“The EEC, along with the Thailand 4.0 policy, is the key to our business strategy, as it is in line with the digital transformation of our company,” Pierre Jaffre, president of Airbus Asia Pacific said at seminar, Next Step Thailand EEC, that conducts by Krungthep Turakij daily newspaper yesterday.

 The EEC is a special economic zone covering the provinces of Chon Buri, Chachoengsao and Rayong. Airbus Asia Pacific is among the many foreign companies that have begun investing in the EEC. Other earlier backers include Hatachi and Huawei.

Airbus has a maintenance, repair and overhaul hub (MRO) in the EEC region. In addition, the multinational company aims to advance its space-technology activities in the zone and has recently signed a contract to assemble a satellite in the economic corridor.

This year some 7,000 aircraft fly across the Asia Pacific region. This figure is expected to increase to 20,000 in the next 20 years, according to Jaffre.

“Hence, there is a need to increase the maintenance capacity in the Asian-Pacific region,” he said. “The Thai government’s Thailand 4.0 policy and the development of the EEC present us with a |promising opportunity to meet this need, and we now have an MRO service centre in operation in the region.

“Airbus has also signed a contract to assemble a satellite in the EEC area, aiming to respond to the increasing usage of smartphones.

“We believe our proposal to assemble a satellite in Thailand is timely with the Thai government’s Thailand 4.0 policy.”

He said Airbus is also in discussions with regulators on a plan to provide emergency medical services by helicopter in the EEC region.

“I believe we all agree that the death toll from road accidents in Thailand is extremely high. With the development of the EEC, there is no doubt that there will also be more traffic in the region,” Jeffre said.

He cites the problem of emergency medical workers often being held up by heavy traffic when they try to reach accident scenes.

“The helicopter emergency medical service which Airbus proposes will allow medical services to reach victims of road accidents at a faster pace,” he said.

Other companies have also been active in seizing opportunities in the EEC.

Hitachi (Thailand) Co Ltd, set up the Lumada, an Internet of Things (IoT) hub for the Asean region in Chon Buri earlier this year.

Lumada functions as a hub that offers IoT services for companies in Thailand and elsewhere in the Asean region. “In Asean, we have been working to improve the productivity of various manufacturers. Recently, we partnered with a company which manufactures car sensors located in Chachoengsao province, and have managed to significantly improve their productivity,” said Somsak Garnjanakarn, general manager of Hitachi (Thailand).

Hitachi has invested more than Bt50 billion to establish the IoT hub, reaffirming its commitment to make Thailand its central unit for services to the Asean region. It expects to generate revenue of Bt60 billion in Thailand in the 2018 fiscal year.

In a speech addressing the tourism strategy for the EEC, Tourism and Sports Minister, Weerasak Kowsurat said that marketing efforts to attract visitors would be geared to improving the livelihoods of local communities, instead of a more narrow focus on merely attracting large numbers of tourists.

More emphasis will be placed on improving the value chain in the tourist industry and less on the quantity of tourists visiting the region itself, Weerasak said.

“This could include providing an ‘all you can eat’ farm tour where tourists can visit local farmers in the EEC area and eat fresh fruit directly from the crops,” he said.

Weerasak said the admission fees that would be charged, along with revenue from additional services provided at participating farms, would significantly boost incomes for farmers in addition to their mainstay business of providing produce for the markets.

The minister did not offer any clear policy that will address the issue of the decline in the number of Chinese visitors. In August, 867,000 Chinese visited the Kingdom, down 11.77 per cent month on month. In September, only 648,000 Chinese visited, marking an even steeper fall of 14.89 per cent month on month.

Weerasak played down the concerns, insisting that 2018 will see a higher total volume of tourists than the 35 million booked for 2017.

He pointed to the fact that although the ranks of Chinese visitors have been declining since a fatal boat accident in Phuket in July, the figures are still higher than for the corresponding period last year.

RCEP is the proposed free trade agreement (FTA) between ten members of Asean – Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand and Vietnam, and six AsiaPacific states with which Asean has existing FTAs – Australia, China, India, Japan, South Korea and New Zealand.

Prime Minister Prayut Chanocha joined the second Rcep summit last week in Singapore, held in conjunction with the 33th Asean summit in Singapore,  with Rcep leaders announcing major progress and expressed determination to complete all negotiations next year when Thailand takes the chair of Asean, according to Chutima Bunyapraphasara, deputy commerce minisฌter.

Negotiations have been held on seven issues ranging from custom proฌcedures and trade facilitation, state procurement, public health measures and crop healthcare, technical regulations, economic cooperation, SMEs and instituions as well as the estabฌlishment of  joint  committees on oversight, supervision and monitoring.

Issues undergoing the negotiations process and expected to be finalised next year include  market opening for products, services and investment, competition policy, intellectual propฌerties, and rules of origin.

“Talks on market opening for prodฌucts, service and investments have seen much progress in negotiations this year, with member states having made their last proposals at a meeting on November 2,” Chutima said. “Most members have expressed satisfaction with the  level of opening but some issues remained to be settled. Market opening will focus on reducing tariffs to zero per cent for 9092 per cent of the products traded between members.”

Tariffs on sensitive and high sensiฌtive products will be phased out over 20 years and each country can keep 1 per cent of  their products with no  tariff reduction,  she said.

Meanwhile, the first draft of a city plan for the EEC will be ready for public hearings in early December, perhaps leading to some land being expropriated for the transportation project.

PM’s Office Minister Kobsak Pootrakool yesterday said he would submit an investment package for the so-called Southern Economic Corridor (SEC), an economic zone covering the four provinces of Chumphon, Ranong, Surat Thani and Nakhon Si Thammarat, with the zone also connected to the EEC.

He made the comments while giving the keynote speech at a seminar entitled “Next Step Thailand: EEC” hosted by Krungthep Turakij, a sister newspaper of The Nation.

The SEC will comprise a Bt10-billion seaport in Ranong province, a Bt10-billion double-track rail linking Chumphon and Ranong provinces, and road investments, he said.

“The new projects are necessary because it would make the EEC the real hub for an investment and trade route linking the Pacific and Indian oceans, and the investment cost is not much,” Kobsak assured.

The EEC and SEC will be linked by double-track railway and other double-track railway routes would link the EEC to Thailand’s borders in all directions, he said.

The National Economic and Social Development Board, under Kobsak’s supervision, has completed a detailed budgeting of investments in these infrastructure projects, which would be submitted for Cabinet approval within this month but no later than early December, he said.

If the Cabinet gives its approval, a feasibility study would be kicked off. The government’s initial plan is to replant mangrove forests in order to replenish fishery resources in the coastal areas. Also, a research and development centre and an industrial park for rubber and palm oil would be established in order to support local farmers. Investors in the SEC will get tax and other privileges from the Board of Investment, he said.

Asked about opposition from local communities, Kobsak said the government had responded by choosing a green project – mangrove reforestation – as its first priority. Also, instead of the proposed new seaport, the existing one would be upgraded, he said.

Meanwhile, Monton Sudprasert, director-general of the Public Works and Town and Country Planning Department, said the first draft of the city plan for the three EEC provinces – Chachoengsao, Chon Buri and Rayong – would be completed next month and opened for public hearings.

He said the new city plan would substantially alter the current one. The area exclusively for industrial zone will be expanded from the current 83,000 rai (13,280 hectares) to about 300,000 rai (48,000 hectares), or close to 4 per cent of the 8.3-million rai of the total EEC land area. The industrial zone expansion would be enough to accommodate new factories.

“But manufacturers should stay close to current industrial parks. They should not buy cheaper land in remote areas, because they may not be included in the industrial zone’s new city plan,” he warned.

The current green zone would be divided into two zones – green and yellow. The green zone is earmarked for natural forest and high value agricultural purposes such as fruit farming, while the yellow zone would be developed as a smart city with residential areas. The purple zone would be the industrial area.

“We may need some land expropriation to make way for transportation projects, but there would be no community relocation,” he assured. He, however, conceded that he did not expect everyone to agree with the new city plan.

Hundred of farmers in Chachoengsao province had earlier protested about not being allowed to renew land rent contracts with the Treasury Department, fearing that land would be used for commercial purposes to serve the EEC development. The five key infrastructure investment projects in the EEC are: high-speed railway, expansion of U-tapao airport, expansion of Laem Chabang seaport and Map Ta Phut seaport, and aircraft maintenance, repair and overhaul, with their combined investment estimated at Bt650 billion.

Transport Minister Arkhom Termpitt-ayapaisith said these key investment projects would be completed in the next five to six years and a digital park project will be completed in 2022.

The government has given priority to transport connectivity with CLMV countries – Cambodia, Laos, Myanmar and Vietnam – he added.

 The Thailand Software Fair 2018 will be held on November 29 from 8:30am to 6pm at C-Asean on the 10th floor of the CW Tower.

Air Chief Marshal Prajin Jantong, a deputy prime minister, will address the event with a speech entitled “the power of Thai software towards the digital economy”.

Mechai Viravaidya, president of the Population and Community Development Association, will also speak on new Thai rural education techniques.

Asean businesses are clearly paying attention and are making incremental changes to their supply chains, but is the pace of change fast enough?

HSBC’s global Navigator survey – which was launched this week and included the views of more than 8,500 corporates (1,000 in Asean) – finds Southeast Asia as the most trade-positive region in the world.

Moreover, Navigator reveals that business decision-makers in Asean view the global shift towards protectionism as increasing the value of their business.

Being positive towards both trade and protectionism seems a little counter-intuitive at first glance.

But dig a little deeper and it is clear that businesses are shrewdly seeing and capitalising on the opportunity amid the emerging trade disruption.

Shifts in production to Asean can – and are – happening quickly.

Thailand and Malaysia already have existing production networks in electronics, especially in hard disk drive (HDD) assembly. Thailand exports about the same amount of finished storage units to the US as does China. Given Asean’s existing capacity, it makes increasing sense to shift assembly to Southeast Asia, especially now that Chinese shipment of HDDs from the US are subject to at least a 10 per cent tariff, making the move to Asean markets all the more |compelling.

Singapore, the Philippines and Vietnam also produce a variety of electronic components, while Vietnam and Indonesia have become increasingly competitive in light manufacturing and textile exports.

Investment data already show an increased shift to Asean. Vietnam’s inbound manufacturing investment has grown by 18 per cent this year, while Thailand and the Philippines have both experienced a significant increase in net FDI. Meanwhile Harley Davidson, Panasonic and Steve Madden have all said they will relocate production to the region.

But while there are immediate opportunities, supply chain networks aren’t linear, rather they are an ecosystem. So, it’s not as straightforward as a multinational corporation shifting production to an idle factory.

Businesses first need to take a view on the overall impact of tariffs on Chinese goods.

Factors including labour costs, shipping costs, and regulations need to be weighed to determine whether additional capacity will be built.

This has implications for Asean as a region and for individual suppliers.

For Asean, an increase in HDD exports is definitely welcome. But countries like Thailand and Malaysia need to move further up the electronics supply chain into higher value-add semiconductor fabrication, particularly of more advanced memory chips, to stay competitive.

This will require nations and businesses to invest in infrastructure, new facilities and the training of skilled workers. Economies that can improve the quality of their exports, and have more room for reallocation and further upgrading, stand a higher chance in capturing supply chain opportunities.

At an individual business level, suppliers across Asean need to accelerate the adoption of new technologies such as automation and robotics, perhaps even running smart warehouses. This can help enable an uptick in production capacity to meet global demands, increasing production efficiency and in-time delivery.

This is top of mind for Asean businesses. According to HSBC Navigator, increasing the use of technology is the top change planned for the region’s supply chains in the next three years. While we’re hopeful of a resolution to the ongoing trade tensions, Asean businesses should prepare for them to remain over the medium term.

Management teams that are considering shifting supply chains to Asean will be asking themselves many questions: Is there production capacity? How are these plants receiving raw materials? Do they have sufficient people skills? Should they add capacity or expand plants? Technology will be key to increasing Asean’s competitiveness and appeal.

When looked against the broader macro-economic backdrop of trade tensions, the prospects for Asean’s supply chain ecosystem are bright.

But the potential opportunities from heightened trade tensions are not a meal ticket that Asean businesses simply have to queue up for to enjoy. Shifting supply chains on a large scale requires collective effort to build up company and regional capacity. And Asean businesses need to act now.

Contributed by STUART TAIT, regional head of commercial banking/Asia Pacific, HSBC