challenge and opp on trade logistics in asean data_1125250912

8/22/2019 Challenge and Opp on Trade Logistics in ASEAN Data_1125250912

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20 September 2012 1www.nesdb.go.th

The Stock Exchange of Thailand, 20 September 2012


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Outlines

1

Expected Changes: Global and Regional2

Overview of Thailands Competitiveness and Logistics Sector


3

4

a enges an ppor un y o a an s og s cs us ness n

Policy Outlook


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From 147 countries

Overview of Thailands Competitiveness

Competitiveness Ranking Ranking by Factors WEF 2012


Countries 2011 2012

Hong Kong 2 4

Singapore 3 2

Korea 12 18

Taiwan 19 25

Malaysia 27 23

Thailand 46 47

WEF Infrastructure Quality Ranking ComparisonThailands Strengths & Weaknesses by WEF

Strengths Weaknesses

Infrastructure Poor health related factors

Macroeconomic Stability Technological readiness

Large domestic market &Strong labour market

conditions

Quality of nationalinstitutions

Source:


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World Banks Logistics Performance Index: What Rank is Thailand?

World Banks Logistics Performance Index (LPI)for 2012 ranks Thailand at number 38 out of 155

economies worldwide, scoring 3.07 out of 5

Thailand still needs to further improve customs,logistics competency, infrastructure and tracking

and tracing categories as their scores are

considerably low compared to other ASEAN

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www.nesdb.go.th

Source: World Bank 2011

Category Singapore Japan Hong Kong China Malaysia Thailand Philippines India Vietnam

LPI 4.13 3.93 4.12 3.52 3.49 3.07 3.02 3.08 3.00

Rank 1 8 2 26 29 38 52 46 53

(1) Customs 4.10 3.72 3.97 3.25 3.28 2.96 2.63 2.77 2.65

(2) Infrastructure 4.15 4.11 4.12 3.61 3.43 3.08 2.80 2.87 2.68

(3) International Shipment Preparation 3.99 3.61 4.18 3.46 3.40 3.21 2.97 2.98 3.14

(4) Logistics Competency 4.07 3.97 4.08 3.47 3.45 2.98 3.14 3.14 2.68

(5) Tracking and Tracing 4.07 4.03 4.09 3.52 3.54 3.18 3.30 3.09 3.16

(6) Timeliness 4.39 4.21 4.28 3.80 3.86 3.63 3.30 3.58 3.64


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Progress of Thailands Logistics Sector DevelopmentDuring the past 5 years, Thai logistics businesses have moved away from the first base of being

physical distribution that emphasized mainly on delivering products to consumers, towards the internally

integrated logistics phase that pays importance to the integration of all related internal processes

ranging from procurement to product delivery.

20 September 20125www.nesdb.go.th

More emphasis on commodity

transportation to consumers Source: World Bank and NESDBs Analysis


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Overview of Thailands Logistics Performance & PotentialTrend of Thailands Logistics Cost to GDP

International Comparison of

Logistics Cost to GDP


Source:


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Capability of Thailands Logistics Sector:

Assessment of Thailands First National Logistics Development Plan 2007-2011 The majority of Thai entrepreneurs, especially those in the industry sector, are more aware of the

importance of logistics system.

SME entrepreneurs have not yet been developed and had sufficient roles in the nations supply chainadministrative management.

Logistics in agriculture sector still lacks efficiency, thereby, resulting in high operational costs andunnecessary waste

Business Logistics

Improvement

1

Transport and Logistics

Network Optimization

2 There has been a lack of proper business model in the nations infrastructure development during thepast years. As a result, the nations competitiveness may have not yet been appropriately enhanced.

Nations rail system development has been drastically slow while the water transportation system has notbeen adequately developed, resulting in intangible multimodal system development.


Trade Facilitation

Enhancement

Logistics ServiceInternationalization

4

Capacity Building

5

Thai LSPs have business disadvantages in terms of integrated services, international standard

administrative management, IT innovation sufficiency and difficulty in accessing finance source

Logistics related laws and regulation has NOT been significantly appropriately amended to help facilitateimports and exports

The National Single Window (NSW) development has not been effectively implemented, due to theinsufficient number of personnel and amount of government budget.

Despite the relatively impressive logistics personnel development during the past 4 years, there is still ashortage of skilled new graduates

A large number of educational institutes curriculums and training courses have not been designed to trulyreflect the markets demand of logistics personnel, while researches and studies are not usually publicly

published for business uses.

Source: primary data collection and logistics expert interviews under NESDBs Logistics Development Plan 2007-2011 Assessment


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Global Trade Facts and Trends: Shift in Centers of Economic Growth to Asia

Exports within Asia and Real Value Added by Manufacturing forMajor Countries/Regions in the World

Intra-regional Trade in Asiacompared to EU and NAFTA


Source: World Bank

it has been forecasted that

centers of the economic expansion

and growth will be shifted from the

West to the East or Asia during the

next 20 years with Asia being the

worlds economic and production

hub, dominating more than 50

percent of the world GDPSource: : Department of Commerces Thailands International Trade Strategy Planning Final Report , 2012

Asias Export Components and DestinationsSource: World Bank


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Trades in the Greater Mekong Sub-region and ASEAN Region

Exporting Markets of Low-income Country Group

(% to GDP)

Proportions of Intra-ASEAN and Extra-ASEAN Trades

of ASEAN countries in 2010


Source: www.aseansec.org

In 2010, the top 5 commodities with the highest Intra-ASEAN trade values wereElectric machinery, Mineral fuels, Nuclear reactors, Vehicles parts and accessories,

and Plastics

The top 5 commodities with the highest Extra-ASEAN trade values were Electricmachinery, Nuclear reactors, Mineral fuels, Vehicles and Rubber

More than 30 % of the total exports of each

ASEAN member countries are traded within

the ASEAN region.

Note: *Emerging Asia = 7 Emerging Asian Market Economies including China, India,

Indonesia. Malaysia, Philippines, Sri Lanka and Thailand

** Asian LICs = 7 Low-income Countries including Bangladesh, Cambodia, Lao

PDR. Mongolia, Myanmar, Papua New Guinea and Vietnam

Lao PDR and Myanmars exports will stillcontinuously be reliable on the ASEAN market,

while Cambodia and Vietnam have already

been expanding their exporting markets to

United States of America.


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Changes after ASEAN Community in 2015

Language

Population67 millions 575 millions

Areas

513,115 sq.m. 4,464,322 sq.m.

New Competition Landscape/ChallengesNew Competition Landscape/Challenges

Market expansion with new formsof trading arena and investment.

Regional production supply chainrearrangement

Raw material sourcing acquirementsin the region

Thai English Malay MyanmarChinese (Mandarin) TagalogJavanese Khmer LaoVietnamese

Thai English


Challenging IssueChallenging IssueHow can local businesses that has

historically been engaging in relatively

small markets improve their competency

and capability to compete, therebysurvive, in much larger markets as a

result of ASEAN Integration?


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The linkage will be an effective link within the regioncorresponding to "ASEAN Connectivity"

Power up investment opportunities along GMS Southern

Economic Corridor Build up a strong connection between ASEAN countries.

New Logistics Short Cut of the Region

Distance to India from Vietnam, Thailand and Cambodia

through Dawei port could be shorten to 3,500, 2,500 and

Effective Link for ASEAN Connectivity

Thailands Opportunities for Industrial Production Base Expansion

132 km

300 km

Dawei


, .Malacca: 4,200, 4,500 and 4,200 km.

Distribution Center & Production Base

The linkage will profit traders both from Myanmar andThailand;

Because of the link to ASEAN highway system, Dawei couldemerge as a trading hub linking Southeast Asia with the Indian

Ocean, the Middle East, Europe and Africa, spurring growth inASEAN region.

The linkage will attract rising FDI flow into the region andcreate the most complementary production bases in theregion.

Source: Italian-Thai Development LtD and Siam Commercial BankSource: * DHL Interview in The Nation March 5, 2012, **UNESCAP report


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Events that Caused Global Supply Chain Disruption

2010 2011 201220092008

Terrorist attacks on September 11, 2001

caused global supply chain disruption

Euro Zone Debt Crisis (2008-present)- economic system disrupted, lower purchasing power

Piracy at main straits such as Malacca damages to goods shipment and higher cost of logistics

2001

Disasters, both natural and

man-made, are expected to be

on the rise with more intensity

Major Earthquake in NZ industries disrupted


Eruption of Icelandic volcano

Airports closure, freight and

passenger transport disrupted

Massive Earthquake and Tsunami

in Japan

E.ColiOutbreak in Europe

Massive floods in Thailand- globalsupply chain effected

Political unrests in Libya, Syria and

Norway- economic system disrupted


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Implications to Thailands Logistics Development from Expected Global and Regional

context changesImplications to Thailands Logistics

Development

Need to expand businesses (production, trade and

LSPs) to other markets in neighboring countries

Need to improve national logistics administration

system to be able to provide high standard logistics

services to deliver high valued products and support

expansion of logistics service networks for integrated

Expected Economics Changes

Shift Economics Growthto Asia

Regional Connectivity


Both transport and LSPs business will expand within

the region, thereby, helping promote Thailand to

become the regions logistics hub

The need for qualified logistics personnel will

significantly increase to undertake the growing trading

activities with neighboring countries as a result of AEC

Intense competition in the logistics labour market as

there will be more foreign logistics personnel in the

country and region.

ASEAN Community

in 2015

Thailands Production

Base Expansion to the

West of Thailand

Supply Chain Disruption


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Opportunities for Thai Logistics Business in AEC

Increasing number of

logistics related

activities in Thailand

due to the larger-sized

market

1

Thai logistics entrepreneurs will

hastily develop their capability

and ability in order to be able to

compete in the new larger-sized

market, the incentive arisen

rom increasin com etition

2

Small and medium sized Thai

LSPs will be beneficial from

increasing number of localoperations and activities from

foreign LSPs, who will still

require their services,

3 Niche Market for Local LSPsLarger Market Capacity/Competency Development


Source: NESDB

espec a y n rura areas

Thailand can start investmentexpansion to Cambodia to asone of the nations production

bases for exports while planningto further exporting goods to

Vietnam

Thailand has quite a greatopportunity for export expansionto Indonesia and Philippines asconsumers have reasonably high

purchasing power.

Thailand should expand logisticsservices to Lao PRD and

Myanmar, as will continue to beThailands important raw material

sources

Implications


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Challenges for Thai Logistics Business in ASEAN Community

Intense logistics labor market competition for

Thai logistics personnel

Regional production supply chain rearrangement

Single large market will bring about relocation and

expansion of production bases to other more cost-effective

locations. Hence, reliance on road transport will increase,

making Thailand as one of the DC options for the region.


Threat of Thai LSPs

Increasing LSP outsourcing competition,possibility of being merged with other SME Thai

LSPs or bought out by foreign companies

as a result of increases in the number offoreign logistics personnel in the country


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Develop Thai LSPs and Businesses to reach a level of professionalism in order to enhance

competitiveness of Thailands main targeted production sectors

Promote collaborative cooperation among Thai SME LSPs in order to

Promote Thai LSPs to shift away from asset-based towardssolution-based logistics services

Policy Outlook for Thailands Logistics Development


r ng a ou e eve opmen o e ec ve n egra e serv ces or

domestic customers.

Support potential large LSPs to have capability and readiness to provide

services at regional and international levels, together with business

collaboration with SME LSPs, while utilizing the geographicalknowledge advantage of Thailand to increase bargaining power and

secure business partnership with foreign owned LSP companies


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