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Highway Linking China, Laos, and Chiang Rai, Thailand

New highway links China, Laos, and Chiang Rai, Thailand

The Industrial Estate Authority of Thailand (IEAT) deputy governor Verapong Chaiperm said the R3A road that will link China, Laos and Chiang Rai will finish construction next year.

China has expressed interest in the plan to set up a 2,000-rai estate worth around 2 billion baht in Chiang Khong district in Chiang Rai, which will be ready for commercial sales in 2014.

The two sides are working on details related to joint developments and target clusters. While China’s aim is to focus on pharmaceuticals, Thailand’s focus is on processed agricultural goods and electrical appliances, said Dr Verapong.

Chiang Khong district of Chiang Rai and Houei Xai district of Bokeo province in Laos, will help bolster Chiang Rai’s trade with neighbouring countries by tenfold to 100 billion baht in the next decade.

The Thai government is also planning about eight billion baht worth of infrastructure projects to foster further development, among them the new bridge in Chiang Khong.

Significant improvements have been made to the infrastructure and facilities initiated under the Greater Mekong Sub-region in recent years, with the latest being the completion of the about 250 kilometres of the R3a highway, which will be opened officially on Monday. While the development has delighted the business community, question remain as to how all sides can make the most out of this transport system to assist border trade.

Differences in customs procedures, as well as the unsettled issue of revenue sharing from the fee collected for the use of the Thailand-Laos bridge linking Mukdahan and Savannakhet, are likely to inhibit the new route’s potential. For example, cargoes from China to Thailand would have to pass different customs checks, including those in Vietnam and Laos. Such inconveniences and the time-consuming process will definitely cost traders more.

Acknowledging the problem, the Chiang Rai Chamber of Commerce is planning to propose a single-stop inspection system for goods shipped through the R3a route.

The system requires all involved countries to harmonise their customs procedures and private companies are being urged to team up and register as a safeguard and risk-management measure.

The chamber’s chairman, Pattana Sitthisombat, said that once everything was sorted out, an inspection of shipments at the Chinese distribution centre would be enough and the goods would not need to be checked again in Vietnam, Laos, and Thailand.

Mr Pattana, who also heads the Quadrangle Economic Development Business Committee that groups 10 provincial chambers of commerce in the north of Thailand, suggested the government urgently address the problem before R3a becomes widely used.

He said that the chambers would meet next month and draft more proposals relating to logistics, tourism and trade to the government, adding that the National Economic Social Development Board should spearhead the issue.

The agribusiness conglomerate CP Group also voiced support for the harmonisation of customs procedures since it could speed up and facilitate farm shipments from country to country.

CP, which has invested extensively in the agricultural sectors in Indochina for decades, still encounters difficulties resulting from imports and exports regulations.

CP Group vice-chairman Ajva Taulananda said that certificates of origin would likely become a problem as well.

“The output harvested from the Ayeyawady area needs to have certificates issued in Rangoon. Or the trucks that carry them need to be changed when getting through Laos,” said Dr Ajva, citing some of the difficulties he foresaw.

At present, imports of production from crops that Thai companies invest in neighbouring countries are prohibited.

“Customs harmonisation and eased imports regulations would even make the region more attractive for trade and investments,” he said.

Though the CP Group is not allowed to bring back the commodities it planted in neighbouring countries to Thailand, it is still upbeat about its contract-farming to promote planting of maize and soybeans in the countries under the pact of the Ayeyawady-Chao Phraya-Mekong Economic Co-operation Strategy (Acmecs).

“We could supply this produce to our animal-feed plants and feed CP’s poultry and shrimp operations that are spreading throughout the region,” he said.

According to Dr Ajva, CP has pioneered contract-farming to grow maize on a total of 3.6 million rai in four Acmecs neighbours: Cambodia, Laos, Burma and Vietnam.

It plans to increase the areas to one million rai each in Cambodia and Laos, from 600,000 and 200,000 rai respectively.

As a former chairman of the Acmecs Business Council, Dr Ajva suggested Thai businessmen use the Acmecs mechanism to expand trade and investments in member countries, where farm businesses are a good choice due to abundant and fertile land.

Besides maize and soybeans, rubber and palm oil have a prosperous outlook. They could produce strong yields, given healthy soil with no need for fertilisers. “Even the flooded areas along the Ayeyawady River have as high as one million rai of fertile land that that are perfect for farming,” Dr Ajva said.

In Thailand, an estimated 130 million rai of farm areas are diminishing, giving way to economic expansion and urbanisation. Maize plantation areas have shrunk markedly to only six million rai today, and Thai companies should not overlook their neighbouring countries.

“What Thai investors should bear in mind is that they have to buy back output at fair prices and provide technical assistance to show their willingness in doing business there,” he suggested.

Another leading businessman said Thais should not be too aggressive, arrogant or greedy when doing business in the neighbouring countries.

“Instead, they should have morality and show their sincerity and sensitivity on issues involving mutual benefits from joint ventures,” suggested Jingjai Hanchanlash, a director of Loxley Co, who has played a big role in developing the GMS scheme.

“Local partners prefer longer-term investments to short-lived ventures where investors aim only to dig gold from their rich resources and then leave,” he elaborated.

Dr Jingjai, also former chairman of the GMS Business Council, expects substantial foreign investments including those from Loxley, which plans to set up a culinary school in Laos and open convenience stores in Burma.

Asked about political uncertainties in these countries, he said: “Though there was political unrest in some of these countries, it has to date had minimal effects on business communities. The same goes for Thailand, where changes in politics have no great impact on local businesses.”

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Posted by on Sep 23 2011. Filed under Chiangrai News. You can follow any responses to this entry through the RSS 2.0. Both comments and pings are currently closed.
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