unescap regional conference of freight forwarders ... · 8. enhance border management capabilities...

OM201 PRINCIPLES OF OPERATIONS MANAGEMENT 1

UNESCAP Regional Conference of freight forwarders, multimodal transport operators and logistics service providers

20 June 2014 Beijing, PRC

Associate Professor Ruth Banomyong (Ph.D.)

The impact of logistics infrastructure and facilitation on the ASEAN

Economic Community Development

Head of International Business, Logistics Transport, Thammasat Business School Director of Logistics Research Center, Thammasat University

Synthesizing the Impact of Thailand’s Logistics Infrastructure Management and Supply Chain Redesign within the context of the ASEAN Economic Community (AEC) 2

GSM is a simulation model based on Spatial Economics, aka New Economic Geography.

Road network in IDE/ERIA-GSM 4

• Introduction

• The ASEAN Economic Community (AEC)

• The Master Plan on ASEAN Connectivity

(MPAC)

• The impact of the AEC

• ASEAN 2025?


Ruth Banomyong (PhD)

• Faculty at Thammasat Business School since 1993

• Winner James Cooper Cup for best PhD in logistics 2001 from CILT UK

• Consultant for World Bank, Asian Development Bank, UNCTAD, ESCAP, OECD, ASEAN, etc.


ASEAN The Association of Southeast Asian Nations, or ASEAN

Regional Inter-governmental Organization

10 Members

4.4 Million KM2

600+ million people (Growth 1.5%)


The Three Pillars


Free Flow of goods

Free Flow of services

Free Flow of investment

Free Flow of capital

Free Flow of skilled labour

(Priority Integration Sectors : PIS)

Liberalisation Facilitation

Tariff and NTB elimination Synchronized external tariff

alignment

Full market access and national treatment Remove

substantially all restrictions on trade in services

All industries and services incidental to these industries

for ASEAN investors

Harmonization of standards in education and training ; MRA on

vocational training

Harmonize capital market standards ; facilitate market driven efforts to

establish exchange and debt market linkages

Transparency ; streamlined Procedures, avoidance of double

taxation ; joint promotion

Customs integration Standards and technical barriers to trade

Relax capital control measures on intra-ASEAN portfolio

investment

Remove discrimination in employment

Conduct a bi-annual review to monitor the status, progress and effectiveness of the PIS roadmaps to ensure timely implementation

Identify sector-specific projects or initiatives through regular dialogues or consultation with stakeholders, particularly the private

sector (Food, Agriculture and Forestry)

Single Market and Production Base Five core elements

MRAs on professional services;

professional exchange

1) GAP, GAHP, GHP, GMP, HACCP.

2) Harmonise SPS, MRLs, Safety and Standard, animal health control, chemical in aquaculture


• Master plan on ASEAN Connectivity (MPAC) is a key for AEC integration. Soft and Hard Infrastructure will be developed according to this plan. Routes and conditions are updated at 2010, 2015, reflecting the development according to MPAC.

• Time and costs at the border crossing half in 2015 due to AEC, and roughly double in 2020 according to congestion.

• Tariff/NTB: Tariffs and NTBs are updated according to various FTA/RTA including AEC.


ASEAN Scorecard AEC Pillar I: Single

Market and Production Base

• Free Flow of Goods

• Free Flow of Services and Skilled Labor

• Free Flow of Investment

• Freer Flow of Capital

• Priority Integration Sectors (PIS)

• Food, Agriculture and Forestry

AEC Pillar II: Competitive

Economic Region

• Competition Policy

• Consumer Protection

• Intellectual Property Rights

• Infrastructure Development

AEC Pillar III: Equitable Economic

Development

• Development of Small and Medium Enterprises (SMEs)

• Initiative for ASEAN Integration (IAI)

AEC Pillar IV: Integration into the

Global Economy

• External Economic Relations

Tracking the AEC: Milestones and Accomplishments

To ensure a timely implementation of the AEC initiatives, ASEAN has established a monitoring mechanism called the AEC Scorecard. As a compliance tool, the AEC Scorecard reports the progress of implementing the various AEC measures, identifies implementation gaps and challenges, and tracks the realisation of the AEC by 2015.


Overview Connectivity

Dimension Strategy

Physical

1. Complete the ASEAN Highway Network

2. Complete the implementation of SKRL project

3. Establish an efficient and integrated IWT network

4. Accomplish an integrated, efficient and competitive

maritime transport system

5. Establish integrated and seamless multimodal transport

system to make ASEAN the transport hub in the East Asia

region

6. Accelerate the development of ICT Infrastructure and

services in each of ASEAN Member States

7. Prioritise the processes to resolve institutional issues in

ASEAN energy infrastructure projects

Scorecard Initial Qualitative Assessment


Overview Scorecard Initial Qualitative Assessment

• In terms of physical connectivity a check–list of what is missing would have been sufficient to reflect upon the actual physical links

But • It is not enough if the goal is to understand the output

and outcome of such physical connectivity.



Institutional

1. Fully operationalize the 3 framework Agreements on transport

facilitation (AFAFGIT; AFAFIST; AFAMT)

2. Implement initiatives to facilitate inter–state passenger land

transportation

3. Develop the ASEAN Single Aviation Market

4. Develop an ASEAN Single Shipping Market

5. Accelerate the free flows of goods within ASEAN region by eliminating

barriers to merchandise trade.

6. Accelerate the development of an efficient and competitive logistics

sector, in particular transport, telecommunication and other

connectivity–related services in the region

7. Substantially improve trade facilitation in the region

8. Enhance border management capabilities

9. Accelerate further opening of ASEAN member states to investments

within and beyond the region under fair investment rules

10. Strengthen institutional capacity in lagging areas in the region and

improve regional–sub–regional coordination of policies programmes and

projects.



• The concept of institutional connectivity requires additional specification.

• Many of the devised key actions focus upon following up on ASEAN member states in terms of ratification, implementation of agreements and how liberalized market access can be followed through as per the various strategies.

• The devised key action can only reflect the status or the possible direction and requires that additional attention be paid to the formulation of each action to enable the monitoring effort.



People to

people

1. Promote deeper intra–ASEAN social and

cultural understanding

2. Encourage greater intra–ASEAN people

mobility

• The formulation of the actions under the people–to–people dimension is more precise than the physical or institutional connectivity, which readily facilitates the monitoring process.

• However, the people–to–people dimension requires additional work to identify and specify output and outcome indicators.


ASEAN Strategic Point for Connectivity

Kunming

Chennai

Ho Chi Minh City

Bangkok

Mandalay Kolkata

Dhaka

Chiang Mai

Yangon

Mekong-India Economic Corridor Link

Dawei SEZ

India Northeast

Thilawa SEZ

Kyaukphyu SEZ

：Existing link

：Potential link to be developed

Myanmar is an Important Strategic Point for Connectivity in East Asia Source：ERIA


Macro Logistics System Framework

Infrastructure

Logistics System

Service Providers

Institutional Framework

Traders/ Manufacturers Banomyong et al, (2008)


GSM is a simulation model based on Spatial Economics, aka New Economic Geography.

Road network in IDE/ERIA-GSM 4

• To simulate the dynamics of population and industries for long-term

• To analyze the effects of infrastructure projects and customs facilitation on the economic activities at prefecture level

Source: ERIA Report

FY2011 FY2012

Number of Cities 4,355 5,708

Number of Routes 7,203 10,792

Rest of the World 2 regions (EU, USA)

63 countries

World Coverage (Population)

63.9% 80.0%

World Coverage (GDP)

81.9% 93.9%


GRDP Differences in Year 2030

GSM Analysis by Banomyong et al &

AEC impact on overall ASEAN members GDP about 26,298 Million USD or +0.32% GDP

This scenario shows the economic impacts

of AEC comparing without AEC.


This scenario shows the economic impacts of AEC comparing without AEC.

THAILAND Perspective

AEC affects positively for all provinces of Thailand. AEC impact Thailand GDP about +1,806 Million USD, this resulted +0.05% of GDP in 15 years after AEC Integration

GRDP Differences in Year 2030

GSM Analysis by Banomyong et al &


Supply Chain Re-design after AEC


• Survey of +60 Potential Investors and Influencers from Japan

Note: Survey has done in Japan by the support of IDE-JETRO

Synthesizing the Impact of Thailand’s Logistics Infrastructure Management and Supply Chain Redesign within the context of the ASEAN Economic Community (AEC) 21 Source: ASEAN Automotive Federation (2013)

• Myanmar and Vietnam are potential investment destination for Japanese Investor in Automotive Industry

• Indonesia is significantly attractive compare to Thailand

• Supply Chain Re-design mostly effects Part Providers not Auto Assemblers

Degree of Attractiveness


Degree of Attractiveness

• Singapore, Malaysia and Thailand are major exporters of E&E in ASEAN (2011)

• Vietnam and Myanmar are mostly attract Japanese Investor in E&E Industry


Degree of Attractiveness Textiles Export in 2009

Source: WTO

• Indonesia, Thailand and Vietnam are major exporters of Textiles in ASEAN (2009)

• Myanmar, Cambodia and Lao PDR are newly attracted destination to Japanese Investors

Vol. Mkt.Share


Key player: The Logistics Service Industry

• The quality of logistics services depends on

– The structure of the logistics industry

–Contractual arrangements for providing logistics services.

• The size of the enterprises depends on

–Barriers to entry,

–Extent of regulation

– Level of demand.


Structure of Logistics Industry and Service

• Trucking, warehousing, forwarding and clearance firms tend to be small, flexible and hesitant to invest

• Rail, ocean, and air transport enterprises tend to be large and formal with more investment resources

• A mix of large and small provides the best service


Major Policy Areas for ASEAN Priority Integration

Sector Logistics Roadmap 1. Encourage the Integration of the ASEAN National Logistics

Systems

(by increasing communications at the regional level to identify actions in the logistics sector to support and facilitate trade flows between ASEAN countries)

2. Encourage the Progressive Liberalization of Logistics Services

(to make them better able to respond to the opportunities available for ASEAN integration and increasing competitiveness)

3. Increase Trade, Logistics and Investment Facilitation

(to identify the means needed to improve transport logistics facilities and the priorities for investment)

4. Build ASEAN Logistics Capacity

(by encouraging human resource development in the sector, and an environment conducive to developing the sector)

5. Promote ASEAN Logistics Service Providers

(by identifying them and providing channels for their greater participation in the sector)

6. Promote Multimodal Transport Capacity

(especially containerized transport)


NO. MEASURES IMPLEMENTING BODY TIMELINE

SPECIFIC ISSUES

I Member country shall endeavour to achieve substantial liberalisation of

logistics services in the following sectors:

1 Maritime cargo handling services CPC 741 Coordinating

Committee on Services

(CCS)

2013

2 Storage & warehousing services CPC 742 CCS 2013

3 Freight transport agency services CPC 748 CCS 2013

4 Other auxiliary services CPC 749 CCS 2013

5 Courier services CPC 7512** CCS 2013

6 Packaging services CPC 876 CCS 2013

7 Customs clearance services CCS and Customs

Coordinating

Committee (CCC) 2013

Structure of the ASEAN roadmap


Maritime transport services

8 International Freight Transportation

excluding Cabotage

CPC

7212

CCS 2013

Air freight services

9 Implement ASEAN Multilateral

Agreement of the Full Liberalisation

of Air Freight Services

Senior

Transport

Officials

Meeting

(STOM)

December

2008

Rail freight transport services

10 International rail freight transport

services

CPC

7112

CCS and

relevant STOM

Working

Groups

Beginning

2008

Road freight transport services

11 International road freight transport

services

CPC

7213

CCS and

relevant STOM

Working

Groups

Beginning

2008



II Enhancing Competitiveness of ASEAN Logistics Services Providers through

Trade (including Documentation Simplification) and Logistics (Transport)

Facilitation

II (a) Trade and Customs Facilitation

II (b) Logistics Facilitation

III Expanding Capability of ASEAN Logistics Service Providers

IV Human Resource Development

V Enhance Multi-Modal Transport Infrastructure and Investment



• Development mostly are concentrated • Countries with better Facilitation will have better impact. • Soft Infrastructure better impact in short and medium range,

Hard Infrastructure better in long range. • What about 10 years after AEC?

Source: ERIA / IDE-JETRO GSM Team.

Industrial Agglomeration

Automotive Cluster


Economic corridors


Social


Safety and security


Technological


Fuel Efficiency


Operational efficiency


Environment


Competitiveness

unescap regional conference of freight forwarders ... · 8. enhance border management capabilities...

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