With the rapid inflows of foreign capital and expansion of the trade business accelerating the pace of Thailand’s economic growth, experts are strongly agreeing that Thailand is going to be the next ASEAN hub over the years. Due to its centralised geographical position, the country’s logistic industry is establishing itself as a major competition, bringing with it associated economic multipliers.

So why Thailand is naturally picked as the hub of the world’s fastest growing economic region? One may wonder. Because the country shares common land border with four neighboring countries, with a total of 30 physical linkages for connectivity with them presenting huge opportunities for the logistic and trade industries.

The ASEAN Economic Community (AEC) has brought over impeccable changes in the areas of investment liberalization ever since it came into realization in 2015. It serves a vital role into the increasing demand for logistic services in Thailand. With goods and services more freely transported, the demand for logistic services has been higher than ever before in addition to the significant increase in the delivery and distribution of raw materials, goods and labor.

With the potential to generate about Bt300 billion, the country has still been witnessing a decline of share of logistic costs to GDP over the last few years. However, the economy expects a boost growth in 2017 as it performed relatively well in 2016.

Although the sector still relies heavily on land transport (accounting for 83% share), despite the increase in oil price which impacts transportation costs, the goal is to develop the logistic system and integrate all transportation platforms- rails, air, road and water. In order to do that, the government has brought an e-logistics system for improvements of its trade systems, which is intended to cut logistics cost, reduce paperwork and the time spent on import and export.

Before 2018, Thailand estimates that about 20 infrastructure projects worth nearly 1.8 trillion baht ($50.2 billion) will be underway which will cover rail, roads, air transport, and ports across Thailand.

Thailand‘s focus is on public infrastructure development by the year 2022. The ongoing 8- year plan to develop the country’s transportation at a cost of Bt2.4 trillion will turn Thailand into a key logistic hub in the AEC by the end of 2022.

Sudeshna Nepal is a researcher with Frost & Sullivan. She can be reached at sudeshna.nepal@frost.com

Sapan Agarwal drives content and marketing for Frost & Sullivan. Sapan is based out of Kuala Lumpur Malaysia and can be reached at sapan.agarwal@frost.com | +603 6204 5830