Songkhla rolls out welcome mat

Songkhla rolls out welcome mat

Many locals embrace SEZ plan, but the devil is in the details

Traffic at Sadao border checkpoint is congested, though the Thai government is busy planning the development of special economic zones at four tambons in Sadao district. Patipat Janthong
Traffic at Sadao border checkpoint is congested, though the Thai government is busy planning the development of special economic zones at four tambons in Sadao district. Patipat Janthong

Unlike locals in other areas who complain about the negative impact of planned special economic zones, Suparat Pongphol, 46, a native of Padang Besar, is feeling upbeat about an SEZ in her hometown.

She says it will offer locals new hope for higher income and a better economy on a par with neighbouring Malaysia.

Ms Suparat wants authorities to speed up the development plan and engage residents in the SEZ's development. In her view, the project will fail unless there is participation from all related parties -- particularly local people.

Padang Besar is one of four subdistricts of Sadao district in Songkhla province designated for SEZ development. The others are Sadao, Samnak Kham and Samnak Taeo. Songkhla's SEZ will span 345,187 rai.

Songkhla itself is important in terms of size. The biggest province in southern Thailand, it accounts for 221 billion baht or nearly 20% of gross regional product -- much more than Phuket (133 billion), Surat Thani (162 billion) or Krabi (68.1 billion). The figure also exceeds those of Chiang Mai (184 billion) and Khon Kaen (191 billion).

An agricultural production centre, Songkhla also has potential as an investment, business and tourism hub. With infrastructure linking all regions of the country, the province could serve as a gateway to distribute wealth and add value to Thai products and tourism.

Songkhla's economic condition and people's income is thus much better and higher  than other provinces chosen for SEZ development thanks to flourishing border trade and tourism.

Cross-border trade between Thailand and Malaysia, mainly through two customs houses -- Sadao (actually the nearby town of Dannok) and Padang Besar -- amounted to 507.65 billion baht last year, up 1.25% from 2013. Of the figure, Thai exports represented 274.99 billion baht and imports 236.66 billion.

Cross-border commuters averaged 355,188 people a month, 4.26 million in 2014.

Given bustling border trade and flourishing tourism, Somporn Siriporananon, chairman of the Songkhla Chamber of Commerce, wants the SEZ to focus on duty-free zones, product distribution, warehousing and logistics. The development could start at 1,095 rai of land owned by the Treasury Department, which is close to Malaysia's border.

"We see it as not worth setting up industrial factories at Songkhla's SEZ, as the land prices are relatively high," Mr Somporn says. "Industrial development, if essential, should stress green industry."

He says land prices in Songkhla rose continuously over the last five years, averaging 15% growth. Land costs roughly 12 million baht a rai.

"Most of the areas at Sadao checkpoint have become crowded with nightlife entertainment, restaurants and hotels," Mr Somporn says. "We see it as much more imperative to develop this area into a tourism venue and duty-free trade zone, which will directly benefit local people."

Meanwhile, the private sector has proposed that the area at Padang Besar checkpoint be developed into a product distribution centre, warehouse, rest area and bus terminal.

Mr Somporn says Thai officials should organise SEZ roadshows in Malaysia, Songkhla's key customer. The Thai Chamber of Commerce has already signed a memorandum of  understanding with Malaysian counterparts in four states -- Perlis, Kedah, Penang and Perak -- to promote bilateral trade and investment.

"As far as we've discussed with Malaysian businesses, what they need is the land ownership rights and special investment privileges," he says.

Somchat Pimthanapoonporn, president of the Tourism Council of Songkhla and the owner of Sakura Grand View Hotel, says the government should state clearly whether it will allow the establishment of an entertainment complex, theme park, casino and hotel in the SEZ areas.

"Songkhla is de facto regarded as a tourism destination, drawing a great number of tourist arrivals from Malaysia and Singapore each year," he says. "But the tourism sector is not clearly aware of Songkhla's SEZ development direction. What we've heard is only a plan to allocate land for industrial factory development."

Mr Somchat deems it inappropriate to draw investment merely from industry, which would benefit job creation only to a certain extent.

Pairoj Chaichiratikul, an adviser to the Association of Southern Logistics Transport, says the government must put infrastructure and logistics at the top of the agenda.

"Our country's logistics system is far behind Malaysia's, but it's not too late to start," he says.

To enable SEZ development, the Thai government has begun building a 325-million-baht, 30-kilometre road network linking the Dannok and Padang Besar checkpoints.

The 55-km Hat Yai-Sadao motorway project, worth 10.06 billion baht, is expected to get off the ground soon and conclude by 2019 to reduce congestion on Kanjanavanit Road in Hat Yai.

That road is part of the 1,274-km Petchakasem Road linking Bangkok and the North-South Expressway, the longest expressway in Malaysia, which runs 772 km from Bukit Kayu Hitam in Kedah to Johor Bahru in the far south of peninsular Malaysia, near Singapore.

Moreover, the government is developing a second Songkhla port in Chana district at a cost of 11 billion baht to ease congestion at the first port in Singha Nakhon district. Plans also call for a double-track railway in Songkhla, but the project has seen little progress.

"As Malaysia now has a clear direction in logistics and infrastructure development, our country should position the SEZ of Songkhla carefully for long-term growth," Mr Pairoj says. "An industrial zone near Dannok under the SEZ project should develop into a logistics hub instead of industrial factories."

The Malaysian government has a long-term strategy for the Northern Corridor Economic Region, focusing on accelerated economic growth and elevated income levels in northern Malaysia and aiming for it to become a world-class economic region by 2025.

Malaysia is also improving railway connectivity with double-track and high-speed development from Penang's Butterworth town. The passenger terminal in Butterworth is under construction and expected to serve three logistics routes locally: bus, train and ferry to Penang Island.

According to Mr Pairoj, the Thai government has already agreed to develop Songkhla's SEZ into a logistics hub with bus and truck services, rest areas, duty-free outlets and retail shops.

Customs Department statistics show that 27,969 trucks, 38,492 cars and 355,188 people commute monthly via Dannok. Moreover, the neighbouring area at the checkpoint has hotels and entertainment complexes.

Apinan Srisamanuwat, honorary chairman of the Federation of Thai Industries' Songkhla chapter, says trucks registered in Thailand are allowed to drive only two km beyond the Malaysian border. This is one of the key obstacles to Thai logistics service.

"We cannot connect to Singapore and Indonesia by road transport," he says. "Thailand should negotiate with Malaysia to ease the transport regime and boost bilateral flow not only to support SEZ development, but also the imminent Asean Economic Community (AEC)."

Songkhla port, Hat Yai airport and the Hat Yai railway, if enhanced, could accommodate both the SEZ and the AEC.

The Southern Region Industrial Estate (Chalung), founded in 1995, is also ready for an upgrade and expansion to support SEZ development.

"All existing fundamentals in Songkhla are more than enough for the SEZ development here," Mr Apinan says. "However, this project should ensure that it is attractive enough to draw back local labourers to work in their hometown instead of in Bangkok."

Nonetheless, Ms Suparat says the government shouldn't overlook improvements to the Padang Besar checkpoint. The Padang Besar railway should be brought up to par with service in Malaysia to boost tourism and transport via the southern border.

Moreover, local government should have a long-term strategy to promote Sadao district as a tourism gateway, connecting to other provinces such as Satun, Trang, Krabi and Phuket.

Padang Besar also needs the tourist rest area, restaurants, shops and outlets to be developed near the checkpoint.

"This subdistrict is ignored by local government for tourism, but it is very popular among Malaysians travelling by cars and trains," Ms Suparat says.

"The local tourism industry will be the key to the SEZ's success in Songkhla, generating more income for tourism and the people."

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