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Policy Analysis on Development of Special Border Economic Zones in Thailand

by Choen Krainara Ph.D. Candidate

Regional and Rural Development Planning Field of Study School of Environment, Resources and Development Asian Institute of Technology 2 May 2014

Policy Analysis on Development of Border Economic Zones in Thailand

This chapter will present policy analysis on development of border economic zones in Thailand. It covers both internal and external dimensions. The paper highlights problem statements, policy interventions undertaken by the Royal Thai Government, policy evaluations and impacts. And lastly it is recommended policy directions. The detailed policy analyses are shown in Table 1 below. Table 1: Policy analyses towards border economic zones development in Thailand linking with neighbouring countries Problem statements Policy intervention applied Policy evaluation and impact Recommended policy direction
1.Internal dimension 1.1 Imbalance spatial development 1) Continuing income polarization interregionally and intra-regionally 2) Strong core region through dominance of Bangkok as megacity and weak peripheral five border regions, which were homes of 23.33 million population or 35.43 % of the whole country population. 3) Daily minimum wages in border provinces were ranged from 161-181 Baht compared to Bangkok at 215 Baht. Promote potential BEZs in Chiangrai and Tak provinces since 2003. On 6 April 2011, the Royal Thai Government declared the policy to develop Maesod Special Border Economic Zone in Tak province based on integrated approach following the recommendations of the Thai-Myanmar Border Trade Committee. This is the first BEZs to be implemented in Thailand. Though Thailand desires to promote special border economic zones for quite long time, in fact it faces sluggish primarily due to political discontinuity and legal issues as many government agencies are reluctant to decentralize their responsibilities to the proposed special border economic zone authority. Implementation plan of Maesod Border Economic Zone and associated investment incentives should be initiated. Firm policy support to promote BEZs should be continued. Additional BEZS should be established consisting of - Sadao district in Songkhla province linking with Bukit Kayuhitam in Kedah State of Malaysia. - Mukdahan province linking with Savannakhet province of Lao PDR. - Ranong province linking with Koh Song province of Myanmar. - Aranyaprathet district in Sakaeo province linking with Bantaeay Meanchey province

of Cambodia. Balance benefits of cross-border trade and national security. Strengthen development capacity of bordering countries placing emphasis on improvement of quality of life of people living along border regions of both countries. Implementation development activities will be based on mutual trust.

1.2 National security: Continuing influx of illegal immigrant labor prompts national security agenda.

Illegally immigrant of labor from bordering countries including drug and human trafficking still pose persistent problem on national security. This can be partly addressed by employing BEZs as a means to create international division of labor.

Promote border economic zones to create employments for local Thai people as well as opening job opportunity for immigrant labor from bordering countries based on international division of labor. This can help prevent influx of immigrant labor into interior regions in Thailand. Mainstream poverty alleviation in national development agenda. It is still necessary to progressively promote rural and community development in order to bring balanced urban-rural relations.

1.3 Poverty 1) Border regions particularly in rural areas host eight out of top ten poverty prevalence provinces across country. 2) Significant unemployment in border regions resulted in high out-migration rate both from rural to urban areas particularly Bangkok and vicinity and Eastern region and other countries e.g. Taiwan, Singapore, Malaysia and Israel. 1.4 Population 1) Thailand will face structural demographic change towards mature aging society in the year 2027 due to successful population planning policy, in which onefourth of national population becomes old. 2) In 2010, the national population growth rate was quite low at 0.77 % per year. The population growth in Bangkok alone was as high at 2.66 %, while the Northeastern

Reduce proportion of people living below poverty line to 4 % during the Tenth National Economic and Social Development Plan (2007-2011).

Due to continuous policy supports, the incidence of people living below poverty line significantly decreased from 20.98 % in 2000 down to 8.48 % or 5.4 million populations in 2007. Approximate 2.8 millions or 52.20 % of people livings below poverty line reside in Northeastern region.

Formulated integrated strategies to address aging phenomena in Thailand. Established the National Committee on Responding to Aging Situation.

It is good initiative in timely responding to aging phenomena in Thailand. It is a part of initial stage to up hold long-term goals for moving Thailand towards welfare state.

Thailand is on right step in preparing for dealing with aging phenomena. It is therefore necessary to equally integrate productive contributions of all age ranges into national development.

region faced decreasing population growth at -1.0 %. 1.5 Labor 1) Increasing domestic labor demands. During 2010-2014, total labor demand in Thailand is approximately expected at 38 millions. Thailand may face serious labor shortage in the future due to entering aging society. 2) Currently required of unskilled labor in particular economic sectors e.g. fishery, construction, agriculture and household in core regions particularly in Bangkok and vicinity and Eastern region. 1.5 Industry: Limited industrial development along border regions. Border cities mostly act as distribution function. Encourages private sector to involve in skilled development and skill upgrading in order to reduce unemployment and out-migration of local people to large cities, as well as up lifting quality of life of local people. Shortages of labor in Thailand resulted from decreasing population growth. Fast economic recovery stimulated the increasing demands of immigrant labor from bordering countries. Therefore, Thailand should promote towards technology intensive industry so as to reduce dependence on immigrant unskilled labor from bordering countries. Continues upgrading labor skills based on specialization so that labor will obtain reasonable compensation. Thailand should also enhance labor skills to substitute migrant labor particularly for professional competences and unskilled labor.

Three investment zones were implemented. Zone 1 includes Bangkok and 5 adjacent provinces. Zone 2 comprises of 12 provinces in semi-peripheral region. And Zone 3 consists of 58 provinces in peripheral region with low income and less developed infrastructure including border regions. A wide range of privileges on reduction of import duty on machinery, corporate income tax exemption for a certain period was highly granted to investors in Zone 3. The National Logistics Development Plan (20062010) aimed to decrease logistics costs down to 13 % and to lower transportation costs at 6 % in 2010.

Approximate 77.72 % of capital investment was even now converged in Zone 1 and Zone 2 due to well-developed infrastructure, as well as having the benefit of positive external economies.

Rationally relocate specific type of labour intensive industries, which Thailand is held least comparative and competitive advantages due to increasing labor cost to potential border regions in order to take advantage of cheaper labor in bordering countries. Advance multimodal transportation both within Thailand and linking with bordering countries in order to promote trade, tourism and competitiveness.

1.6 Logistics: High logistics costs, which made up of approximate 16 % of GDP and transportation cost was accounted for 7.2 % in 2005.

Slow progress of logistics development is due to discontinuity of political support. So far, approximate 80 % of logistics service is transported by road, which is costly resulting in high prices of goods. In addition, it involved up to 1,550 laws for both land and rail transport modes, which several of them are in conflict. Thailand possesses strategic geopolitics to become

regional logistics hub both in ASEAN and GMS. 2.External dimension 2.1 International relations 1) Border conflicts between Thailand and Cambodia over co-management of Prasat Viharn temple affect cross-border trade environment. Resolve border conflict over the Prasat Praviharn temple through fostering closer diplomatic ties. Occasional border tension causes a reduction of cross-border trade values between Thailand and Cambodia at 10 % per month. It still takes time to settle the problem. Resume more effort to restore peaceful environment along Thai-Cambodian border through settling of problem on co-management of Prasat Viharn temple. Continues negotiating with Myanmar for reopening the Myawaddy border checkpoint in order to maintain close interdependence towards AEC.

2) Unilateral closure of Myawaddy border checkpoint from 23 July 2010 until present, which causes by the Moei river bank protection project on Thai side, affects loss of cross-border trade value approximately 1,800 million Baht per month and political uncertainty in Myanmar leads to unfavorable crossborder trade environment.

Resolve border conflict over the unilateral closure of Myawaddy border checkpoint through fostering closer diplomatic ties.

There existed a combination of empirical and hidden reasons for Myanmar to close Myawaddy border checkpoint. The empirical reason was Myanmars concern over the Moei river bank protection project on Thai side. The hidden reason was that Myanmar may need to maintain domestic political stability by controlling cross-border trade conducted by their minority groups with Thai traders. These motivated Myanmar to unilaterally close Myawwady border checkpoint. During 2004-2009, the annual average of registered immigrant labor was at 881,965 persons, which were fluctuated depending on frequency of opened registration per year. The registered immigrant labor will be temporality allowed to live and work in Thailand only for general wage labor and maid for the duration of 1 year. In 2009, the distribution of registered immigrant labor constituted of 82 % from Myanmar, 8.43

2.2 Labor 1) Continuing influx of illegal immigrant labor and family members from Cambodia, Lao PDR and Myanmar at a total of 5-6 million persons due to higher wage in Thailand creating problems on Thai economy and society particularly on security, public health, social and economic aspects. 2) High turnover rate of illegal immigrant labor from Thai border cities to interior areas particularly Bangkok and vicinity

Two projects were implemented in 2004 consisting of (1) Establishment of illegal migrant labor center in Tak province for sending them back to Myanmar (2) Regulation adjustment and permission of illegal migrant labor to work in Maesod based on daily movement. The Thai cabinet also approved setting up of One Stop Service data coordination and registration center of illegal migrant labor in four provinces namely Tak, Chiangrai, Ranong and Kanchanaburi, in which Tak province was a pilot

Thailand is on right direction to address illegal immigrant labor problem and should keep on this policy track. Database of immigrant labor from bordering countries should be set up. Educational and health services should be rendered to immigrant labor.

and Eastern region. 3) Lack of long-term strategy to address illegal immigrant labor problems

border region. During 2001-2009, the Royal Thai Government has opened for registration and extension of work permits for illegal immigrant labor from CLM for 10 times. The principal objective was not only to use as means to systematically manage the illegal immigration problems but also legalize them, as well as protecting their rights. In 2011, the Royal Thai Government has just approved a comprehensive plan to address illegal immigrant labor problem. Memorandum of Understandings on labor development and cooperation have been signed between Thailand and Cambodia (2003), Thailand and Lao PDR (2002) and Thailand and Myanmar (2003). Under these MOUs, it enabled Thailand to legally import labor from CLM based on quota arrangements. ASEAN level ASEAN Hub policy under the theme sustaining trading and investment base particular in Cambodia, Lao PDR, Myanmar and Vietnam (CLMV) for moving Thailand towards global market, which is implemented by means of establishment of Thailands distribution centers, trading firms, as well as relocating prospective investment sectors and contract farming to neighbouring countries. GMS level Foster greater flows in order to increase volume and values of cross-border trade, as well as facilitating intra-GMS and extra-GMS trade particularly on agricultural trade, investment and tourism.

% from Lao PDR and 9.57 % from Cambodia. There are large numbers of immigrant labor who have not yet registered. The implementation of cooperation between Thailand and Cambodia and Lao PDR are quite effective. The total imported legal labors from these two countries were at 27,447, 17,059 and 14,150 persons in 2007, 2008 and 2009, respectively. Though huge labor demands, in fact Thailand encounters complex procedure in implementing this agreement with Myanmar. Thailand has been able to import labor for the last eight years at a total of 1,500 persons. As a result, influxes of immigrant labor from CLM are persisting. Cross-border trade has shown on the rising trend. During 1996-2010, the cumulative cross-border trade values between Thailand and neighbouring countries were significantly amounted at 113.59 billion US$ represented at 51.15 % of cumulative trade values between Thailand and neighbouring countries. The cumulative share of cross-border export from Thailand to these neighbors was as high at 58 %. While the cumulative share of cross-border import from bordering countries was at 42.31 % divided into 54 % from Malaysia; 38 % from Myanmar; 6 % from Lao PDR and 1.27 % from

A long-term plan and strategy to turn illegal immigrant labor challenge into positive national economic growth and social cohesion should be created. It should designate appropriate proportion for allowing immigrant labor to work in border economic zones in Thailand.

2.3 Trade: Common cross-border trade problems 1) Prevalent culture of corruption of government officials responsible for trade facilitation resulting in high cross-border trade transaction costs, which also leads to prevalence of illegally organized trade. 2) Traffic congestion at key border checkpoints affects trade flows. 3) Incidence of cross-border drug and human trafficking. 4) Trade discriminatory measures imposed by Lao PDR and Myanmar caused more difficult to Thai traders for penetrating their markets. 5) Low trade performance from unilateral free trade privileges due to complex

The policy direction is on right track in exploiting geopolitics of Thailand and locational advantages of border regions. Therefore, Thailand should continue promoting cross-border trade and transit trade expansion with bordering countries. Active cross-border trade facilitation should be rendered. Abolish or adjust daily cross-border transaction ceiling control (at 15,763

import-export procedures either from Thai or neighbouring countries sides resulted in continued shortage of raw agricultural materials in Thailand. 6) Complex and changing financial system, relevant rules and regulations and money transfer procedures in neighbouring countries affect cross-border trade environment. 7) Cross-border traders in CLM and Thailand lack of international trade practices. 8) Limited authorized banks in border cities of CLM, and border trade largely transacted on informal manner relying on mutual trust, which affected confidence diluting business environment and trade expansion. 9)There is existent of regulation announced by Bank of Thailand on daily cross-border transaction ceiling control at 5,763 US$. Bilateral cross-border trade problems 1.Cambodia 1.1 Frequent change of customs tariffs rates be collected and customs practices do not meet international standard. 1.2 Transport of goods through local border crossing can not operate daily. 1.3 Border conflict over co-management of Prasat Pra Viharn temple in April 2011 leads to a 10-15 % loss of cross-border trade values between both countries. 2.Lao PDR 2.1 Inter-provincial tax charge for goods movement at 1 %.

Undergo cross-border trade reform towards international standard system. Keenly negotiate transit trade regime with neighbouring countries e.g. China, Lao PDR, Myanmar and Vietnam to facilitate freer flow of goods to nearby neighbouring countries markets in South East Asian, South Asian, and East Asian regions. It is obvious that there is a convergence of Thailands cross-border trade policies towards GMS and Ayeyawady-Chao Phraya-Mekong Economic Cooperation Strategy (ACMECS). Promote contract farming in neighbouring countries in order to increase supply of raw materials for industrial and energy sectors both along border regions and in interior regions of Thailand.

Bilateral level: Implicitly common polices Improve facilities and logistics system to facilitate cross-border trade in specific border checkpoints consisting of Aranyaprathet checkpoint in Sakaeo province, Nongkhai checkpoint in Nongkhai province, Mukdaharn checkpoint in Mukdaharn province and Chonkmek checkpoint in Ubolratchathani province, Maesod checkpoint in Tak province and Sinkhon checkpoint in Prachuab Kirikhan province. Promote closer trade institutions between Thailand and bordering countries in the form of Joint Trade Commission and exchange of bilateral visit of

Cambodia, respectively. As a result, Thailand gained significant cumulative balance of cross-border trade at 17.47 billion US$. The share of cross-border trade to intra-ASEAN trade increased from 6.06 % in 1996 up to 32.49 % in 2010 reflecting the convergent noodle bowl effects of bilateral and regional trade agreements and regional trade facilitation initiatives. The share of cross-border trade to Thailands aggregate international trade with the world rose from 1.02 % in 1996 to 6.42 % in 2010. Likewise, consolidated cross-border transit trade values between Thailand and Singapore (via Malaysia), China and Vietnam (via Lao PDR) are also on the rising trend, which increased from 1.60 billion US$ in 2007 to 3.00 billion US$ in 2010.During 2007-2010, Thailand gained a total of cross-border transit trade balance at 428.49 million US$, and the annual growth rate of transit trade with these three countries was as distinguished at 25.16 %. In 2008, Thailand imported agricultural produces under contract farming amounting at 1.2 million tons from Cambodia; 0.5 million ton from Lao PDR; and 0.2 million ton from Myanmar, respectively. Thailand extended ASEAN Integration System of Preferences (AISP) to CLMV,

US$) in order to respond to increasing cross-border trade prospect.

2.2 High customs facilitation cost e.g. O.T charges and high import tax lead to illegally organized trade. 2.3 Frequent change of trade rules and regulations on trade of wood products e.g. up to 20 % tax charge for export. 2.4 Low trade facilitation performance causes delay of trade of perishable goods. 2.5 Trade law does not standardize across country. 2.6 High cost of cross-border money transfer. 2.7 Imposes quota on selected commodities e.g. cement, vegetable oil and steel. 3.Malaysia 3.1 Some Thai products do not meet Halal standard. 3.2 Rapid urbanization of border cities associated with urban environmental problems e.g. slum, solid waste and waste waster water, etc. 4 Myanmar 4.1 Internal political uncertainty affects cross-border trade environment. 4.2 Unilateral closure of Myawaddy border checkpoint since July 2011 until present leads to a loss of 80 % of trade values per month. 4.2 Frequent change of customs tariffs rates be collected and customs practice do not up to international standard. 4.3 Lack of local and regional road infrastructure. 4.4 Long importation process (2 days). 4.5 Impose strict control on 15 imported

Ministers of Commerce. Hold regular consultation for both local and regional public and private partnerships in order to resolve problems on cross-border trade. Reinforce local agencies to facilitate crossborder trade towards international standards. Closely coordinate with neighbouring countries for establishing border economic zones in order to boost the growth of co-production and crossborder trade. Government agencies should provide assistance and consultation to Thai private sectors so that it can minimize risk in doing business in neighbouring countries. Organize Thai Trade Fair in neighbouring countries for publicizing the image of Thai products, as well as inviting business counterparts to join. Thailands agency for providing assistance to businesses and investors in doing business in neighbouring countries similar to JETRO of Japan should be in place. Simplify procedures and export regulations in order to facilitate and reduce cross-border trade transaction costs. Improve Value Added Tax refund system and import tax, etc. Provide trainings on international trade and cross-border trade practices to both Thai and neighbouring countries traders. Closely cooperate between Royal Thai and neighbouring countries governments in promoting good business ethics for both cross-border traders and investors. Suppress corruption of trade facilitation officials at the border checkpoints.

which the time frame for implementing this scheme was at eight years beginning from 1 January 2002 until 31 December 2009. In 2005, Thailand granted cumulative AISP to CLMV at 340, 300, 850 and 63 commodities, respectively.

consumer goods, which are major exported goods of Thailand to Myanmar. 4.6 Lack of decentralization of power to local officials to issue AISP certificate. 4.7 Several imported channel of goods are in minority group strongholds, which are not authorized by Myanmar government. 5.Thailand 5.1.Low integration and coordination of agencies responsible for cross-border trade promotion and facilitation

Legalize illegal border trade.

Different bilateral policies 1.Cambodia 1.1 Improve facilities and logistics system to facilitate cross-border trade in Aranyaprathet district, Sakaeo province. 1.2 Improve transport routes linking Thailand and Cambodia in order to facilitate transportation services, as well as reducing logistics costs to Cambodia. 1.3 Conduct in-depth marketing research for Cambodian market so that Thai exporters can use as guidelines for exports. 14 Resolve border conflict over the Prasat Praviharn temple. 2.Lao PDR 2.1 Improve facilities and logistics system to facilitate cross-border trade at Nongkhai checkpoint in Nongkhai province, Mukdahan checkpoint in Mukdahan province and Chokmek checkpoint in Ubolratchathani province 2.2 Thailand should pursue third country or international lending agencies for rendering infrastructure development in Lao PDR. 3.Malaysia 3.1 Strengthen knowledge on standard for trading of Halal products. 4. Myanmar 4.1 Improve facilities and logistics system to facilitate cross-border trade in Maesod district, Tak province and Sinkhon checkpoint in Prachuab Kirikhan province. 5. Thailand 5.1 Abolish or adjust daily cross-border transaction

ceiling control (at 15,763 US$) in order to respond to increasing cross-border trade prospect.

2.4 Industry: Limited cross-border production network.

Establish border economic zones along GMS

economic corridors by adopting co-production and sister cities concepts as well as forging cooperation on labor management with neighbouring countries. Establish regional production networks by relocating some industrial, agricultural and services investments to neighbouring countries in order to help generate jobs, distribute income and narrow development gaps between Thailand and neighbouring countries in parallel with sharing of natural resources, labor, capital, technology and expertise. The targeted industries are agroprocessing, wood industries, sugar industry, energy, construction, tourism, and hotel and services.

The striking border industrialization is evident in Maesod district where 65 % of provincial factories mainly textile, apparel and agro-processed industries are located (Tak Industrial Office, 2010). Nevertheless, actual investment in the border regions has been far behind causing out migration of Thai labor to the core regions worsening interregional disparities in Thailand. During the last 21 years (1988-2009), the cumulative FDI from Thailand to Cambodia, Lao PDR, Myanmar and Malaysia were roughly at 12.82 billion US$. The tendency of capital investment out-flows from Thailand to these bordering countries appears to be intensifying as a result of greater trade and investment openness in the GMS and ASEAN. Full implementation of this agreement was expected to complete by 2009, but in fact it faces delay due to time consuming for legal adjustment within member countries. Instead, pilot border crossings between Thailand and neighbouring countries were initially implemented consisting of Poipet border checkpoint in Banteay Meanchey province of Cambodia and Aranyaprathet border checkpoint in Sakaeo province, Mukdahan border

Keep up developing potential border economic zones in Thailand in association with strengthening cross-border production linkages and outward processing in bordering countries.

2.5 Logistics 1) Inefficient cross-border trade logistics and long customs procedure at the border checkpoints leads to high logistics costs. For example the R3E route along North South Economic Corridor (NSEC), 60 % of the costs are incurred at the border including all customs charges, and 40 % are transportation cost. 2) Incidence of unsafe logistics provisions as well as incurring of extra logistics fee particularly in CLM

Proactive implementation of Cross-Border Transport Agreement

Thailand is on right aim to facilitate speedy cross-border logistics with least costs. It should coordinate with bordering countries to minimize extra informal logistics costs. In addition, Thailand may encourage Thai investors to perform joint venture with counterparts in


3) Unfavorable rule and regulations 4) Incompatible technology applications between Thailand and neighbouring countries.

checkpoint in Mukdahan Province and Savannakhet border checkpoint in Savnnakhet Province of Lao PDR, Maesod border checkpoint in Tak province and Myawaddy border checkpoint in Kayin State of Myanmar and Maesai border checkpoint in Chiangrai province and Tachilek border checkpoint in Tachilek province of Myanmar.

bordering countries for offering cross-border logistics services.

2.6 Customs 1) Complex customs procedures and lot of paper work. 2) Prevalent corruption of trade facilitation officials.

Operate customs formality and inspection around the clock through application of advance notice system.

It aims to enhance logistics provisions, as well as sustaining Thailands regional production networks in the GMS. It also implemented Thailands commitments under GMS and action plans within Greater Mekong Sub-region and JapanGMS Cooperation Framework

It is a very constructive initiative to move towards ASEAN Economic Community. It is crucial to coordinate and synchronize customs operations system with bordering countries.

2.7 Transport: Poor condition of road infrastructure particularly in CLM.

Improve transport routes linking Thailand and CLM in order to facilitate transportation services, as well as reducing logistics costs. Exploit development potentials along GMS economic corridors. Support transnational connectivity under ASEAN and Asian Highway Networks. Uphold Thailand as tourism gateway to Asia. Implemented regional tourism cooperation schemes under GMS and ACMECS.

Rapid progress of GMS transport corridor has resulted in flourishing cross-border trade and people mobility. It is now challenging to turn GMS transport corridor into fully-fledged GMS economic corridors. However, some sections of road infrastructure in CLM are in poor conditions. The trend of cross-border people movement seems prominent. The aggregate people movement of all nationals using passports and border passes through these border checkpoints

Continue connecting road linkages with bordering countries both under GMS framework and further link with South Asian and East Asian regions in order to facilitate trade and tourism growths. Cross-border tourist flows are impressive. Networking of tourism sites along GMS economic corridors should be supported. Royal Thai

2.8 Tourism: Travel by car is inconvenient due to document requirements for immigration formality and inadequate infrastructure


increased from 5.19 million persons in 2002 to as high at 18.22 million persons in 2010 with the average annual growth rate at 12.42 %. Particularly between 2009 and 2010, it surged at 37 %. Majority of Thai tourists cross-border to play casinos in bordering countries. Likewise, cross-border shopping is also on increasing trend. 2.9 Visa: Still required visa for Thai tourists to enter China and Myanmar Implemented pilot ACMECS single visa between Thailand and Cambodia Visa exemption between Thailand and Cambodia effective since 16 December 2010. Established Office of Neighboring Countries Economic Development Cooperation Agency to foster development cooperation with bordering countries. Extended financial and technical assistance, as well as supporting infrastructure development in neighbouring countries based on bilateral cooperation, GMS, ACMECS and ASEAN. ACMECS single visa is an important instrument in facilitating greater people mobility between Thailand and bordering countries. It is a good illustration of south-south development cooperation.

Government may need to distract Thai tourists going to play casinos in bordering countries.

Keep on implementing ACMECS single visa between Thailand and other bordering countries in order to ease cross-border flows of people.

2.10 Official development assistance: Starkly different stages of development between Thailand and Cambodia, Lao and Myanmar.

As an emerging donor country, during 2005-2009, Thailand has extended grant to CLM at a total of 201.87 US$ to develop cross-border rail links, interprovincial roads and airports towards sub-regional transport integration and multimodal linkages (NEDA, 2009).

Stretch out official development assistance to bordering countries based on aid for trade concept in order to, which will strengthen closer international relations towards AEC. Thailand should pursue partner country or international lending agencies for rendering infrastructure development in Lao PDR.

Source: Authors field survey in 2010. Changhlam, A. (2005). Promoting Thailand-Myanmar border trade: paper presented at the seminar on Turning Maesod as gateway of East -West Economic Corridor at Central Maesod Hill Hotel, Maesod district, Tak province on 23 September 2005. Department of Foreign Trade of Thailand. (2011). Ministry of Tourism and Sports. (2008).


Neighbouring Countries Economic Development Cooperation Agency. Annual Report 2009.NEDA.Bangkok. Office of International Coordination, Office of the National Economic and Social Development Board. (2011). Customs operations 24 hours at cross-border check points. Office of the National Economic and Social Development Board. (2009).Directions for driving integrated aging development strategies. NESDB.Bangkok. Prince of Songkhla University. (2002).Border trades between Thailand and Malaysia., retrieved on 19 April 2011., retrieved on 21 April 2011., retrieved on 9 May 2011., retrieved on 9 May 2011., retrieved on 9 May 2011., retrieved on 19 April 2011., retrieved on 10 May 2011., retrieved on 21 May 2011


Conclusions The Royal Thai Government has already implemented a range of conducive policies towards the goals of sustaining economic equity through dispersing economic activities to key border regions, as well as considerably fostering investment outflows to neighbouring countries so as to create jobs, distribute income and narrow down international development disparities. According to the preceding policy analyses, it has found that the formulated national policies have generally favored regional economic cooperation, as well as exploiting locational advantages through development of border economic zones, which are evident from expanding crossborder trade and transit trade, people mobility, capital investments and cross-border shopping between Thailand and bordering countries. In addition, it also intended to address such problems at national level e.g. continuing influx of immigrant labor from bordering countries, drug and human trafficking and smuggling of goods. However, it was quite problematic to realize policies into real practice at border city level due to limited sectoral and spatial integration towards border economic zones development and complex interagency coordination in which many government agencies are reluctant to decentralize their power/responsibilities to the proposed border economic zone authorities. It is therefore important for Thailand to strongly determine this policy direction. Thus, integrated policies favorable towards development of potential border economic zones should be encouraged. It is also challenging for Thailand to move towards emerging economy by adopting more technology and capital intensive industries in association with upgrading comprehensive labor skills, as well as allowing some jobs to be carried out by immigrant labor with free employment conditions at border economic zones. This can help dealing with long-term aging phenomena in Thailand and building strong international relations in order to foster sustainable cross-border economic cooperation with bordering countries. Particularly for the expansion of cross-border trade of goods, a number of contributing factors included advancement of cross-border linkages including road, rails, telecommunications and river ports. Official development assistances from Thailand to develop infrastructure in bordering countries play crucial role in these progress. In addition, bilateral and regional trade agreements particularly AFTA and ASEANChina Free Trade Area have up held the growth of cross-border trade coupled with regional trade facilitation initiatives.