As the Asean Economic Community (AEC) draws near, many countries in the region are adjusting their strategies to take advantage of growing border trade.
Oil tankers queue at the border checkpoint in Mae Sot in Tak province. Oil demand across the border in Myawaddy is rising as the pace of development picks up in Myanmar.
Thailand in particular is making a major push to tap the potential for more business with Myanmar, Laos, Cambodia and Malaysia. Authorities believe they can lift the value of border trade this year to 1.5 trillion baht, which would be an increase of up to 50% from the 2014 figure.
The main focus of the increased activity will be special economic zones (SEZs) in six border areas: Mae Sot in Tak province, Aranyaprathet in Sa Kaeo, Sadao in Songkhla, plus Trat, Mukdahan and Nong Khai. The special zones will cover 10 districts and 36 tambons with a combined area of 2,932 square kilometres.
"These border provinces are already functioning as trading gateways for Thailand and the SEZs will support the growth of the provinces," said Niyom Waiyaratpanich, a vice-president of the Thai Chamber of Commerce (TCC).
"Incentives offered by the government will attract more investors to set up operations with advantages in terms of hiring workers and sourcing raw materials, to further generate prosperity in the border provinces."
Mr Niyom said he expected much more investment in infrastructure, mainly road networks, to facilitate logistics activities. The SEZ committee chaired by Prime Minister Prayut Chan-o-cha last week approved 45 related infrastructure projects worth 2.6 billion baht for fiscal 2015 and 79 projects worth 7.9 billion baht for fiscal 2016.
Among the notable incentives given for businesses located in SEZs is a corporate tax exemption for eight years on profits based on a project's investment value excluding land costs and working capital, and a 50% reduction in tax on net profit from investment for five years after the expiry of the exemption.
Other privileges include a deduction of double the cost of transport, electricity and water supply for 30 years, and an additional 25% deduction for the cost of installing or building facilities in addition to normal depreciation costs. As well, machinery import taxes are exempted for five years, along with taxes on raw or essential materials for use in production for export.
"The SEZs will not only help reduce logistics costs, but also will foster greater employment of foreign workers. Moreover, there will be more small and medium-sized enterprises investing in these areas," Mr Niyom said.
The government plans to offer temporary border passes to migrant workers with jobs in the zones. They will be allowed to cross the border and return home in the evening and legally work in border areas without passports.
However, finding and acquiring suitable land plots for industrial estates and infrastructure will be a challenge to the ambitious SEZ plan. To no one's surprise, prices of some private land plots have risen by 5-10% since the government confirmed the SEZ locations.
Officials have agreed that sites owned by private developers could be considered if the locations meet criteria in the government's plan.
The Thai SEZs, once they start operating, have the potential to be part of a larger network and supply chain, according to Mr Niyom.
"Neighbouring countries already have their own special economic zones along their borders," he said. "In Laos, there are Khammouane, Chong Mek and Champasak. There is the Myawaddy SEZ in Myanmar, while we have Mae Sot on our side, so it would be possible to collaboratively develop it into a cross-border SEZ.
"Developments along the East-West and North-South corridors are projected to link those potential border areas in order to prepare for AEC integration."
Over the past few years, there has been a steady increase in trading activity along the borders, bolstered by liberalisation of economic activity in neighbouring countries. The opening up of Myanmar in 2010 after five decades of isolation has also helped.
The value of border trade between Thailand and its four neighbours in the first 11 months of 2014 was 901.4 billion baht, a rise of 7% from the same period a year earlier, according to the department of foreign trade at the Commerce Ministry.
Exports grew 6% and imports increased by 8.6% year-on-year. Thailand enjoyed a border trade surplus totalling 177.9 billion baht with Laos, Cambodia and Malaysia. The country recorded a trade deficit with Myanmar but expects to have a surplus by 2016.
In 2013, border trade was worth 924.2 billion baht, up 1.5% from the previous year, and Thailand recorded a surplus of 196.1 billion.
More than 80% of trading activity with neighbouring countries takes place at 70 major and minor border checkpoints, and in permitted areas in 30 provinces of Thailand. The majority of traded goods are basic commodities for daily usage such as consumer goods and agricultural products.
Thai commodity exports are led by natural rubber to Malaysia, but the value declined 24.5% to 84 billion baht in the first 11 months of last year. Other exports such as components for personal computers (PC), automotive parts, diesel fuel, telephones and steel performed well.
Top imported goods include data recording devices, magnetic tape, industrial machines, and copper. There was a 28.1% decrease in imports of electronic parts for PCs in the first 11 months of last year.