Without massive investment in infrastructure projects, the Thai logistics industry is unlikely to compete with Singapore and Malaysia once regional economic integration takes effect in 2016, experts warn.
Massive investment in infrastructure projects is needed. (Bangkok Post file photo)
The Asean Economic Community will enable regional investors to own up to 70% in logistics businesses ranging from maritime cargo handling and warehousing to freight transport, courier service and customs clearance.
Thailand's logistics costs are expected to remain at 15% of GDP at the end of the year, against 5-6% for Singapore and 10-11% for Malaysia.
"The investment, particularly through the 2-trillion-baht infrastructure development plan, is essential to make Thai transport services competitive with countries like Singapore and Malaysia," said Prempracha Supasamut, the managing director of Friendly Groups Logistics Co.He said road transport still constitutes up to 80% of Thailand's logistics infrastructure.
According to the National Economic and Social Development Board (NESDB), 82.6% of goods in the country are carried by road, followed by water (9.5%), coastal marine (5.7%), rail (2.2%) and air (0.02%).
Thailand previously achieved a reduction in logistics costs of 2.6 percentage points, from 17.1% of GDP in 2007 to 14.5% in 2011.
The government says the 2-trillion-baht infrastructure plan will cut logistics costs by an additional two percentage points.
The World Bank's Logistics Performance Index 2012 ranked Thailand 38th, far behind leaders Singapore and Hong Kong.
The poor showing was due mainly to Thailand's sluggish approach to road, rail and water transport development.
The country's 11th National Economic and Social Development Plan (2012-16) aims to increase rail transport to 10-15% of total transport.
Mr Prempracha said Thailand should also invest in improving the aviation network for air freight, as Thai Airways International provides limited routes for delivering goods.
"The national carrier should seek more alliances or partners in order to expand its network for air freight to cover the global market," he said.
Chanvit Amatamatucharti, an NESDB deputy secretary-general, agreed, adding that Thailand is moving at a snail's pace in rail transport development.
Apart from calls to improve existing rail and build dual tracks, he urged the government to step up its overhaul of the State Railway of Thailand's management structure.
Chula Sukmanop, director-general of the Transport and Traffic Policy and Planning Office, said the government must improve facilities at 11 key border checkpoints to enhance cross-border trade.
He said domestic laws should be amended to ease trade and investment in the region.