Logistics Development through EWEC

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Logistics Development through EWEC

• By
• Kenan Institute Asia
• Shangri-La Hotel, Chiangmai
• Mar 18,2008

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Background

• Thai-Laos Friendship Bridge was opened in Dec
  2006
• East-West Economic Corridor
• Myanmar, Thai, Laos, Vietnam, Cambodia and Yunan

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Background
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EWEC Route

• In Myanmar
  50 km.
• In Thailand
  900 km.
• In Laos
  237 km.
• In Vietnam
  273 km.
• Total
  1450 km.

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Background

• Route no. 9 is intersect with road no. 13 at Seno
  and intersect with road no.1 in Vietnam and able
  to go to Danang
• Instead of Laem Chabang, Exporter in NE has
  option in Using Danang Port 500 km. away
• ADB to promote the growth of GMS (by connecting
  Asian 450, China 1300 and India 1000 million
  people)

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Distance and Time usage
Mukdaharn to Savannakhet only a bridge
Savannakhet to Dansavan 4.5 hours approx. 237
KM, Laobao to Hue, 4 hours approx. 163 KM Hue
to Danang, 2 hours approx. 100 KM Total from
Mukdaharn to Danang 500 KM,10.5 hours
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The 2nd Friendship Bridge
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Objectives

• Study the impact of the opening of the 2nd
  Friendship Bridge and the highway across Laos for
  movement of goods between Thailand, Laos and
  Vietnam
• Make recommendations to the Lao and Thai
  governments to improve the benefits of the new
  route
• Make recommendations for Thai and Lao businesses
  on use of the route

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People moving into Thailand
2006 192,158 people 2007 347,522 people
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People moving out of Thailand
2006 196,065 people 2007 366,702 people
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Import Incoming Transit Goods
Import Oct 06-Sep 07 amount 9,605 mil.
Baht Import Oct 05-Sep 06 amount 2,318 mil.Baht
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Export Outgoing Transit Goods
Export Oct 06-Sep 07 amount 6,144 mil.
Baht Export Oct 05-Sep 06 amount 6,140 mil.Baht
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Project Findings

• Exports from Thailand to Laos increased 10 for
  the first 4 months after the bridge opening
• Imports to Thailand from Laos increased more than
  2,226 when compared month by month (copper was
  the import that increased the most)
• Transit goods from other countries moving from
  Thailand to Laos more than doubled

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Project Findings

• Current trucking regulations restrict efficient
  movement of goods along the new route
• Thai trucks cannot go into Vietnam
• Vietnamese trucks cannot go into Thailand
• Lao truck can go into both countries, but Lao
  trucks are inadequate in number and inferior in
  quality and capacity

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Project Finding

• Customs documentation and processes increase
  shipping times sometimes by days
• Very few cargo ships stop at Danang port
• Due to customs delays, unofficial and official
  fees, trucking costs and shipping costs the new
  route currently provides no cost advantage over
  shipping from northeastern Thailand through Laem
  Chabang

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Danang Port
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Project Finding

• Savan Seno Special Economic Zone provides 10
  years of tax incentives compared to 8 years in
  Thailand and 4 years in Vietnam
• Laos has the lowest unskilled labor costs but
  lacks adequate skilled labor
• Thai tourist visits to Laos increased
  significantly

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Recommendations

• To improve export value from Thailand
• To Government
• Shorten document preparation and cargo inspection
  time and fee costs
• Improve multi modal transport Rail from East and
  North-East to land road at Mukdahan using rail
  shippable containers

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Recommendations

• To improve export from Thailand
• To logistics provider
• LSP should take an active role in meeting with
  governments to reduce regulatory obstacles
• Improve staff capability with training
• Improve utilization of trucks currently returning
  empty
• Establish container yards to facilitate
  transition to trucks of different gauge or
  different nationality

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Project Finding - Analyze

• Laos gains little benefit from the route
• Because of the short distance, tourists can have
  breakfast in Mukdaharn and lunch in Hue, Vietnam
• Some interesting tourist attractions but the
  sites are not well managed and very few marketing
• Savan Seno Special Economic Zone still just
  empty land
• Very few hotels along the route -- the best hotel
  is only 3 stars and provides little incentive to
  tourists

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Recommendations on Laos benefits

• For Lao Government
• Warehouse locations need to be identified and
  incentives provided for warehouses and container
• Encourage establishment of joint venture
  logistics providers along the route to take
  advantage of fact that Lao trucks can go into
  both Thailand and Vietnam
• Encourage establishment of roadside services
  including gasoline stations and rest stops

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Recommendations on Laos benefits

• For SavanSeno Special Economic Zone
• Infrastructure in the zone needs to be ready
• Incentives offered must be concrete and not
  undercut by local government taxes and
  restrictions
• Rules and regulations on crossing border should
  facilitate the transportation of goods
• Need to develop skilled labor

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Recommendations on Laos benefits

• Develop good marketing strategy to promote the
  zone
• Invite investment in duty free shops and
  department stores

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Recommendations on Laos benefits

• Tourism
• Government should develop tourism by
• Provide incentives to build hotels
• Improve road condition with good signboards
• Improve tourism facilities rest rooms, markets,
  hotels, tourist attractions

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Recommendations on Laos benefits

• Simplify the visa on arrival service
• Provide money exchange services
• Market tourism more actively
• Focus on sustainable tourism, eco-tourism

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Private Firms Cooperation
1) Seeking area of mutual benefit 2) Each
Association or Industries arrange group of
meeting 3) Association push and support Gov with
enough info and country benefit 4) Research for
specific topic and industry should be done
Thai Firms
Vietnam Firms
Lao Firms
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Internal Logistics

• Enterprise level
• Inventory Management
• Sales Forecasting
• Packaging
• Time of Delivery
• CRM, SRM

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