New highway links China, Laos, and Chiang Rai, Thailand
By Jon Fernquest |
The Asia Focus section of Saturdays' Bangkok Post featured an article on the new R3a highway through Laos scheduled to open today.
The R3a highway will connect up Chiang Khong in northern Thailand with Laos and China to the north.
Many anticipate growth in the northern economy from this connection to China.
Currently, trade between Yunnan, China and Thailand relies upon boat transportation along the Mekong river.
The negative impacts of road projects through Laos on the poor villagers who live along the road have been pointed out by others. (See New Mandala blog at Australia National University (ANU), for example this article, and also a video on the economic benefits by International Herald tribune)
Here is the article in full:
ASIA FOCUS
A route to prosperity
The R3a highway holds plenty of promise, but certain issues need to be sorted out first, writes Walailak Keeratipipatpong
Saturday March 29, 2008
The launch of the modern highway R3a linking China, Laos and Thailand is expected to substantially raise economic prosperity in the region through increased trade and investments.
(See photo on right of the second Thai-Lao Friendship Bridge, which connects Mukdahan with Savannakhet in southern Laos, opened in late 2006)
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Local businessmen estimate that the route, linking Thailand through the yet-to-be-built Thai-Lao bridge in Chiang Khong district of Chiang Rai and Houei Xai district of Bokeo province in Laos, will help bolster Chiang Rai's trade with neighbouring countries by tenfold to 100 billion baht in the next decade.
The Thai government is also planning about eight billion baht worth of infrastructure projects to foster further development, among them the new bridge in Chiang Khong.
Significant improvements have been made to the infrastructure and facilities initiated under the Greater Mekong Sub-region in recent years, with the latest being the completion of the about 250 kilometres of the R3a highway, which will be opened officially on Monday. While the development has delighted the business community, question remain as to how all sides can make the most out of this transport system to assist border trade.
Differences in customs procedures, as well as the unsettled issue of revenue sharing from the fee collected for the use of the Thailand-Laos bridge linking Mukdahan and Savannakhet, are likely to inhibit the new route's potential. For example, cargoes from China to Thailand would have to pass different customs checks, including those in Vietnam and Laos. Such inconveniences and the time-consuming process will definitely cost traders more.
Acknowledging the problem, the Chiang Rai Chamber of Commerce is planning to propose a single-stop inspection system for goods shipped through the R3a route.
The system requires all involved countries to harmonise their customs procedures and private companies are being urged to team up and register as a safeguard and risk-management measure.
The chamber's chairman, Pattana Sitthisombat, said that once everything was sorted out, an inspection of shipments at the Chinese distribution centre would be enough and the goods would not need to be checked again in Vietnam, Laos, and Thailand.
Mr Pattana, who also heads the Quadrangle Economic Development Business Committee that groups 10 provincial chambers of commerce in the north of Thailand, suggested the government urgently address the problem before R3a becomes widely used.
He said that the chambers would meet next month and draft more proposals relating to logistics, tourism and trade to the government, adding that the National Economic Social Development Board should spearhead the issue.
The agribusiness conglomerate CP Group also voiced support for the harmonisation of customs procedures since it could speed up and facilitate farm shipments from country to country.
CP, which has invested extensively in the agricultural sectors in Indochina for decades, still encounters difficulties resulting from imports and exports regulations.
CP Group vice-chairman Ajva Taulananda said that certificates of origin would likely become a problem as well.
"The output harvested from the Ayeyawady area needs to have certificates issued in Rangoon. Or the trucks that carry them need to be changed when getting through Laos," said Dr Ajva, citing some of the difficulties he foresaw.
At present, imports of production from crops that Thai companies invest in neighbouring countries are prohibited.
"Customs harmonisation and eased imports regulations would even make the region more attractive for trade and investments," he said.
Though the CP Group is not allowed to bring back the commodities it planted in neighbouring countries to Thailand, it is still upbeat about its contract-farming to promote planting of maize and soybeans in the countries under the pact of the Ayeyawady-Chao Phraya-Mekong Economic Co-operation Strategy (Acmecs).
"We could supply this produce to our animal-feed plants and feed CP's poultry and shrimp operations that are spreading throughout the region," he said.
According to Dr Ajva, CP has pioneered contract-farming to grow maize on a total of 3.6 million rai in four Acmecs neighbours: Cambodia, Laos, Burma and Vietnam.
It plans to increase the areas to one million rai each in Cambodia and Laos, from 600,000 and 200,000 rai respectively.
As a former chairman of the Acmecs Business Council, Dr Ajva suggested Thai businessmen use the Acmecs mechanism to expand trade and investments in member countries, where farm businesses are a good choice due to abundant and fertile land.
Besides maize and soybeans, rubber and palm oil have a prosperous outlook. They could produce strong yields, given healthy soil with no need for fertilisers. "Even the flooded areas along the Ayeyawady River have as high as one million rai of fertile land that that are perfect for farming," Dr Ajva said.
In Thailand, an estimated 130 million rai of farm areas are diminishing, giving way to economic expansion and urbanisation. Maize plantation areas have shrunk markedly to only six million rai today, and Thai companies should not overlook their neighbouring countries.
"What Thai investors should bear in mind is that they have to buy back output at fair prices and provide technical assistance to show their willingness in doing business there," he suggested.
Another leading businessman said Thais should not be too aggressive, arrogant or greedy when doing business in the neighbouring countries.
"Instead, they should have morality and show their sincerity and sensitivity on issues involving mutual benefits from joint ventures," suggested Jingjai Hanchanlash, a director of Loxley Co, who has played a big role in developing the GMS scheme.
"Local partners prefer longer-term investments to short-lived ventures where investors aim only to dig gold from their rich resources and then leave," he elaborated.
Dr Jingjai, also former chairman of the GMS Business Council, expects substantial foreign investments including those from Loxley, which plans to set up a culinary school in Laos and open convenience stores in Burma.
Asked about political uncertainties in these countries, he said: "Though there was political unrest in some of these countries, it has to date had minimal effects on business communities. The same goes for Thailand, where changes in politics have no great impact on local businesses."
(Source: Bangkok Post, business section, Asia Focus, 29-03-08, Walailak Keeratipipatpong, temp-link)
Vocabulary:
the R3a highway - the highway from Thailand through Laos to China pictured in the map above
the Thai-Lao Friendship Bridge - the second Thai-Lao Friendship Bridge, which connects Mukdahan with Savannakhet in southern Laos, opened in late 2006, the first bridge was built at Nongkhai
anticipate - expect in the future, look forward to
has promise - seems likely to succeed
holds plenty of promise - is very likely to succeed
sort out a problem - do the work necessary to solve a problem
issues need to be sorted out first - need to solve some problems/issues before you start
once everything was sorted out - after all the problems were solved
economic prosperity - doing well economically, successful economically
bolster - increase
bolster Chiang Rai's trade - increase Chiang Rai's trade
Greater Mekong Sub-region (GMS) - an organisation of countries along the Mekong river: Cambodia, Lao PDR, Myanmar, Thailand, Vietnam, and China (Yunnan Province) (See GMS Business Forum for more information)
customs - a government agency responsible for controlling the flow of goods in and out of a country, also collects import duties and tariffs (See Wikipedia)
issue of revenue sharing - the problem of how the profits will be split between the different sides involved
X inhibits Y - X prevents or slows down Y
time-consuming process - a task that takes a long time to do
acknowledge Y - accept and admit that Y is true and exists
acknowledging the problem - accept that there is a problem that needs to be solved
harmonise - fit well together and work together well
harmonise their customs procedures - when two or more countries make their customs procedures work well together
team up - join together to work on a project
a safeguard - a law or regulation to protect someone from harm
a safeguard and risk-management measure - an action to protect from harm and the the risk of harm
Quadrangle Economic Development Business Committee -
a chamber of commerce - a network of local business people that pursues the following goals: 1. promotion of trade in their local area, 2. pushing for local regulations that support business, 3. collecting useful information and statistics, 4. settlement of disputes between members by means of arbitration, 5. advocating for business friendly policies at the state, local, federal, and international levels (See Wikipedia)
a proposal - a suggested plan or idea for people to discuss, debate about, and finally decide upon (accept or reject)
draft proposals - (formal) write proposals
logistics - the management of the flow of raw materials, intermediate goods and other resources from their source (point of origin) through factories and warehouses and finally to a store and a consumer, includes transportation, inventory, warehousing, material-handling, and packaging (See Wikipedia)
National Economic Social Development Board - (See Wikipedia)
facilitate - help, make a project easier and more likely to succeed (See glossary)
citing X - mentioning, referring to X
foresaw X - expected that event X would happen, before it happened
citing some of the difficulties he foresaw -
eased imports regulations -
upbeat About Y - cheerful and hopeful about project Y
contract farming - when a farmer produces agricultural products for a company under a contract with a fixed price (See the many possible definitions of "contract farming")
upbeat about its contract-farming - hopeful and cheerful about the future of it contract farming business
Ayeyawady-Chao Phraya-Mekong Economic Co-operation Strategy (Acmecs) -
abundant - present in large quantities
fertile - land that is able to support the growth of many strong and healthy plants
abundant and fertile land - lots of land that is good for growing crops
a plantation - a large farm growing crops such as sugar, tobacco, palm oil, or rubber
shrunk markedly - decreased by a noticeable amount
bear in mind Y - remember something important Y (while you do something
investors should bear in mind - investors should remember this important thing while they are investing
arrogant - acting proudly and unpleasantly towards others, because they think they are better than others
sincerity - honest, really mean what they say and do, not just appearance
sensitivity - show understanding, awareness, and pay attention to the needs, problems, and feelings of other people
culinary school - a cooking school
convenience stores - a small store or shop located in busy are, alongside busy roads or at gas stations, in Thailand 7-11 is the most well-known (See Wikipedia)
