Challenges of transit trade facilitation and the Way Forward: Ongoing Implementation in Thailand
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1 Challenges of transit trade facilitation and the Way Forward: Ongoing Implementation in Thailand by Mr. Arkhom Termpittayapaisith Deputy Secretary General Office of the National Economic and Social Development Board Presented to Asia-Pacific Trade Facilitation Forum hrs, Thursday 26 United Nations Conference Center 1
2 Agenda Regional - Sub-regional Cooperation Contributing Factor Trade Facilitation: An Element of Thailand s Logistics Plan The Ways Forward 1 2
3 CAFTA-DR Costa Rica, Guatemala, El Salvador, Honduras, Nicaragua, Dominican Republic The United States Current and Proposed Regional Agreements in Asia-Pacific Region NAFTA Canada Mexico Chile, Hong Kong, Chinese Taipei Papua New Guinea, Peru, Russia ANZCERTA APEC (FTAAP) Northeast Asian FTA Australia New Zealand Japan Korea China APTA ASEAN+6 (CEPEA) ASEAN+3 (EAFTA) Bangladesh Sri Lanka India BIMSTEC FTA Bhutan Nepal SAARC (SAFTA) Maldives Pakistan ASEAN (AFTA) Brunei Philippines Vietnam Singapore Malaysia, Indonesia Thailand Thailand Myanmar Laos Cambodia Current Regional Agreement Proposed Regional Agreement ANZCERTA: Australia & New Zealand Closer Economic Relations Trade Agreement AFTA: ASEAN Free Trade Area APEC: Asia Pacific Economic Cooperation APTA: Asia Pacific Trade Agreement (Known as Bangkok Agreement ASEAN: Association of Southeast Asian Nations BIMSTEC: Bay of Bangal Initiative for Multi-Sectoral Technical CAFTA-DR: Central America Free Trade Agreement and The Dominican Republic and Economic Cooperation EAFTA: East Asia Free Trade Area CEPEA: Comprehensive Economic Partnership in East Asia NAFTA: North America Free Trade Area FTAAP: Free Trade Area of the Asia-Pacific SAFTA: South Asian Free Trade Area SAARC: South Asian Association for Regional Cooperation 3
4 Trade Facilitation & Logistic Development under ASEAN Economic Community (AEC) Present Within 2013 Free Flows of Goods All members build up trade facilitation system to apply ASEAN Single Window Implement full function of ICT for custom duty and trade facilitation Full function of ASEAN Single Window system Free Flows of Services Present Within 2013 Allow 70% foreign shareholders in Thai s logistic service. Liberalization of all service sectors Present Within 2015 Infrastructure Development 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 4
5 Sub-regional Cooperation: Cooperation that Leads to Economic Prosperity and Better Quality of Life GMS -- Connectivity Competitiveness Community BIMSTEC -- New Emerging Economies Poverty Eradication Anti-Terrorism JDS Stability & Security IMT-GT ACMECS -- Sister Cities Contract Farming Narrowing Economic Gap Avian Influenza Energy, Natural Disaster and Earthquake Security 5
6 To enhance Connectivity, Competitiveness and Communities To expand trade and investment to accommodate growth of the subregion (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 Cooperation with Neighboring Countries in the Subregion 6
7 Sub-regional Development Trends Subregional Connectivity in the GMS: Roads Telecommunications Power Transmission Line Intra-subregional connectivity especially in infrastructure will be improved and completed i.e. land transportation, telecoms & ICT, transmission lines and power grids 7
8 7 Pilot sites for Initial Implementation of CBTA Cross Border Transport Agreement (CBTA) Key Concept of CBTA Exchange 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. Open to Traffic among Thailand-LaoPDR-Viet Nam along EWEC since 11 June 2009 Ongoing Pilot CBTA Checkpoint :: Mukdahan Waiting for Implementation :: Aranyaprathet Future Plan :: Chiang Khong Trat Ubonrajchatani Mae Sot and Mae Sai 8
9 Cross-Border Transport Facilitation in the GMS Remark: C-Customs; Q-Quarantine; I-Immigration Flow of Goods and People from Country B to Country A CBTA Step Country B Normal Clearance Process Normal Clearance Process Country A 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) (Aranyaprathet-Poipet) (T-C) pending Ratification Status - Ratified all: CAM PRC LAO VN - Not Ratified all : MYA - Ratified Some: THA (11) 9
10 Agenda Regional - Sub-regional Cooperation Contributing Factors Trade Facilitation: An Element of Thailand s Logistics Plan The Ways Forward 2 10
11 Factors governing the decision on Thailand s logistics plan Push Factor 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 Pull Factor 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,
12 Thailand s Logistics & Trade Facilitation Challenges: Cost vs. Value added Thailand s Logistics Cost to GDP ( ) % Logistics Cost to GDP in Comparison China 21% Thailand 18% India 13% EU Japan 11% 11% USA 9% Source: The Economist, June 17th 2006 & NESDB Source: Thailand s Logistics Report 2008, NESDB Potential growth for logistics services in ASEAN countries is 3 4 times of GDP growth for the next 5 years Source: McKinsey 12
13 Vision bjectives Trade Facilitation: An Element of Thailand s Logistics Development Strategy ( ) The Thai Cabinet approved on February 27, 2007 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 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 Strategic Agendas Business Logistics Improvement Transport and Logistics Network Optimization Logistics Service Internationalization Trade Facilitation Enhancement Capacity Building 2.Logistics Development for Key Industry Action November Plan Trade Logistics Action Plan 1.Immediate Logistics Action Plan Single Window e-logistics Development Action Plan 7. Establishment of Copyright 2009 by Permanent NESDB Mechanism 5. Logisitcs Data System Action Plan 6. Logistics Capacity Building Action Plan 13
14 Key Initiatives: Upgrading logistics human resources and businesses 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 businesses 3. Lack of logistics practical skills found in graduates produced by vocational and graduate institutes Thailand s logistics capacity building action plan ( ) Strategy 1 Strategy 1 Upgrading performance and quality of logistics personnel in manufacturing industries and logistics service businesses Strategy 2 Strategy 2 Improving curriculums and teaching methodology to obtain a closer linkage between theory and practice Strategy 3 Strategy 3 Setting up Occupational Standard and Vocational Qualification for logistics personnel Key Initiatives: 1. Logistics Clinic offering consultation on logistics management for SMEs 2. Logistics Capacity Building Project providing series of seminars and trainings 3. Performance-specific training program for Thai truck drivers 4. Writing Thai logistics-related case studies 5. Offering Cooperative Education with private companies on logistics degree in universities 14
15 Key Initiatives: Transport and Logistics Network Optimization Objectives: Physical Infrastructure 1. To save energy 2. To integrate multi modal networks 3. To build seamless connectivity Transport Management Trade Facilitation Modal Shift Commodity-based Route-based Multi-modal Transport Area-based Cross-border Trades Key Initiatives: Railway system: Constructing double track on the Eastern route Procuring additional locomotives and pallets Proceeding the organization re engineering program of the State Railway of Thailand Regional connectivity: Supporting transport linkages with neighboring countries Establishing new trade lanes to the world market Water way transport: 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 15
16 Key Initiatives:Transport and Logistics Network Optimization GMS transport and logistics network Thai investment 16 16
17 2 6 System Architecture: National Single Window of Thailand Private Sector &Transport Agencies Importer/ Exporter Governance Mechanism policy decision, service charge regulation, SLA etc 5 Value Added Service Providers VAS 1 e Document Exchange Hub for Cross border Trade and Transport 3 ebms 30 Government and Facilitation Agencies Customs Dept Carrier Custom Broker/ Freight Forwarder Ship Agent, Airlines Agent Other Logistics Service Providers Other business parties Bank and Insurance 4 VAS VAS VAS Value Added Services for Single Window Entry and Business Process Management Data Harmonization National Single Window (NSW) By The Customs Department ICT National Infrastructure and related Laws Dept. of Foreign Trade Dept. of Fisheries Dept. of Disease Control Port Authority Of Thailand Port/Airport Other public agencies Source: Ministry of Information and Communication Technology November and 2009 Kasetsart University Data Harmonization ebms ebms ebms ebms ebms
18 Key Initiatives: Evolution of Thailand s Trade Facilitation System Trade across Borders Rank Document for export (number) Time for export (days) Cost to export (US$ per container) Stage IV ( ) 2012) Documents for import (number) Time for import (days) Cost to import (US$ per container) Source: World Bank, Stage III ( ) 2008) National Single Window Source: Ministry of Information and Communication Technology and Kasetsart University Stage I (1998 ) Stage II ( ) Manual Operations Customs Paperless Services Customs EDI Services 18
19 Key Initiatives: Logistics Human Resource Development Thailand s Logistics Capacity Building Action Plan ( ) Strategy 1 Upgrading performance and quality of logistics personnel in manufacturing industries and logistics service businesses Strategy 2 Improving curriculums and teaching methodology to obtain a closer linkage between theory and practice Strategy 3 Setting up Occupational Standard and Vocational Qualification for logistics personnel Number of Logistics Human Resources including Executives, Managers, Service Providers and Operating Staff Numbers of Trained Staff 46, % 2,388 85% 16, % 16, , Number of Education Institutions with Logistics Program in Thailand สถาบ น หล กส ตร Institutions Logistics Programs 19
20 One Start One Stop Investment Center (OSOS) 20
21 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 THAILAND Physical distribution Medium-term Target for Thailand under the Stages of Global Logistics Development AUS HK SG Internally integrated logistic EU Externally integrated logistic US Global logistic management Source: November The 2009 World Bank and NESDB
22 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 22
23 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
24 Thank You 24
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