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Economy

Thailand scraps new economic zones and plans regional linkups

Bangkok to focus on infrastructure in border towns over industrial parks

A sign showing the road leading to Thailand near Dawei in southern Myanmar where a special economic zone has been built.    © Reuters

BANGKOK -- The Thai government is revamping its special economic zone strategy and pushing for links with those in neighboring countries, hoping to improve access within the region and secure tariff-free entrance for its goods into the European Union.

Deputy Prime Minister Somkid Jatusripitak recently said government agencies are drafting plans to develop some border areas, with the goals of boosting exports and providing jobs to narrow the urban-rural inequality gap.

"Thailand as a major player which is located in the center of the region should try to optimize these opportunities," said the deputy prime minister.

Since taking power in 2014, the military-led government had floated SEZ projects with the idea of building industrial complexes in the poor, remote areas along the country's border. The plans backfired by fueling property speculation and sending land prices substantially higher, driving up the costs of building the SEZs.

The planned SEZs were also not competitive compared with similar facilities in neighboring Greater Mekong countries. Goods from developing countries such as Myanmar, Cambodia, Laos and Vietnam can be moved into the European Union tax-free. Thailand, being more developed, faces EU import taxes of up to 30% for most goods and up to 100% for "sensitive" products, a factor that has caused projects to fall through.

"That has made us rethink about our SEZs project," said Somkid. "In fact, we should learn from them and we should work and grow together with [neighboring Mekong countries] instead of vying with them."

To that end, the Thai government plans to hold senior-level meetings soon with Cambodia, Laos, Myanmar and Vietnam, collectively referred to as CLMV, to discuss ways to jointly develop SEZs at the borders.

Thailand is now putting more weight on building up rail links and improving transportation and logistics near border areas to facilitate trade and investment in the SEZs of its neighbors. Thai investment into goods produced and exported from CLMV would also be exempt from EU import taxes.

Korbsak Pootrakool, minister of the Office of the Prime Minister, said development of the border area in Thailand's easternmost Mukdahan Province, which is located near the Lao Savan Seno SEZ, should focus on improving logistics-related infrastructure instead of building a new industrial park.

"Improved logistics infrastructure could help facilitate Thai investors to invest in Laos and export from Laotian origins to capitalize on zero tariff into the EU," he said.

The Thai government also plans to invest in trading and logistics facilities in the western and northern border areas, near Dawei and Myawaddy cities in Myanmar, over the next few years. Those cities are home to two SEZs. Thailand recently said that it expects border trade with Myanmar to double to $12 billion by 2026.

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