Trade & Transport facilitation issues with Thailand

1. Trade & Transport facilitation issues with Thailand Asst. Prof. Ruth Banomyong (PhD) Thammasat Business School Banomyong@thammasat.net

2. AGENDA • Definition & scope of Trade & Transport Facilitation • Benefits of Trade & Transport Facilitation • Facilitation related agreements • Trade with Thailand

3. What is Trade & Transport Facilitation? • No standard definition • The objective of TTF is to reduce transaction costs of international trade while maintaining efficient and effective control. • Finding the right balance between control and facilitation.

4. Scope of Trade & Transport Facilitation • Customs • Rules & regulations • Trade procedures & documentation • Transit issues • Logistics • Security • ICT • Finance

5. Benefits of Trade & Transport facilitation • To Government • More effective control methods • Better data accuracy & possibly more revenue • To Traders • Lower administrative & compliance cost • Reduced processing/clearance time • To Society at large… • Lower cost of imported goods • Increase export competitiveness • Indirect poverty reduction

6. A National Trade Facilitation Body • The Ministry of Transport has a Transport facilitation committee. • UNCTAD has implemented a “cluster” development to facilitate trade and transport in Lao PDR since March 2005.

7. A World Bank Audit Methodology forTrade & Transport Facilitation • To alleviate poverty and gain access to trade • Borders impose complex barriers • WB invests a lot in ports, airports & roads • Investments will not yield full returns unless there is associated trade facilitation http://www.worldbank.org/html/fpd/transport/publicat/twu-46.pdf

8. Lao transit related agreements • Bilateral • Asian Development Bank (ADB) • Association of South East Asian Nations (ASEAN) • United Nation Multilateral Treaties

9. Bilateral • With Thailand • 1978 Agreement on transit trade • 1999 Agreement but still difficulties in protocol implementation • With Vietnam • 1991 Agreement on transit trade • 1999 Agreement on road transport • 2000 Agreement on transit trade • With Cambodia • 1999 Agreement on road transport

10. ADB agreement • G.M.S. 1999 Trilateral Agreement for the transportation of goods & people • Thailand, Lao PDR, Vietnam • Cambodia acceded in 2001 • China acceded in 2002 • Myanmar expression of interest • The GMS agreement has been designed to harmonise individual bilateral agreements among the members’ countries, in particular, the harmonisation of customs and immigration procedures .

11. ADB Led-agreements • Even though ADB led agreements have been signed for transit facilitation but their implementation is still lacking. • The issue of ‘single window’ customs inspection is currently being finalised with a pilot between Dan Sawanh & Lao Bao starting at the end of 2005.

12. ASEAN Framework Agreements • Facilitation of Goods in Transit • Hanoi 1998 • Inter-state traffic • Unsigned • Multimodal transport • Unsigned but is expected for, 2005?

13. International Trade Multilateral treaties • None related to Customs or Multimodal Transport matters • Convention on Transit Trade of Land-locked States, New York, 8 July 1965. • 8 July 1965 (Signed) • 29 December 1967 (Ratified)

14. Trade with Thailand • Nongkhai is the most important province for Thai-Lao PDR: • border-trade • transit trade • More than 90% of Lao transit trade goes through Nongkhai.

15. Thai-Lao Transit trade value (million US$)

16. Trade with Thailand • Carriage of transit goods can only be done through designated and licensed hauliers. • Formerly only 5 licensed operators for transit cargo: • Express Transport Organisation (ETO) • Ubonsahatham • Regional Container Line (RCL) • TL Enterprises • State Railway of Thailand (SRT).

17. Trade with Thailand • As of April 2005, there are 172 Thai trucking companies with a total fleet of 5,139 vehicles with international transport permit • Only 11 operators have specifically applied for the international transit permit. • The traditional operators are still dominant but freight rates have gone down by 20 to 30%. • Fuel cost increase may not lead to a sustained reduction in freight rates.

18. Trade with Thailand • Export from Lao PDR into Thailand can move: • in any Thai registered vehicle • in Lao registered vehicle for delivery only within Nongkhai province. • transload of export or transit cargo in Nongkhai.

19. Example of difficulties with Thailand • Transit shipment ex-Pakse via Piboon via Bangkok to Le Havre in France. • Export of ‘Palm Beer’ • Must export via Vientiane (~750 km north) as it is the only officially recognised transit point for tobacco & alcohol.

20. Reasons behind difficulties • The Excise Department: special permit for cigarettes and alcohol. • The Royal Forestry Department: Timber and other wood products permit. • Department of Livestock: authorisation permit for leather or other animal part and body. • Ministry of Interior: Weapons and explosives permit.

21. Thai transit related agencies and fees

22. Export via Bangkok (Thailand) • Cost per TEU to Bangkok quoted at ~ USD 800/TEU (FAK) • Vientiane-Nongkhai quoted at ~USD 116/TEU • Nongkhai-Bangkok quoted at ~ USD 500/TEU • Distance just under 700 km. • Non-transport related cost estimated at around 40% of total cost for FOB Bangkok.

23. Thai-Lao Border crossing charges Total : 131 $

24. Comparison of transit cost

25. Comparison of average transit time

27. Questions? Comments? Thank You For Your Attention! 