The World Bank on the global food crisis

This week the Bangkok Post featured a background article by World Bank experts on how food security works.

The last food crisis was in the 1970s over 30 years ago, so it has long passed from most the memory of most people.

Food security for the whole world, not just a single country, is defined as:

"...when all people, at all times, have physical, social, and economic access to sufficient, safe, and nutritious food to meet their dietary needs and food preferences for an active and healthy life."

Even if food is abundantly available in a country, like Thailand, food security is not always ensured. As the article points out:

"...starvation is a matter of some people not having enough food to eat, and not a matter of there being not enough food to eat. The irony is that most of the food insecure live in rural areas where food is produced, yet they are net food buyers rather than sellers. Poverty constrains their access to food in the marketplace."

The recent failure of rice farmers, the very people who grow rice, to profit from higher rice prices, is a similar but less severe economic pattern.

This article, though a little long and difficult at times, provides essential background information that can make the daily news reported in the Bangkok Post more meaningful.

Here is the article in full:

Achieving food security

In the mid-1970s, as rapidly increasing prices caused a global food crisis, food security emerged as a concept. Attention focused first on food availability but then quickly moved to food access and food use, and, most recently, to the human right to adequate food. The International Covenant on Economic, Social, and Cultural Rights, ratified by 153 states, obligates these states to progressively realise the right to food.

The commonly accepted definition of food security is when all people, at all times, have physical, social, and economic access to sufficient, safe, and nutritious food to meet their dietary needs and food preferences for an active and healthy life.

For most of the world's malnourished people, the lack of access to food is a greater problem than food availability.

The chronically food insecure never have enough to eat. The seasonally food insecure fall below adequate consumption levels in the lean season. And the transitory food insecure fall below the food consumption threshold as a result of an economic or natural shock such as a drought, sometimes with long-lasting consequences.

Investments in agriculture are important to increase food security. The channels are complex and multiple. Rising productivity increases rural incomes and lowers food prices, making food more accessible to the poor. Other investments - such as improved irrigation and drought-tolerant crops - reduce price and income variability by mitigating the impact of a drought. Productivity gains are key to food security in countries with a foreign exchange shortage or limited infrastructure to import food.

The same applies to households with poor access to food markets. Nutritionally improved crops give access to better diets, in particular through biofortification that improves crop nutrient content. The contributions that agriculture makes to food security need to be complemented by medium-term programmes to raise incomes of the poor, as well as insurance and safety nets, including food aid, to protect the chronic and transitory poor.

Secure world, insecure households

The world is generally food secure, producing enough food to meet the dietary needs of today's global population. Even so, future global food security should not be taken for granted because of uncertainties from growing resource scarcity and climate change.

About 850 million people remain undernourished. Accordingly, the first Millennium Development Goal includes the target of halving hunger as tracked by the measure of undernourishment given by the Food and Agriculture Organisation (FAO).

The highest incidence of undernourishment is in Sub-Saharan Africa, where one in every three persons suffers from chronic hunger. The greatest number of undernourished is in South Asia (299 million), closely followed by East Asia (225 million).

East Asia has reduced the prevalence of undernourishment in the past decade by more than 3% a year and South Asia by 1.7% a year, but the failure to reduce the absolute number of undernourished remains a cause for concern. In the 1970s, 37 million people were removed from the ranks of the undernourished, and 100 million in the 1980s, but in the 1990s, only three million were removed.

What accounts for these millions of food-insecure individuals? Food security depends on adequate and stable food availability, access to adequate and appropriate food, and proper use and good health to ensure that individual consumers enjoy the full nutritional benefits of available, accessible food. Availability is necessary but not enough to ensure access, which is necessary but not enough for effective use.

Food availability

The price increases in the mid-1970s world food crisis were exacerbated by low foreign-exchange reserves, limiting food imports in many food-deficit countries. This rise in prices prompted some countries to look inward, striving for food self-sufficiency through domestic production.

But today, with deeper international markets, lower real prices, and more countries with convertible exchange rates, trade can stabilise food availability and prices for most countries. And most countries have diversified their export base, increasing their capacity to import.

However, food availability is still a concern in some agriculture-based countries. Many countries have declining domestic production per capita of food staples. Burundi, Ethiopia, Kenya, Madagascar, Nigeria, Sudan, Tanzania, and Zambia all had negative per capita annual growth rates in staple food of -1.0% to -1.7% from 1995 to 2004. In addition, staple food production in many agriculture-based countries is largely rain fed and experiences large fluctuations caused by climatic variability.

Stagnation or a decline in domestic production and large fluctuations clearly raise a potential problem of food availability at the national level. Can this problem be addressed through imports? In many countries the answer is yes. In other countries, however, the main staples consumed have a low degree of tradeability and are hardly traded internationally. Poor infrastructure imposes high costs for food to reach isolated areas, even when the capital city and coastal cities are well served by international markets.

Beyond tradeability issues - with adequate infrastructure and internationally traded staples - low foreign exchange availability often limits the capacity to import.

Consider the case of Ethiopia, which would import on average 8% of its staple food consumption (assuming no food aid) to maintain current levels. Additionally, a 9% shortfall in production, which occurs on average every six years, could only be compensated by a doubling of imports.

Almost all the agriculture-based countries are net importers of food staples, importing on average 14% of their total consumption over the past 10 years, but reaching high dependency levels of more than 40% in Guinea-Bissau, Haiti, and the Republic of Yemen. With such levels of dependency and food imports often representing more than 20% of the available foreign exchange, world price fluctuations place additional strain on import capacity, and therefore domestic food availability. World price variability remains high, with a coefficient of variation of around 20%.

Because of the low price elasticity of demand for food staples and the thinness of markets, problems in food availability (from low domestic production or lack of imports) translate into large spikes in domestic prices and reductions in real incomes of poor consumers (many of whom are farmers). Even in countries that engage in trade, transport and marketing costs result in a large wedge between import and export parity within which domestic prices can fluctuate without triggering trade.

Food access - enough to eat

But for most of the malnourished, the lack of access to food is a greater problem than food availability. Nobel Laureate Amartya Sen famously wrote that starvation is a matter of some people not having enough food to eat, and not a matter of there being not enough food to eat. The irony is that most of the food insecure live in rural areas where food is produced, yet they are net food buyers rather than sellers. Poverty constrains their access to food in the marketplace.

According to the UN Hunger Task Force, about half of the hungry are smallholders: a fifth are landless; and a tenth are agropastoralists, fisherfolk, and forest users; the remaining fifth live in urban areas. Today, agriculture's ability to generate income for the poor, particularly women, is more important for food security than its ability to increase local food supplies. Women, more than men, spend their income on food. In Guatemala, the amount spent on food in households whose profits from non-traditional agricultural exports were controlled by women was double that of those whose men controlled the profits.

India has moved from food deficits to food surpluses, reducing poverty significantly and reaching a per capita income higher than that in most parts of Sub-Saharan Africa. Yet it remains home to 210 million undernourished people and 39% of the world's underweight children. Bangladesh, India, and Nepal occupy three of the top four positions in the global ranking of underweight children. Many believe that the inferior status of women in South Asia has to some extent offset the food security benefits of agriculture-led poverty reduction.

Food use - ending hidden hunger

Food use translates food security into nutrition security. Malnutrition has significant economic consequences, leading to estimated individual productivity losses equivalent to 10% of lifetime earnings and gross domestic product (GDP) losses of 2% to 3% in the worst-affected countries. But malnutrition is not merely a consequence of limited access to calories. Food must not only be available and accessible, but also be of the right quality and diversity (in terms of energy and micronutrients), be safely prepared, and be consumed by a healthy body, as disease hinders the body's ability to turn consumption into adequate nutrition.

Lack of dietary diversity and poor diet quality lead to micronutrient malnutrition or hidden hunger, even when energy intakes are sufficient. Hidden hunger can cause illness, blindness, and premature death as well as impair the cognitive development of survivors. In the next 12 months, malnutrition will kill one million children before the age of five. Iron deficiency among female agricultural workers in Sierra Leone will cost the economy $100 million in the next five years.

Although increased production of horticulture products and livestock has been agriculture's main avenue to improve diet quality, agriculture now offers an additional pathway to address hidden hunger. Biofortification is enhancing staple crop varieties and improving diet quality with higher levels of vitamins and minerals through conventional crop-breeding and biotechnology.

In the future, agriculture will continue to play a central role in tackling the problem of food insecurity. It can maintain and increase global food production, ensuring food availability. It can be the primary means to generate income for the poor, securing their access to food. And through new and improved crop varieties, it can improve diet quality and diversity and foster the link between food security and nutrition security.

Adapted from the 2008 World Development Report, prepared by Derek Byerleee, senior adviser for the World Bank's Agriculture and Rural Development unit, and Alain De Janvry, Professor of Agricultural and Resources Economics and Public Policy, University of California at Berkeley.

(Source: Bangkok Post, op-ed section, World Bank, 08-05-08, temp-link)

Vocabulary:

secure - safe from harm, protected

insecure - not safe from harm, not protected

security - actions taken to make a place safe and protect it

food security (for a country) - protecting a country from food shortages

food security (for the world) - "when all people, at all times, have physical, social, and economic access to sufficient, safe, and nutritious food to meet their dietary needs and food preferences for an active and healthy life."

food availability - food is available on the market and can be bought if you have enough money (but the poor do not have enough money, so they do not have "access" to the food)

food access, access to food, accessible food - food that people can get (for poor people this means be able to buy with their limited income)

food use - how people actually use the food they have access to (for example, a poor person might have enough money to buy healthy potatoes or unhealthy potatoe chips and choose to buy the unhealthy alternative)

the human right to adequate food - the idea that every human being has a right to obtain adequate food (how to ensure that right is a problem)

adequate food - enough food

inadequate - not enough food

sufficient food - enough food

Vocabulary for Markets

tradeability - can be traded in markets

low degree of tradeability - difficult to trade the good in markets

a thin market - little buying and selling in a market, making them less useful for trade

deeper markets - markets with a lot of buying and selling, making them useful for trade

low price elasticity of demand - demand for good does not change much when price changes

large spikes in prices - when prices suddenly increase and then decrease (producing a graph that looks like a "spike")

prices fluctuate - prices move up and down irregularly

Vocabulary for Production

productivity - producing more per unit of resource (labour, machines, land)

a resource scarcity - not enough resources exist

shortfall in production - produced less than expected, not enough

Vocabulary for Diet and Nutrition

a diet - the type and range of food that you eat regularly

nutrients - substances and chemicals that help living things grow

nutritious - food has a lot of substances to help you grow

nutrition - how nutrients are obtained from food by the body, the study of how this happens

crop nutrient content - the substances in crops that help people grow

nutritionally improved crops - crops that have more nutrients in them to help people grow

nourish - to provide the food necessary for life, growth, and good health

undernourished (adjective) - person does not get enough food for growth and good health

undernourishment (noun) - the situation when a person is undernourished

dietary needs - the foods and nutrients needed regulary for growth and health

food preferences - the foods that you like

malnutrition - weakness and lack of health from inadequate food

malnourished people - people who are unhealthy because of inadequate food (See Wikipedia)

a staple food - the basic and most important food for everyday life (for example, in Thailand the staple food is rice)

chronic - lasting a long time

transitory - lasting a short time

chronically food insecure - always facing harm from a lack of food

the lean season - the time period during the year when there is littel food production

a threshold - a limit, when you reach the limit something happens (for example, a nutritional threshhold needed for health)

an economic or natural shock - a sudden event that effects the supply of goods in a market (for example, when there is a drought or when oil producing nations suddenly decide to limit the world supply of oil)

drought - a time when there is no rain and no water

consequences - the results or effects of something

long-lasting consequences - results or effects that last for a long time after they initially occur

channels - arrangements for money and resources to be used for something

irrigation - supplying water to land to help crops grow

a drought - when rain does not fall and there is little water

drought-tolerant crops - crops that can still grow with very little water

price and income variability - when prices and income move up and down

mitigating the impact of - reducing the negative effects of

X, in particular Y - X is especially true for Y (the current world food situation is bad, in particular Burma has been especially hard hit)

particularly Y - especially true for Y

X complemented by Y -

safety nets - protection from unforeseen events (safety nets are placed around a building being constructed so that if a worked falls off the building the "safety net" will save him)

taken Y for granted - assume you will always have Y, never think of the possibility of not having Y

Millennium Development Goal - long-term goals for worldwide economic development (See Wikipedia)

Food and Agriculture Organisation (FAO) - the United Nations agency that specializes in defeating hunger worldwide (See Wikipedia)

incidence - frequency of occurrence

The highest incidence of Y - the highest frequency of occurence of Y

the prevalence of Y - Y is common, seen widely

the relative number of Y - the number of Y compared to something else (fractions and proportions often used for comparison)

the absolute number of Y - the actual number or count of something

the ranks of - the members of a group

stable - not likely to change suddenly

effective use - a use that works well and helps achieve goals

exacerbated - made worse

foreign-exchange reserves - foreign currencies held by the central bank of a country, in case of an emergency

a deficit - not enough, inflow greater than outflow

food-deficit countries - countries that don't produce enough food to feed their people, therefore import food

prompted - caused them to do

look inward - change to using your own resources, being self-reliant and not dependent on others

convertible exchange rates -

diversified their export base - export a variety of different goods (so that if one fails, another will succeed)

capacity to import - the amount that you are able to import

fluctuations - move up and down, change irregularly (fluctuations in the price of oil, for example)

prices fluctuate - prices move up and down, change irregularly

climatic variability - the weather changing all the time (for example, sometimes no rain and drought, sometimes too much rain and flooding)

stagnation - stops moving, developing, and progressing

problem addressed through Y - Y is used to solve the problem

isolated areas - areas of a country not connected to the main part by roads (for example, Tachileik in Burma was not really connected to the rest of Burma by road until recently)

X compensated by Y - X balanced by Y, Y makes the situation better

a dependency - a need for someone else

strain - making an organisation or system do more work than it can handle

place additional strain on - give it even more work, when it can't handle the work it already has

import and export parity - imports equals exports

a large wedge between import and export parity within which domestic prices can fluctuate without triggering trade - only when food prices in a country increase or decrease too much, do people try to buy food outside the country

irony - surprising because very different from what you expect

smallholders - farmers who own a small amount of land that they farm

landless - farmers who do not have land (must rent to farm)

agropastoralists - people who move frequently, living at different locations, raising animals such as cattle, camels, or goats

fisherfolk - people who fish for a living (the traditional word "fishermen" excludes women)

forest users - people who grow food in th forest or search for food (forage) in the forest

tackling the problem of - solving the problem of

Posted by Jon Fernquest at 01:23 PM | Permalink | TrackBacks (0)

How can poor rice farmers
increase their share of rice profits?

This week Korn Chatikavanij, shadow finance minister for the Democratic Party and member of parliament, in his weekly Bangkok Post column, visited Isan with a group of students and discussed ways to ensure poor farmers get the portion of rice profits that they deserve.

Simple projects, like three kilometers of irrigation canals to existing water sources, that could improve the lives of farmers significantly at low cost are often neglected.

In the sugar industry, farmers and refiners already share revenues and split profits. Rice farmers might be able to do the same if they were able to join together and derive power from their numbers.

Recent inefficient and price distorting interventions planned by the current government are also critiqued. Like selling stockpiled rice at a high price and re-purchasing it at even higher prices, instead of giving a subsidy to poor farmers from profits on market-priced rice sales. Selling stockpiled rice is also likely to depress the price of rice for farmers growing a third crop this year, making life even more difficult for them.

The difference between rice production and oil production is also covered and how a cartel of rice producers similar to OPEC is infeasible.

Here is the article in full:

Co-op structure ideal for rice farmers

I took time out from my usual Bangkok routine to go spend a night in a village in rural Ubon Ratchathani last week. The Democrat Party organises a bi-annual Internship Programme for university students and the current group were spending three days living and learning about life in a typical Isan village.

They were also tasked with reporting on how we could help improve the quality of life for the villagers.

I joined them and the villagers for a night and, apart from the pleasure of being woken up for the first time in a while by a rooster, I left the next day with some answers and many questions.

Briefly, it is clear that the recent surge in the price of rice has passed these villagers by pretty much entirely. As with most Isan farmers, given poor access to water, they only manage one crop a year and that was harvested back in December last year before the price surge.

Since then they have been growing their other main crop, chillies, the price of which has inexplicably collapsed.

Pretty much the only concern the villagers had was the issue of water. In the case of this particular village, a natural year-round water source is available only 3km away, but as a result of poor irrigation it might as well be 3,000km. Indeed, they often face the depressing situation of parts of their land being flooded and parts being completely arid at the same time. They claim that an expenditure of 12 million baht on construction of Klong Sai Gai ("chicken entrails" canal) would allow an additional 1,000 rai of farming to take place. Finally, they tell me that their request for funds has been turned down during the past several years simply because they are known Democrat voters.

Interestingly, they refused to believe that they would fare any better if they changed their allegiance, given that the tambon next door, known TRT/PPP supporters, have fared no better in terms of real improvement in infrastructure.

In contrast to the plight of the rice farmers, back in Bangkok the cabinet last week approved an increase in the domestic price of sugar by 5 baht a kilogramme - a decision that, while hurting consumers, directly benefits sugarcane farmers, given the unique revenue-sharing system between farmers and refiners in our sugar industry.

The legal framework determines that revenues are shared 70:30 between farmers and refiners and is a model that ensures the interests of farmers and traders are largely aligned.

Readers will, like me, at this point ask the question: Why can't we legislate the same deal for rice farmers? The Ubon farmers would not need to worry that they had sold their paddy for 9,000 baht a tonne in December while milled rice price has more than doubled since. A fair division of the revenue between traders, millers and farmers would be pre-agreed, even net of input costs such as land rental and fertiliser. Effectively, the creation of a legal framework creating a co-op structure for the rice industry. I posed the question to one of our MPs in a sugarcane constituency (Dr Preecha Musikul, MP for Kamphaeng Phet), who surmised that it was an issue of the inability of rice farmers to club together in the same way that sugarcane farmers have been able to. If and how this could be resolved is surely a question worth asking, and I will be seeking expert opinion on this henceforth.

In the meantime, though raising sugar prices domestically has an obvious beneficial impact on farmers, the 25% increase in consumer prices is dramatic and, given the current cost of living issues and accelerating inflation, the method and timing is questionable, especially now that export prices are beginning to look better after a two-year decline.

Back to rice: the government has decided to become more interventionalist and has decided to bag and sell the 2.1 million tonnes of rice at its disposal at a discounted price. The government has also pledged to replace the rice sold with new stock to be bought at 12,000-13,000 baht a tonne from farmers.

Our view has been made clear from the start: we believe that the optimum way to derive benefit from this stock of rice is for it to be sold at market prices, with the profits received used to the benefit of those who pledged the rice to the government in the first place - the farmers.

This could be done through the provision of subsidy for the necessary purchase of fertilisers for the next crop, so as to reduce farmers' costs and thus risks. Indeed, the 2.1 million tonnes of rice were never a strategic stock and the use of taxpayers' money to re-acquire the stock at a higher price is inefficient, given that there is no shortage of demand for our rice in the current world market.

I have read columnists writing that Thais ought to have the right to access cheap rice as we are a rice producer, similar to the people of oil-producing countries whose domestic price is set at a deep discount to the world price. I think there is a major flaw in this argument, since oil is a natural resource owned effectively by the whole population and save for the cost of exploration and marketing, is effectively free.

With rice, however, half our population is engaged in the hard work and risk-taking to produce the rice without the contribution of the other half, who are simply consumers. The farmers thus have a right to be able to sell their produce at the highest price. Even more so since they are the poorest component of our society.

Low-wage consumers who are genuinely suffering from the cost of living increase could be assisted by food coupons and increases in minimum wage guarantees. This is more efficient because even the government acknowledges that it cannot ensure the discounted rice would fall into the hands of those who most need it.

Furthermore, there was an immediate impact on futures prices of rice on the announcement of the discounted rice scheme, impacting directly the selling price for farmers for the second crop about to be harvested.

The issue of wage increases was one I wrote about a fortnight ago and the tri-partite discussion has concluded an increase in the minimum wage raging from 2-11 baht across different provinces in the country. This is clearly the minimum amount necessary for low wage earners to survive in this new inflationary environment, for it represents a maximum of just over 5% increase when inflation is running at 6% on an annual basis and the cost of many basic products is rising by much more than that.

Clearly, the issue of inflation is one that will be most challenging for us politicians for sometime to come.

In times of inflation, what becomes even more pressing is the concentration on productivity and the adding of value to our products. You cannot fight inflation by throwing money at it.

I was thus more than happy to see our intern students drafting ideas and plans to their village hosts as to how to process and package their raw chillies so as to capture higher value up the product chain.

The organisation of cooperatives and investment in improving quality and quantity of all goods is a national agenda that requires immediate attention.

Korn Chatikavanij is shadow finance minister.

(Source: Bangkok Post, op-ed section, 06-05-08, Korn Chatikavanij, temp-link)

Vocabulary:

a co-op structure, a farmer's cooperative, an agricultural cooperative - when farmers join together to process, store, and market their crops

shadow finance minister - an MP from the opposition party (Democrats) who follows what the government (party in power) is doing and suggests alternatives (follows like a shadow whereever the real minister goes)

shadow boxing - boxing with your shadow as practice and training

derive - get

interventions - when the government buys and sells in markets

critiqued - evaluate, assess, look for faults, errors, flaws, and shortcomings

stockpiled rice - rice stored for long periods of time

infeasible - not practical, cannot succeed if tried

took time out - stopped doing what you normally do, to do something else for a while (take a break from)

a routine - regularly doing things in a fixed order to get work done quickly

bi-annual - happens two times every year

an internship - when a student gets practical training under supervision

tasked with - given a task or job to do

inexplicably - could not be explained

the price collapsed - the price suddenly fell by a large amount (causing hardship for those who relied on it)
.
arid - very dry so few plants can grow

chicken entrails - the insides of chickens that most people do not eat (intestines, stomach, heart, liver, etc)

allegiance to X - support for X, loyalty to X

X fared no better than Y - Y did better than X, X did worse than Y

in terms of - measured by

a plight - a difficult situation full of problems

revenue-sharing system - a system for sharing profits from producing something

revenues are shared 70:30 between farmers and refiners - farmers get 70% of revenues and refiners get 30% of revenues

refiners - the companies that take raw sugar from the fields and turn it into packaged sugar sold in stores

interests - what particular people hope to gain from a situation

aligned interests - when people have the same interests (and therefore the same motivation for acting, which makes it easier to work together and cooperate)

interests of farmers and traders are largely aligned - farmers and traders are roughly working for the same goal

legislate X - make a law X in parliament

paddy - harvested rice straight from the fields

milled rice - rice that has been dehusked, dried, and processed at a rice mill

club together - join together in a group

resolve a problem - solve a problem

henceforth - from this time forwards, in the future

obvious - easy to see and understand

accelerating inflation - inflation getting worse and worse, prices increasing at a faster and faster rate

timing - judging the right time in a situation to do something

interventionalist - when the government buys and sells in markets (instead of just lightly regulating and guiding markets)

disposal of rice at a discounted price - selling rice to the public at a lower than usual price

pledged - promised to do

the optimum way - the best way

provision of subsidy - giving money to do something

strategic - plans to achieve something over long periods of time

strategic stock or rice - rice kept for an emergency, in case there is s severe rice shortage

domestic price is set at a deep discount to the world price -

a flaw - a mistake or error (making less true and effective)

a component - a part

cost of living issues - problems caused when the costs of everyday things such as food and transportation rise

cost of living increase - extra money given to workers to pay for increase daily expenses of food and transportation

food coupons - pieces of paper that can be exchanged for food at stores

X falls into the hands of Y - Y gets X (accidentally)

fortnight - 14 days, two weeks

tri-partite discussion - discussion between three groups (employees, employers, government)

throwing money at a problem - using a lot of money to solve a problem without really thinking how to solve the problem effectively (throwing = not thinking)

capture higher value up the product chain - when a middleman does something between initial production and consumption of a good to add a lot of value

hosts - people who invite you (their guests) to their home (village or heighborhood)

village hosts - people in the village who invited you to their village

the national agenda - the plan for the country's future, the things that must be done to achieve the country's goals

Posted by Jon Fernquest at 01:26 PM | Permalink | TrackBacks (0)

Can a new rail system
add value to commerce in Thailand?

The Thai government has been looking for ways to revamp Thailand's transportation system so that goods can be transported from place to place at lower cost.

The improvements being planned for Thailand's railway system were the focus of a Commentary by Bangkok Post news editor Saritdet Marukatat this Tuesday.

The commentary explains some of the shortcomings of the antiquated railway technology left over from the past. The commentary also suggests that the sudden renewed focus on rail may be planning too much, too quickly.

One big issue will surely be who will take charge of carrying out these critical changes.

Should the changes be handled by the existing State Railways of Thailand (SRT) which have lost money for decades? (since 1974, 24 years)

Or by a completely new government agency? By a private company? Or by a joint venture between the government and the private sector?

Railways make very long-term investments so any railway project has to be careful that the investment can actually pay back the investment cost before the technology becomes antiquated and a burden rather than adding value to Thai commerce.

Here is the commentary in full:

At last, big plans for SRT

The bigwigs at the State Railway of Thailand and Transport Ministry are now thinking something similar. If new lines and the additional double-track networks are built, they will come. What they mean is that more passengers and freight will go by rail, thus ending SRT's misery.

After enjoying profits in the early years, the agency has been in the red since 1974. Its accumulated losses stand at 51 billion baht. Another 34 billion baht liability will be added for the Airport Rail Link project to be launched next year.

The main reason for losing money looks simple. More roads have been built in the country than railway lines. And they are constantly improved from two to four and even six lanes for key highways across the country.

The rail network in this country covers some 4,043km, less than in neighbouring Burma, which has around 5,500km. Worse, only 280km of the Thai rail is the double-track system, compared with 200km in Malaysia and 600km in Burma.

Thus it is not difficult to imagine why delays are very common for passengers due to that traffic bottleneck. To arrive at a railway station only to find that the train taking them to their destination will come two hours late, is still possible.

The single track limits the driver to run the train at a maximum speed of 120km per hour. Thus it is understandable for railway officials to envy those working at the Highways Department because roads always come first when policy-makers talk about transport infrastructure.

Suddenly, last Thursday, something favourable to the railway agency happened at a transport meeting. All the big shots agreed that it was time to make a serious effort to develop the railways.

So now the government will spend 39 billion baht to improve the tracks, including laying more double tracks.

That won't be enough. In the long term, around 367 billion baht will be spent for new and wider tracks covering 2,644km. The railway jargon for this is "standard gauge," which is 1.435 metres wide, compared to the one-metre gauge system being used now. Thailand will eventually have high speed trains running at 160km per hour from Bangkok to Nakhon Sawan, Pattaya, Chanthaburi and Nakhon Ratchasima. The bottom line for this is that focus should be shifted to trains because they can carry people and goods in large amounts at the same time. Logistics costs will be cut and there will be even less pollution especially in the long term when electricity, not diesel, will be the main power to haul trains.

Should train enthusiasts give the government a big round of applause? The answer could be "No." One conclusion of this ambitious plan is that it is going too far, too quickly.

There is no argument the SRT needs the double-track system. The on-time schedule and faster trains which would result will lure people to take the train and factory owners to transport their freight. But will it need to add the standard gauge into the existing system? Whether the tracks should be widened from one metre to 1.435m has been the subject of debate among train officials for several years. Wider tracks mean trains can run faster, that's true. But new technologies can also help trains on the one-metre track to run faster, too. The money to build the new system should be used to expand the train network to more areas in the country. Only 600km have been added to the railway map since the establishment of the SRT to replace the Royal State Railways of Siam in 1951. That was 57 years ago.

It would be easy to equip the SRT with high speed trains, but whether it would be worth it remains a question. Other countries such as Japan, France, Germany, South Korea and Taiwan have those kind of trains. But that happened after all basic train infrastructure was put in place, including the double-track system, and enough coaches to serve passengers, enough locomotives to pull the trains and qualified staff to run the organisation.

"Don't think too far ahead about high speed trains. Let's find a way to have our present trains run quicker first and think about other things later." That's what one senior SRT official said about what should be the priority for his agency.

Saritdet Marukatat is News Editor, Bangkok Post.

(Source: Bangkok Post, op-ed section, 06-05-08, Saritdet Marukatat, temp-link)

Vocabulary:

State Railway of Thailand (SRT) - the government agency running the railway lines throughout Thailand

add value - the amount of value added to a good or service by a step in the process of producing it (for example, an automobile manufacturer "adds value" to auto parts when it builds a car from them)

commerce - all the activities involved in buying and selling goods and services

revamp - make changes to improve something

shortcomings - faults and weaknesses

antiquated - not used anymore, old and old-fashioned

left over - remaining when most has been used and disappeared

renewed - done again

focus - spending time on one thing or task (rather than many)

renewed focus - once again spending a lot of time on this one thing

carrying out - doing, executing a plan

critical - important

a burden - causes a lot of difficulty, worry, and hard work (a heavy load to carry)

new lines - new railway tracks for trains to travel over

a network, a transportation network - the roads, flights, train lines, or shipping lines that goods and people are transported from place to place over

single tracks - a railway system with tracks running in one direction only (this means that trains must sometimes wait while a train running in the opposite direction is using the track)

double tracks, double-track networks - a railway system with tracks running in both directions (this means that trains don't have to wait to use tracks and can go faster)

in the red - company losing money, no profit

a liability - borrowed money that has to be paid back

traffic - trucks, cars, trains, airplanes, and ships passing traveling through a transportation network ("internet traffic" is people using the internet)

traffic bottleneck - a place in a transportaton network that slows the whole network down, because traffic can't pass through this point

big shots - VIPs, the powerful rich people who make decisions that effect the public

jargon - specialised language (used in a job or by experts)

railway jargon - the special language used to talk about railways and trains

the bottom line - the most important point

focus should be shifted - limited resources should be moved to some other use

logistics costs - the costs of transporting goods from factory to store (also warehouse costs)

train enthusiasts - people whose hobby is trains, often building and running model trains

big round of applause - many people clapping their hands and approving

ambitious - has very hard to achieve goals

an ambitious plan - a plan with hard to achieve goals

going too far, too quickly - doing too much in a short time (and thus risking failure)

lure people - attract, persuade people to come

the subject of debate - the issue or problem that people are discussing and evaluating (good points, bad points) before making a decision

coaches to serve passengers - train cars (that people sit in when traveling from place to place)

should be the priority - should the most important goal

Posted by Jon Fernquest at 12:25 PM | Permalink | TrackBacks (0)

Who will gain or lose from the new Laos highway
from Thailand to China?

The impact of the new road to China from Thailand via Laos was the focus of an article in this week's Bangkok Post Perspective.

Chiang Rai as a whole is set to benefit from the new road, becoming a transportation hub for the region. Farmers in northern Thailand, however, may be negatively effected by low cost agricultural imports from China.

Here is the article in full:

Shaking up the neighbourhood

The Asian Development Bank (ADB) has supported the development of transportation routes linking China, Burma, Laos, Vietnam, Thailand and Cambodia since the Greater Mekong Subregion (GMS) was established in 1992. Route 9 connecting Thailand, Laos and Vietnam has been completed. A stretch of Route 3 from the southern Chinese border village of Boten to the Lao border town of Houei Xai, opposite the northern Thai border town of Chiang Khong in Chiang Rai province, was officially opened on March 31. (See map)

The journey from Boten to Houei Xai on the old mostly dirt road took as long as two days. With the new roadway, the trip takes only five to six hours. For its part, Thailand is planning several infrastructure projects, including a new bridge linking Chiang Khong with Houei Xai. Once completed, the bridge will connect Kunming, the capital of southwestern Chinese province of Yunnan, with Bangkok via a 1,855-kilometre highway, which will be connected to the road network in Malaysia and Singapore.

Acknowledging the importance of this new trade route, the Thai-Chinese Chamber of Commerce (TCCC) has urged Thai businessmen to tap into this new potential for economic growth.

"Chiang Rai will benefit the most in terms of trade, investment and tourism," said TCCC chairman Tanakorn Seriburi. "It can be the hub for Chinese tourists, who will not only travel in Thailand but around the region."

He foresees greater Thai-Chinese joint investment in long-term projects, including food processing and gem and jewelry business. A northern industrial park may also be set up with investors from China, he told a seminar in Bangkok in March.

In this regard, said Tanakorn, Thailand should promote the learning of Mandarin Chinese as a second language as it will help foster closer relations between the two countries.

"China is a fast-growing economy and its people are going abroad to further their studies and broaden their visions," said Tanakorn. "This is a new China that we must deal with."

As a matter of fact, the value of trade between China and Thailand has been increasing over the years. According to records of the Information and Communication Technology Centre and the Customs Department, the value of trade in goods between Thailand and China was 816 billion baht back in 2005.

With the value of imported items from China almost reaching 448 billion baht by the end of 2005 and exceeding 367 billion baht in exports from Thailand the same year, Thailand incurred a trade deficit with China of 81.5 billion baht in 2005.

Interestingly, by the end of 2007, the trade value between China and Thailand had exceeded a trillion baht.

However, with imports of 564 billion baht coming in from China and over 510 billion of exported items taking off from Thailand in 2007, the trade deficit for Thailand had decreased from that in 2005, but was still at a noteworthy 53 billion baht. (See chart)

The main export items from Thailand have been automatic data processing machines, rubber, polymers, refined fuels, crude oil, chemicals products, rice and tapioca products, whereas the top imported items from China have been computer parts and accessories, electrical machinery, iron and steel products and other metal ores and scraps, household appliances, chemicals, fertiliser and pesticides, fabrics and manufactured articles.

Roads to change

Professor Sompop Manarungsan, an economist at the Faculty of Economics, Chulalongkorn University, considers that in economic terms, the new Route 3 will be beneficial in at least three ways.

Firstly, it will encourage market expansion across the borders, considering the improved logistical framework. "Up to now, the main mode for transporting goods in the region has been via the Mekong River," he says, noting that vegetables from China are shipped along the river into Thailand, whereas exports from Thailand are shipped to Guangdong in China, from where they are transported to Kunming and other cities in Yunnan. "With the new road, cost and time incurred on logistics will be reduced in favour of door-to-door logistics."

Secondly, the development will also boost investments in the region, he said, noting that Chinese investors have already started acquiring land in Laos, on lease terms of 99 years, for commercial and real estate projects, as well as for building new entertainment complexes and casinos. "Investors from Korea, Singapore, Malaysia and Japan are already giving more attention to the area, which was initially considered a marginal area with few business opportunities, but is now more accessible," said Prof Sompop.

Thirdly, the road link will allow for more opportunities in the services sector. For example, tourists who initially travelled along the Mekong River to experience the inland destinations of the region would enjoy the improved transportation, and considering how the area is still exotic, tourism will gain momentum, he said.

Fourthly, such opportunities will not be equally offered for all the parties involved. Thailand and China, for instance, would enjoy more gains as compared to Laos, where impacts on the environmental, social and cultural fronts will also have to be faced, he added.

Thai traders with business partners in the northern or eastern parts of China, however, say the new highway will not give them any logistic advantage.

Samruay Chaiputhi, who has been importing agricultural chemical products from China for the past 20 years, said he would continue to ship the goods from Shanghai to Bangkok Port. "Transporting these chemicals by land is impractical as it involves many customs checks and procedures," he said. "Damage may occur if the products are loaded and unloaded several times along the way."

In his opinion, the new highway will mainly promote trade, investment and tourism between the southern Chinese provinces of Yunnan and Sichuan and other countries in the region.

All GMS countries should harmonise their customs procedures and settle the issue of revenue sharing from the fees collected for the use of the new highway and bridges spanning the Mekong River, he added.

New look for Laos

Even before the completion of Route 3, China has already overtaken Thailand and Vietnam as the biggest investor in Laos. Most of that investment has come in the agribusiness industry, in particular rubber.

Rubber plantations have mushroomed across the land-locked country in recent years to meet China's growing demand for rubber, mainly driven by its booming automobile industry. Before that, China had been involved in mining, hydropower and other resource-related projects to propel its industrialisation.

So far, major Thai investments in Laos have been in contract farming, international logistics, garment manufacturing and hydropower generation, according to Prof Sompop. In China, Thai firms have invested in hotels, agriculture-related businesses and international trade.

In fact, the value of Thai-Lao trade has been on the rise for the past three years - from about 40 billion baht in 2005 to 61.5 billion baht in 2007.

However, since the exports from Thailand exceed the imports from Laos, the trade surplus is enjoyed by Thailand. For example, in 2007, imports from Laos were over 16 billion baht and exports from Thailand were over 45 billion baht, which makes the trade surplus for Thailand nearly 29 billion baht. (See chart)

Main items exported from Thailand to Laos include refined fuels, iron and steel and their products, motor cars and accessories, machinery, woven fabrics, chemical products, plastic products, beauty products and beverages. Main items imported from Laos into Thailand are metal ores and scraps, fuels, wood, vegetables, coal, fruits, stranded wires and cables and machinery.

Dr Sompop said Thailand and Laos should develop a cooperation programme that would permit workers from Laos to work in Thailand with more ease, and at the same time, permit Thai workers to take up more opportunities to work in Laos. "This particularly applies to the agricultural sector, since there is a lot of unused land with potential for agricultural development in Laos. This would, in turn, benefit both countries resulting in a win-win situation," he said.

Regionwide, Thailand should be able to benefit from this linkage because at present, it is a centre that provides road links between many old and new member countries of the Association of Southeast Asian Nations (Asean). Many areas in neighbouring Laos, Burma and Cambodia are land-locked, he added.

Cross-border crime

Another matter that will have to be tackled by respective governments is international crime, such as human and drug trafficking which will become easier with this new mode of transportation, Prof Sompop said, adding that it would be helpful to have sub-regional cooperation to ensure a positive outcome of the development while keeping adverse impacts to a minimum.

The establishment of casinos, which already exist at the Chinese-Lao border, would require added efforts in crime suppression. Likewise, extra measures would be needed to check on human and drug trafficking, and to protect forests that might be encroached for agricultural purposes.

In this respect, intra-regional cooperation that gears for sustainable development is crucial. The Thai government itself must have an action plan for managing this new development, said the professor.

And last, but not least, the academic said Thailand must address economic impacts on local sectors as goods and people move freely across borders.

"With an influx of cheap fruits and vegetables from China, small-scale farmers in northern Thailand will be affected. These farmers will, therefore, have to utilise their land more effectively, for example, by planting more short-lived crops," he said.

Several academics have already voiced concern over the impact of the China-Thailand free trade deal on agricultural produce, which took effect in October 2003.

For example, data from the International Trade Study Centre of the University of Thai Chamber of Commerce (ITSC-UCC) shows that Thailand exported 7,031.97 million baht worth of vegetables to China while it imported 1,203.4 million baht worth from China during the first six months of 2006.

Despite the trade surplus, many Thai vegetable farmers suffered because more than 99 percent of the total value of exports was cassava and its products. China imports Thai cassava to produce alternative fuel, animal feed and other products.

"If we consider other vegetables, we are losing," said ITSC-UCC director Aat Pisanwanich. "For example in 2005, we exported only 13 million baht worth of fresh vegetables and imported about 77 million baht. We exported dried vegetables (excluding dried longan) worth 600,000 baht while importing about 600 million baht."

Hardest hit are northern Thai garlic farmers who have suffered greatly from the flood of cheap garlic from China during the past four years. A study released in March by researchers from Kasetsart University in Bangkok shows that a large number of garlic farmers in northern Thailand have quit because they could not compete with cheaper garlic from China.

Dr Decharat Sukkamnerd, head of the research team, called for a review of the China-Thailand free trade agreement to evaluate the impact on Thai farmers. Future agreements, he added, must be studied more thoroughly.

Cultural aspects

According to Mr Suraphan Boonyamanop, the Thai consul-general in Kunming, the new highway will contribute to stronger Thai-Chinese friendship and cooperation.

While many experts have looked at new trade and investment opportunities, Mr Suraphan said both countries should also strive for greater cooperation in the fields of education, research and development, and cultural exchange.

In education, an increasing number of Chinese students are attending colleges and universities in Thailand, and vice versa. Nine universities in Kunming already have a four-year Bachelors degree programme on the Thai language. Other courses conducted in Thai involve tourism, hospitality and business administration.

Several Thai and Chinese universities already have exchange programmes for both students and teachers. Students who undertake these programmes will study in China or Thailand after completing the first two years in their respective countries.

China has also sought cooperation with Thailand to develop its rice and rubber cultivation. Yunnan is also interested in planting mango, jackfruit and longan, which are popular among Chinese consumers, he added.

Mr Suraphan noted that China has already enhanced its image and presence in Thailand through the promotion of Chinese language study in Thai schools and universities. "Confucius institutes have been set up in various Thai schools, where Chinese language courses are offered to Thai students with free textbooks."

In addition to trade and investment, China will also gain new strategic footholds via access to the Andaman Sea, the Gulf of Thailand, and various ports in Cambodia. "For Thailand, what this brings will really depend on how we can tap into new opportunities," said the consul-general.

"Our relations with China are good in all aspects," he added. "Look at Chinese tourists and you see how happy they are in Thailand."

If a new bridge linking Chiang Khong with Houei Xai is constructed, more tourists can travel by land from Yunnan to northern Thailand via Route 3. Just an 8-10 hours drive from Yunnan, they will be in Chiang Rai by early afternoon, and have dinner in Bangkok. This scenario is already happening between Vietnam and Laos, thanks to the opening two years ago of the Hai Van Tunnel on Vietnam's national Highway 1 linking the East-West corridor with the central seaport of Danang.

Until the Chiang Khong-Houei Xai bridge is built, Chinese tourists and goods destined for Thailand through Laos must be ferried across the Mekong River. Northern Thailand's trade with Yunnan will continue to rely largely on shipping up and down the Mekong, with goods taking anywhere from 10 to 15 days to travel.

This is the second part of a series on the recent launch of the North-South Corridor of the Great Asian Highway. The first part was published on 13 April 2008.

(Source: Bangkok Post, Perspective, 04-05-08, SONGPOL KAOPATUMTIP and SIRIPORN SACHAMUNEEWONGSE, temp-link)

Asian Development Bank (ADB) - an international organistion that funds large development projects in Asia

a trade deficit - a country's imports greater than exports

incurred a trade deficit - country imported more than it exported

a trade surplus - a country's exports greater than imports

a corridor - a strip of land connecting one country to another

optimism - feeling positive about what will happen in the future

bolster trade - increase trade

geopolitical - the effect of geography on politics

Greater Mekong Subregion (GMS) - organisation for cooperation between the countries located along the Mekong River (China, Laos, Burma, Thailand, Cambodia)

tap into Y - start using resource X

tap into this new potential for economic growth -

food processing - cleaning, cutting, and packaging food for sale in stores

relations - contacts and connections between two groups (governments, companies, NGOs, international organisations, universities)

foster closer relations - help two groups know each other better and work together more

broaden their visions - change the way they view the world, go beyond the limits of their culture and economy (by studying abroad and traveling)

polymers - a chemical and material used in the production of many goods

metal ores - metal mixed with dirt and rock mined from the earth, then processed into metal

logistics - transportation and storage of goods, from where they are produced to stores where they are bought by consumers

logistical framework - a system for transporting and storing goods

cost and time incurred on logistics - the length of time spent transporting goods (delay) and the costs of transporting them (fuel, labour, warehousing)

door-to-door logistics - when goods are transported directly from seller to buyer (in this case by truck along the new highway, instead of being shipped in China by truck to a boat, transported by the Mekong River to Chiang Saen in Thailand, and then shipped by truck to another destination in Thailand)

marginal area - small and not very important

more accessible - easier to go there and use its resources (for example, use agricultural land for growing export crops)

momentum - continuing to move even though no longer pushed

tourism will gain momentum - amount of tourism will increase (permanently)

fronts - an important situation or field of activity (a front is where two sides meet to fight a war)

impacts on the environmental, social and cultural fronts - changes in the environment, society and culture that it causes

an advantage - something that puts you in a better position than other people

give a logistic advantage - something that allows you to move goods between locations more quickly at lower cost

practical - effective and sucessful in real situations (plans that can be put into action)

impractical - not practical

customs - the government agency that controls the flow of goods into and out of the country (checking for illegal goods and collecting tariffs and taxes on imports)

customs checks - government checks of goods coming into the country

harmonise their customs procedures -

settle the issue of revenue sharing from the fees collected -

plantations - very large farms growing large amounts of crops (coffee, sugar, rubber) and employing many usually low paid labourers

plantations have mushroomed - many plantations been started (they have popped up all over the country like mushrooms)

land-locked - has no coast, no access to the sea

hydropower - using the force of water flowing in rivers create (generate) electricity

propel - drives, causes to develop

propel its industrialisation - have been important in the development of industrialisation

contract farming - when a company hires a farmer to grow crops, usually for a guaranteed price

a win-win situation - a situation when both sides win (no loser)

a linkage - a connection between two things

provides road links between - connects two places by road

tackled - solved a problem

adverse impacts - negative effects

encroached - start using land that you do not own yourself

influx - inflows, flows into the country of goods

utilise their land more effectively -

concern - worrying about a situation

voiced concern over - said they were worrying about a situation

a review of the China-Thailand free trade agreement -

evaluate Y - study and consider, to make a judgement about how good or bad y is

evaluate the impact on Thai farmers - study to discover how much of a positive or negative effect there has been on Thai farmers

undertake - do

a foothold - a strong or favourable position from which further advances can be made

gain new strategic footholds - start doing businesses that might develop into sucessful businesses in the future

access to Y - allowed to use Y or go to Y

tap into new opportunities - trying new business opportunities (rather than just repeating what you have always done)

ferried across the Mekong River - moved across the river by boat (ferry)

Posted by Jon Fernquest at 01:49 PM | Permalink | TrackBacks (0)

Transportation and logistics improvements in Thailand
to combat rising oil prices

As oil prices rise transportation costs rise.

Transportation and logistics has risen from 19% to 23.9% of Thailand's GDP since 2006.

Cutting transportation costs by 1% could reduce the price of goods produced in Thailand by as much as 5% to 8%.

Developing the Western Seaboard of Thailand on the Bay of Bengal may be one way to cut the costs of Thai goods and make them more competitive on international markets.

Moving goods by sea on routes in the Gulf of Thailand such as Laem Chabang-Songkhla and Bangkok-Surat Thani may also be a way to save on transportation costs.

Rail to China via northern Thailand is also a potential cost saver.

The Bangkok Post business section carried an article on possible future logistics developments in Thailand this week.

See photo on right of the largest container ship (MV Maersk Kalamata) to dock and use the container facilities of Laem Chabang port on Thailand's Eastern Seaboard in 2003. 3,500 twenty-foot containers were loaded "for a 19-day direct transit to US ports, marking a new era for Thailand's shipping industry. The 304-metre ship has a total capacity of 6,400 TEU (twenty-foot equivalent units). The LCB1 terminal...can load 160 TEU per hour."

Here is the article in full:

'Western Gateway' proposed

Thailand needs to build a deep-sea port and marine motorway on the west coast to cut logistics costs, former finance minister M.R. Pridiyathorn Devakula said yesterday. M.R. Pridiyathorn, also a former central bank governor, said the so-called Western Gateway would complement the congested Laem Chabang port in the Eastern Seaboard.

The project would help save costs for exporting goods from Thailand to Europe and the Middle East, which are currently shipped from Laem Chabang, he said. Potential locations of the West Gateway were Ranong, Phangnga, and Krabi, M.R. Pridiyathorn said, adding that the project would also stimulate the long-delayed development of the Southern Seaboard.

"Now Thailand's logistics cost is higher than that of our rivals in Asia and we need to bring it down to make Thai goods more competitive in the global market," he told a logistics seminar held by the Board of Trade and the Federation of Thai Industries (FTI).

On the marine motorway, M.R. Pridiyathorn said the government should welcome participation from the private sector to offer services for moving goods on routes in the Gulf of Thailand such as Laem Chabang-Songkhla and Bangkok-Surat Thani.

Marine shipments now account for 12% of the overall transport usage in the kingdom, with 85% from road transport. The shares of rail and air transport were 2% and 0.9%, respectively.

The government should speed up the development of a dual-track rail system across the kingdom with a total length of 832 kilometres and connecting onward to mainland China.

The cabinet has planned to invest two trillion baht to build domestic train routes linking Thailand with China.

The International Freight Forwarders Association said Thailand's logistics costs as a share of GDP have soared to 23.9%, up from 19% in 2006, mainly because of high oil prices.

The latest figure contrasted with the 15-16% that the National Economic and Social Development Board had set as a goal for logistics costs, said the association's president, Suwit Ratanachinda.

"Thailand's logistics costs have been rising, even though we have tried to bring them down. The failure was mainly because the government has not done anything," Mr Suwit said.

The sharp increase in oil prices has pushed marine freight charges up by 30% over the past 12 months to $460 per tonne and they would rise to $535 next month, he said.

Thanet Sorat, the vice-president of V-Serve Group, a logistics service provider, said every 1% cut in logistics costs could reduce the overall cost of Thai-made products by 5% to 8%.

Voratat Tantimongkolsuk of the Thai Airfreight Forwarders Association (TAFA) said that Thailand's utilisation of its two biggest airports had also not been optimised to improve logistics efficiency.

(Source: Bangkok Post, business section, 30-04-08, page B3, NAREERAT WIRIYAPONG, temp-link)

Vocabulary:

the Eastern Seaboard - the industrialised area to the southeast of Bangkok near Chonburi, Pattaya, Rayong, and Laem Chabang

the Western Seaboard, Western Gateway - Thailand's coast on the Bay of Bengal with easier shiiping access to India, the Middle East, and Europe, avoiding the Straits of Malacca, the Western Seaboard is not yet developed

the Straits of Malacca - the narrow stretch of water between Malaysia and Singapore and the Indonesian island of Sumatra, most ships have to pass through these straits on their way from India to India, the Middle East, and Europe (See Wikipedia)

the Southern Seaboard - Thailand's coast stretching from Hua Hin, past Surathani and Nakhon Sri Thammarat to Songkhla and Pattani

logistics - transportation and storage of goods, from the factory to stores and wholesalers or between factories (See Wikipedia)

cut logistic costs - reduce transportation and storage costs

a deep-sea port - an ocean port that larger ships can dock at

X complements Y - X goes well with and adds value to Y

congested - crowded (because too many ships are using it)

Laem Chabang port - port near Bangkok on Eastern Seaboard with facilities for container ships

container ships - cargo ships that carry all of their load in truck-size containers (See Wikipedia on container ship and containerization)

stimulate - encourage, increase activity

stimulate development - encourage and increase development

Board of Trade - promotes cooperation with the Chambers of Commerce, Trade Associations, State Enterprises and Co-operatives, in promoting and regulating trade, advises and provides information on trade, industry, agriculture, finance, and taxation in Thailand (See website of Thai Chamber of Commerce and Board of Trade and information about the organisation, and info source)

Federation of Thai Industries (FTI) - an industry association in Thailand that has been operating since 1967 (See website, website)

International Freight Forwarders Association - (See list of members, and presentation, address: 10/1 Soi Farmwattana Rama 4 Road Prakhanong Klongtoey Bangkok, tele: 662 3913437)

National Economic and Social Development Board -

Thai Airfreight Forwarders Association (TAFA) - the industry association for air freight forwarders in Thailand (See website)

freight forwarders - firms that make all the necessary arrangements for transporting goods to a destination (usually international) including booking space in ships, trucks, trains, or airplanes, preparing the necessary documentation (See Wikipedia on freight forwarder and international freight forwarder)

dual-track rail system - a train system with two tracks running in opposite direction, like the Skytrain in Bangkok


logistics costs as a share of GDP have soared - more money is being spent on transportation of goods in the economy

the latest figure - the latest reported amount

contrasted with - compared with

marine freight charges - prices for transporting goods by ship

utilisation (noun) - the use of something

optimised - adjust a system so that it reaches the highest levels of efficiency and smooth operation

Posted by Jon Fernquest at 01:29 PM | Permalink | TrackBacks (0)