Thailand poised to emerge as ASEAN logistics center

SxSE_TempleDespite its history of political unrest and military juntas, the nation of Thailand is emerging as a major Southeast Asian logistics hub that could be worth nearly US$100 billion in revenue over the next few years, according to a December 2015 study released by worldwide consultants Frost & Sullivan.

Thailand’s economic policy, which focuses on high-tech manufacturing and expansion of trade, combined with increased foreign capital inflows, will support accelerated growth in air services, the report said. Frost & Sullivan estimates that Thailand’s logistics industry earned revenue of $71.7 billion in 2014 and the consultants believe it will reach $96.5 billion by 2019.

Thailand is part of the 10-member Association of Southeast Asian Nations (ASEAN) which also includes Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore and Vietnam. Frost & Sullivan found that the formation of ASEAN in 1967 and the impact of various free-market agreements on key manufacturing sectors outside the region are shaping Thailand’s logistics landscape.

“Government plans to position Thailand as the trade and service hub of the Greater Mekong sub-region and as the gateway to Asia are opening up opportunities in the logistics and transport industry,” said Jeff Tan, automotive and transportation senior consultant for Frost & Sullivan. “Thailand’s road transport plays a key role in connecting the landlocked countries of Indochina.”

Cross-border trucking will be supported by increased foreign investment in Myanmar, Cambodia and Laos, accelerating road network development in Thailand, the report said. However, global uncertainties such as stalled economies in the Eurozone and Japan could be a threat to Thailand’s exports and possibly derail transportation and logistics projects. Also, delays in government spending, and failure to invest optimally in logistics infrastructure could hamper freight movement, thus lowering Thailand’s productivity.

Last year, the Hong Kong Trade Development Council reported that Thailand’s manufacturing sector – dominated by automotive and electrical products – represented 80 percent of its exports in 2014, and that exports made up half of the country’s GDP. Thailand’s exports to other ASEAN countries also grew by an average of 12 percent per year during the period from 2009 to 2014, HKTDC said, with Myanmar, Cambodia and Laos being the fastest-growing trade partners.

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