Thailand must improve its logistics to remain competitive and attract foreign direct investment (FDI) amid a rising wave of activity in neighbouring nations, says the Bank of Tokyo-Mitsubishi UFJ.
Angkana: Planned projects will help
Angkana Meeploy, a senior vice-president for Asian business, said logistics has been one of Thailand's strengths in luring FDI despite a boom in the CLMV group of Cambodia, Laos, Myanmar and Vietnam.
Speaking at the bank's seminar on investment in the Greater Mekong Subregion (GMS) yesterday, Ms Angkana said Thailand ranks No.2 behind Vietnam in terms of logistics cost competitiveness.
As a result, the government's planned infrastructure projects worth 2 trillion baht will preserve the country's strong point as the region's logistics hub.
Thailand received a combined US$119 billion in FDI applications from 2003-12, with Japanese investors leading the field.
Myanmar, Asia's latest frontier, had FDI totalling $40 billion last year, while Cambodia's FDI from 1999-2011 amounted to $25 billion. Laos recorded FDI totalling $14 billion from 2000-12.
Japanese investors have expanded their investment base to the CLMV and GMS countries to diversify geographical risk, especially after Thailand's massive floods in late 2011.
But Thailand remains a key Japanese factory base due to its economic growth, infrastructure investment plan and skilled labour, said Ms Angkana.
"Thailand needs to keep such strengths and sharpen competitiveness," she said.
"We should transform from a labour-based to a skilled-production country."
Among the CLMV countries and Thailand, the latter ranks fourth in electricity cost competitiveness and last in labour cost competitiveness.
Therefore, the country's lower-skilled labour industries, particularly garments and agriculture, could expand to CLMV countries to improve cost management.
Most economic zones in Cambodia and Laos sit along the Thai border, so logistics will play a big role in surging regional trade.