan, a total area of 578.5 sq km (equivalent to 361,542 rai or approx. 142,809 acres), 642 km from Bangkok.  Mukdahan border checkpoint serves as a permanent cross-border point linking Thailand with Lao People’s Democratic Republic (PDR) at Savannakhet.  Thailand-Lao PDR trade volume ranks second largest.

Potential and Opportunities: Situated on the East – West Economic Corridor.  A gateway to Lao PDR and Vietnam and further on to Far Eastern countries (Japan, Korea and Taiwan).  A major channel for cargo transport to Vietnam and Southern China.  Capable of co-production business operations with Savan – Seno Special Economic Zone (Lao PDR), where investments are diverse.

Basic Infrastructure Development is divided into three phases as follows:
>> Under Construction: Highway 12 Kalasin – linking with Somdet District
>> Accelerated Development: Highway 12 Kalasin – Na Khrai – Khamcha-i District, Parts 1-2
>> Long-term: Highway 121 Wan Yai -That Phanom, Phang Mueang Ruam Mukdahan Road and Mukdahan Bus Terminal

3. Special Economic Development Zone: Sa Kaeo Province.

The Center for Agricultural Products Processing Industry and Multimodal Transport covers four sub-districts in two districts, namely Aranyaprathet and Watthana Nakhon, a total area of 332 sq km (equivalent to 207,500 rai or approx. 81,963 acres), 260 km from Bangkok.  Aranyaprathet Border Checkpoint serves as a permanent cross-border point linking Thailand with Cambodia at Banteay Meanchey Province.  Thailand – Cambodia trade value ranks the highest.

Potential and Opportunities: An international wholesale area with retail potentials, as Aranyaprathet is situated near Laem Chabang Port (250 km) and Bangkok, on the GMS Southern Economic Corridor, which is a major channel for cargo transport to Phnom Penh and Southern Vietnam.  Capable of co-production business operations with Poipet – O’Neang Special Economic Zone (Cambodia).  The zone, however, is not yet eligible to benefit from the preferential tariff scheme where developed countries generally grant import tax reductions or exemptions for eligible goods produced in developing countries under the Generalized System of Preferences (GSP). 

Basic Infrastructure Development is divided into three phases as follows:
>> Under Construction: Highway 359, Highway 304 intersection (Phanom Sarakham) – merging with Highway 3 (Sa Kaeo); railways linking Kaeng Khoi – Khlong Sip Kow – Sudsaphan Khlong Luek 
>> Urgent: 22-km highway linking Aranyaprathet – Thailand-Cambodia border (Ban Nong Ian – Stueng Bok)
>> Long-term: Road intersecting Highway 33 to Dan Ban Khlong Luek and Sa Kaeo Bus Terminal

4. Special Economic Development Zone: Trat Province.

The Center for International Wholesale and Multimodal Transport and Regional Tourist Service Center covers three border sub-districts, namely Khlong Yai, Hat Lek and Mai Rut, in Khlong Yai District, a total area of 50.2 sq km (equivalent to 31,375 rai or approx. 12,393 acres), 420 km from Bangkok.  Ban Hat Lek Border Checkpoint serves as a permanentl cross-border point linking Thailand with Cambodia at Koh Kong Province.

Potential and Opportunities: Situated on the South Economic Corridor, the province has access to Laem Chabang Port (approx. 340 km) and Sihanoukville Port in Cambodia (approx. 250 km), as well as a local tourism base and is capable of linking with Koh Kong Special Economic Zone (Cambodia) where there are overseas investments, for example, Hyundai assembly plant, Mikasa volleyball production plant and Yazaki car electronics and instruments plant from Japan.

Basic Infrastructure Development is divided into three phases as follows:
>> Under Construction: Khlong Yai Port
>> Urgent: Expansion of Highway 3 (Trat – Ban Hat Lek) Part 3
>> Long-term: A1, B, and C, city roadways.

5. Special Economic Development Zone: Songkhla Province.

The Processing Industry for Export and Multimodal Transport covers four sub-districts, namely Sadao, Samnak Kham, Samnak Taeo and Padang Besar, in Sadao District, a total area of 552.3 sq km (equivalent to 345,187.5 rai or approx. 136,349 acres), 950 km from Bangkok.  Sadao and Padang Besar Border Checkpoints serve as permanent cross-border points linking Thailand with Malaysia at Kedah and Perlis States.  Border trade value Thailand – Malaysia rank as the highest and second highest, respectively.

Potential and Opportunity: A hub of Thailand’s southern region, Songkhla Province has Sadao and Padang Besar Border Checkpoints by land which see the highest trade value.  Both are situated close to Penang Port and the Central Port of Malaysia. Besides, Thailand and Malaysia are linked via railways through Padang Besar.  Its local production base includes, for example, the rubber, seafood and electronics processing industries. The area is also part of the Indonesia – Malaysia – Thailand Growth Triangle (IMT-GT), a tripartite economic cooperation zone, which will boost the economy in the region and help expand it to neighboring countries, particularly leading to the Joint Special Economic Development Zone Sadao – Bukit Kayu Hitam (Malaysia) to stimulate investments in the industrial and service sectors.  The venture can help further expand trade and investment cooperation along the North-South Expressway in Malaysia into Central Malaysia. 

Basic Infrastructure development is divided into three phases as follows:
>> Urgent: The 2nd Port of Songkhla
>> Long-term: Hat Yai – Thailand – Malaysia Border Highway; Songkhla cargo terminal; Dual-track electric train (Hat Yai – Padang Besar); and Land Bridge projects

     In any case, the above-mentioned data is only part of the special economic zone development.  Still, it should be useful for entrepreneurs and/or investors in all industries as it provides an overall picture, trends as well as potential business opportunities, both current and future.

Compiled by BLOG.SCGLogistics

References Guide to Investing in Special Economic Development Zone. The Board of Investment

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