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1November 2009 Copyright © 2009 by NESDB

Challenges of transit trade facilitation and the Way Forward: On-going Implementation in Thailand

byMr. Arkhom Termpittayapaisith

Deputy Secretary GeneralOffice of the National Economic and Social Development Board

Presented to Asia-Pacific Trade Facilitation Forum

10.15-12.00 hrs, Thursday 26 November 2009United Nations Conference Center


Regional - Sub-regional Cooperation – Contributing Factor1

2

The Ways Forward3

Trade Facilitation: An Element of Thailand’s Logistics Plan

Agenda

1


Current and Proposed Regional Agreements in Asia-Pacific Region

Laos

BhutanNepal

Myanmar Cambodia

BangladeshSri Lanka

MaldivesPakistanIndia

BruneiPhilippinesVietnamSingaporeMalaysia, Indonesia

AustraliaNew Zealand Japan Korea

China

The United StatesCanadaMexico

Chile, Hong Kong, Chinese TaipeiPapua New Guinea, Peru, Russia

Costa Rica, Guatemala,El Salvador, Honduras,Nicaragua,Dominican Republic

NAFTANAFTANAFTAAPEC (FTAAP)APEC (FTAAP)

APTAAPTAAPTA

BIMSTEC FTABIMSTEC FTABIMSTEC FTA

SAARC (SAFTA)SAARC (SAFTA)SAARC (SAFTA)

ASEAN (AFTA)ASEAN (AFTA)ASEAN (AFTA)

ASEAN+6 (CEPEA)ASEAN+6 (CEPEA)

ASEAN+3 (EAFTA)ASEAN+3 (EAFTA)ANZCERTAANZCERTAANZCERTA

Northeast Asian FTANortheast Asian FTA

ANZCERTA: Australia & New Zealand Closer Economic Relations Trade AgreementAPEC: Asia Pacific Economic CooperationASEAN: Association of Southeast Asian NationsCAFTA-DR: Central America Free Trade Agreement and The Dominican RepublicEAFTA: East Asia Free Trade AreaNAFTA: North America Free Trade AreaSAFTA: South Asian Free Trade Area

AFTA: ASEAN Free Trade AreaAPTA: Asia Pacific Trade Agreement (Known as Bangkok AgreementBIMSTEC: Bay of Bangal Initiative for Multi-Sectoral Technical

and Economic CooperationCEPEA: Comprehensive Economic Partnership in East AsiaFTAAP: Free Trade Area of the Asia-PacificSAARC: South Asian Association for Regional Cooperation

Proposed Regional Agreement

CurrentRegional Agreement

ThailandThailandThailand

CAFTA-DRCAFTACAFTA--DRDR


Trade Facilitation & Logistic Development under ASEAN Economic Community (AEC)

All members build up trade facilitation

system to apply ASEAN Single Window

Present Within 2013

Free Flows of Goods

Allow 70% foreign

shareholders in

Thai’s logistic service.

Liberalization of all service sectors

• Implement full function of ICT for custom

duty and trade facilitation

• Full function of ASEAN Single Window

system

• Transportation Action Plan

- Poipet-Sisophon Rail Link

-Road Safety Requirements (2011)

•Draft ASEAN framework on multi-model

transport facilitation (2013)

•Singapore-Kunming Rail Link (SKRL)

•Draft ASEAN framework on cross

border transport facilitation

Present Within 2013

Present Within 2015

Free Flows of Services

Infrastructure Development


JDS – Stability & Security

IMT-GT – Avian Influenza Energy,

Natural Disaster and Earthquake

Security

Sub-regional Cooperation:Cooperation that Leads to Economic Prosperity and Better Quality of Life

ACMECS -- Sister Cities Contract

Farming Narrowing Economic Gap

GMS -- Connectivity

Competitiveness

Community

BIMSTEC

-- New Emerging

Economies

Poverty Eradication

Anti-Terrorism


Cooperation with Neighboring Countries in the Subregion

• To enhance Connectivity, Competitiveness and Communities

• To expand trade and investment toaccommodate growth of thesubregion (GMS, ACMECS, IMT-GT)

• To create economic linkages within the subregion by emphasizing on linkages of production chain, production base and marketing

• To narrow the development gaps


Subregional Connectivity Subregional Connectivity

in the GMS:in the GMS:

199219922006200620152015

Roads

Telecommunications

Power Transmission Line

Sub-regional Development Trends

• Intra-subregional connectivity

especially in infrastructure will

be improved and completed

i.e. land transportation,

telecoms & ICT, transmission

lines and power grids


Ongoing Pilot CBTA Checkpoint : MukdahanWaiting for Implementation : Aranyaprathet Future Plan : Chiang Khong Trat Ubonrajchatani Mae Sot and Mae Sai

Ongoing Pilot CBTA Checkpoint : MukdahanWaiting for Implementation : Aranyaprathet Future Plan : Chiang Khong Trat Ubonrajchatani Mae Sot and Mae Sai

Cross Border Transport Agreement (CBTA)

Key Concept of CBTAExchange of Traffic Rights (500

permits)

Single Window Inspection

Single Stop Inspection

Other facilities i.e. Traffic Sign, Permit, Driving license, insurance

Key Concept of CBTAExchange of Traffic Rights (500

permits)

Single Window Inspection

Single Stop Inspection

Other facilities i.e. Traffic Sign, Permit, Driving license, insurance

Thailand ratified 11 annexes and

protocols out of total 20. Five bills are

in process for enforcement. Before

March 2010, 4 additional annexes and

protocols should be ratified.

Thailand ratified 11 annexes and Thailand ratified 11 annexes and

protocols out of total 20. Five bills are protocols out of total 20. Five bills are

in process for enforcement. Before in process for enforcement. Before

March 2010, 4 additional annexes and March 2010, 4 additional annexes and

protocols should be ratified.protocols should be ratified.

7 Pilot sites for Initial Implementation of CBTA

7 Pilot sites for Initial Implementation of CBTA

Open to Traffic among Thailand-LaoPDR-Viet Namalong EWEC since 11 June 2009

Open to Traffic among Thailand-LaoPDR-Viet Namalong EWEC since 11 June 2009

9November 2009 Copyright © 2009 by NESDB(Aranyaprathet(Aranyaprathet--Poipet) (TPoipet) (T--C)C) pendingpending

Flow of Goods and People from Country B to Country A

Country B Country A

CBTA

Step

Normal Clearance

Process

Normal Clearance

Process

Joint Process

Clearance Doc

Joint Inspection at CCA

(If Required)

1 CIQ CIQ None C

2 IQ IQ C C

3 I I CQ CQ

4 None None ICQ CQ

Ongoing:4 Check Points (total16)

- Mukdahan-Savannakhet (T-L)

- Dansavanh-Lao Bao (L-V)

- Heku-Laocai (PRC-V)

- Bavet-Mocbai (C-V)

Ratification Status

- Ratified all: CAM PRC LAO VN

- Not Ratified all : MYA

- Ratified Some: THA (11)

Remark: C-Customs; Q-Quarantine; I-Immigration

Cross-Border Transport Facilitation in the GMS


Regional - Sub-regional Cooperation – Contributing Factors1

2

The Ways Forward3

Trade Facilitation: An Element of Thailand’s Logistics Plan

Agenda

2


1) Low efficiency of logistics management in Thailand compared with trading partners

2) 88 percent of freight transport relying on trucking, a mode of transport with high energy-consuming cost

3) Oil price surging – NTB – Terrorism threats

4) New Geography of Trade signifying ‘Trade facilitation’ a success factor for competitive advantage*

5) Competition by MNCs in all sectors by taking advantage from better logistics and supply chain management

1) National economic restructuring strategy

2) Logistics service sector potentially creating economic values

3) Logistics development leading to new perspective in enhancing business efficiency along supply chain

* UNCTAD, 2005

Factors governing the decision on Thailand’s logistics plan

Push Factor

Pull Factor

http://images.google.com/imgres?imgurl=http://www.globefish.org/billeder/WTO-DOHA_724.jpg&imgrefurl=http://www.globefish.org/index.php?id=1220&h=170&w=250&sz=9&hl=en&start=23&tbnid=-KhlzaHmMxgMmM:&tbnh=75&tbnw=111&prev=/images?q=Non+tariff+barriers&start=20&ndsp=20&svnum=10&hl=en&lr=&rls=GGLD,GGLD:2004-48,GGLD:en&sa=N


Thailand’s Logistics Cost to GDP (1999‐2007)

%

18.919.118.317.317.618.0

19.520.019.2

Source: Thailand’s Logistics Report 2008, NESDB

Thailand’s Logistics & Trade Facilitation Challenges: Cost vs. Value‐added

9%

11%

11%

13%

18%

21%

USA

Japan

EU

India

Thailand

China

Source: The Economist, June 17th 2006 & NESDB

Logistics Cost to GDP in Comparison

Potential growth for logistics services in ASEAN countries is 3‐4 times of GDP growth for the next 5 yearsSource: McKinsey


To establish a world-class logistics system at both national and industrial levels in order to support Thailand as the Indochina’s trade and investment hub

Vision

Trade Facilitation: An Element of Thailand’s Logistics Development Strategy (2007-2011)

Objectives

Strategic Agendas

1.To enhance trade facilitation with an aim to increase cost efficiency, customers’responsiveness and reliability and security

2.To create value-added for the logistics and other supporting industries

Business Logistics

Improvement

Transport and Logistics Network

Optimization

Logistics Service

Internationaliza-tion

Trade Facilitation

Enhancement

Capacity Building

2.Logistics Development for Key Industry Action Plan

3.Trade Logistics Action Plan

4. Single Window e-Logistics Development Action Plan

5. Logisitcs Data System Action Plan

6. Logistics Capacity Building Action Plan

1.Immediate Logistics Action Plan 2007

7. Establishment of Permanent Mechanism

The Thai Cabinet approved on February 27, 2007


Key Initiatives: Upgrading logistics human resources and businesses

1 2 3 4 5

Strategy 1Strategy 1

Upgrading performance and quality of

logistics personnel in manufacturing industries and logistics service businesses


Improving curriculums and teaching methodology to obtain a closer linkage

between theory and practice


Setting up Occupational Standard and Vocational Qualification for logistics

personnel

Thailand’s logistics capacity building action plan (2008‐2011)

Key Initiatives:

Rationales 1. Severe competition among industries and logistics businesses at both domestic and international levels high‐skilled labors with international trade and logistics knowledge are in greater demand

2. Insufficient logistics personnel in both real sectors and logistics service businesses3. Lack of logistics practical skills found in graduates produced by vocational and graduate institutes

1. Logistics Clinic – offering consultation on logistics management for SMEs2. Logistics Capacity Building Project – providing series of seminars and trainings3. Performance-specific training program for Thai truck drivers 4. Writing Thai logistics-related case studies5. Offering ‘Cooperative Education’ with private companies on logistics degree in universities


Key Initiatives: Transport and Logistics Network Optimization

1 2 3 4 5

Modal Shift Multi-modal Transport

Cross-border Trades

Commodity-based

Route-based Area-based

Physical Infrastructure Trade FacilitationTransport Management

Railway system: Water way transport:

‐ Constructing double track on the Eastern route‐ Procuring additional locomotives and pallets‐ Proceeding the organization re‐engineering program of the State Railway of Thailand

‐Modernizing seaports at LCB Port and Bangkok Port (e.g. e‐port by e‐toll, e‐gates) ‐ Constructing public river piers‐ Preparing a terminal for coastal ships at LCB Port‐ Reducing port charges for coastal shipping

Key Initiatives:

1. To save energy2. To integrate multi‐modal networks3. To build seamless connectivity

Objectives:

Regional connectivity:

‐ Supporting transport linkages with neighboring countries‐ Establishing new trade lanes to the world market


Key Initiatives:Transport and Logistics Network Optimization 1 2 3 4 5

• GMS transport and logistics network – Thai investment• 16


Importer/Exporter

Carrier

Ship Agent, Airlines Agent

Custom Broker/Freight Forwarder

Bank and Insurance

Other LogisticsService Providers

Private Sector&Transport Agencies

Other business parties

VAS

VAS

VAS

VAS

Value‐AddedServiceProviders

Value‐AddedServices for

Single Window Entry andBusiness Process

Management

56

National Single Window(NSW)

By The CustomsDepartment

e‐Document Exchange Hubfor Cross‐border

Trade and Transport

1

ICT National Infrastructure and related Laws4

Governance Mechanism – policy decision, service charge regulation, SLA etc2

Data Harmon

ization

3

Customs Dept

Dept. of Foreign Trade

Dept. ofDisease Control

Dept. of Fisheries

Port AuthorityOf Thailand

Port/Airport

30 Governmentand Facilitation

Agencies

Other public

agencies

ebMS

ebMS

ebMS

ebMS

ebMS

ebMS

Data Harmon

ization

Source: Ministry of Information and Communication Technology and Kasetsart University 17

System Architecture: National Single Window of Thailand 1 2 3 4 5


Key Initiatives:Evolution of Thailand’s Trade Facilitation System

Stage I (1998 )Stage I (1998 )

Manual Manual OperationsOperations

Stage II (1998 Stage II (1998 ‐‐2006)2006)

Customs Customs EDI ServicesEDI Services

Customs Customs Paperless ServicesPaperless Services

Stage III (2006Stage III (2006‐‐2008)2008)

National National Single WindowSingle Window

Stage IV (2008Stage IV (2008‐‐2012)2012)

Source: Ministry of Information and Communication Technology and Kasetsart University

Source: World Bank, www.doingbusiness.org

1 2 3 4 5

Trade across Borders 2006 2007 2008 2009

Rank 108 50 10

Document for export (number) 9 9 7 4

Time for export (days) 24 24 17 14

Cost to export (US$ per container) 848 848 615 625

Documents for import (number) 12 12 9 3

Time for import (days) 22 22 14 13

Cost to import (US$ per container) 1042 1042 786 795

http://www.doingbusiness.org/


Key Initiatives:Logistics Human Resource Development

1 2 3 4 5

Number of Logistics Human Resources including Executives, Managers,

Service Providers and Operating Staff

Number of Education Institutions with Logistics Program in

Thailand

05

1015202530354045

2547 2551

10

31

16

43

สถาบัน

หลักสูตร

2006 2007 2008 2009

2,388

16,785

16,219

10,670

702%

85%

30%46,062

Numbers of Trained Staff

2004 2008

Institutions Logistics Programs


Upgrading performance and quality of logistics personnel in manufacturing industries and logistics service businesses


Improving curriculums and teaching methodology to obtain a closer

linkage between theory and practice


Setting up Occupational Standard and Vocational Qualification for logistics

personnel

Thailand’s Logistics Capacity Building Action Plan (2008-2011)


One Start One Stop Investment Center (OSOS)


Physical distribution

Internally integrated logistic

Externally integrated logistic

Global logistic management

1970 20001980 1990Source: The World Bank and NESDB

AUS

HKSG

EUUS

Medium-term Target for Thailand under the Stages of Global Logistics Development

THAILAND

Thailand is actively upgrading its logistics capability

in order to reduce its logistics cost and to step up the value

chain that would result in the national competitiveness

enhancement .

The significant

improvement is expected

to achieve in

the next 4-5 years


Challenges (1)

Regional and Subregional Level: Promote cooperation under various regional and subregional

forums to compliment ASEAN and expedite priority subregional projects into action;

Harmonize cross border related forms and upgrade a system to electronics data interchange.

Admit of vehicles liability insurance among GMS member countries.

Improve coverage and efficiency in ICT to support GPRS tracking system for Thai trucks traveling in

other countries.

Promote business matching approach to create opportunity for round-trip load of transport between

Thailand and neighboring countries

Expedite a negotiation between PRC-LaoPDR-Thailand on the initial implementation of CBTA and

commence exchange of Traffic Rights along the North-South Economic Corridor.

Follow-up pilot implementation of Customs Transit System along EWEC and apply to other corridors

Strengthen private sector role and their competitiveness in cross border cooperation.

Building capacity of the countries in road safety and road maintenance

22


Challenges (2)

National Level

Develop domestic infrastructure and logistics linkages system particularly in rails and

waterways to maximize benefit from regional and subregional infrastructure development.

Strengthen capacity in Cross-border facilities and Single Window Inspection for key

border towns to better perform as subregional gateways.

Building capacity of CIQ staffs at the border checkpoints and drivers especially in English

and local languages as well as formal practices under various frameworks.

Comply domestic laws and regulations with CBTA framework and enable

effective implementation of Single Stop Inspection and Common Control Areas.

Strengthen institutional arrangement for trade and transport facilitation, for information

sharing and for gathering involvement from stakeholders.

Link national supply Chain with regional one.

23


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