understanding one belt, one road ... - chiang mai...
TRANSCRIPT
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Understanding One Belt, One Road: Role of China Trade and Investment
in Greater Mekong Sub-region(GMS):A case study of Thailand.
Dr. Nisit Panthamit
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Wechat id: nisitp9009
Nisit Panthamit, Ph.D.Director of ASEAN Studies, Chiang
Mai University, Thailand(CMU)
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Contents
1
Role of China Trade and Investment
World Economic Power1.
2
.
A Case Study of Thailand3.
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1. The new landscape of world economy (1) : Growth has been too slow for too long.
Due to: -restructuring of world economy, especially China’s economic transition-humanitarian disaster like Syria’s millions of refugees to surrounding countries as well as to Europe
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1. The new landscape of world economy(2): restructuring in major economies
The US
• From over-expansion in financial market ( per capita GDP in the finance sector was 2.75 times as much as that in the manufacturing sector in 2007) to re-industrialization
• Artificial intelligence (AI), Robots and digital manufacturing and other strategic new industries like new energy, bio-engineering, etc.,
EU
• High-tech-oriented industrial policy
• Energy, environment protection
Germany
• Industry 4.0
Japan
• AI, application of 3D technology
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Economic Growth Models: China Vs. US
2011 2012 2013 2014
Personal consumption expenditures
USA 68.88% 68.40% 68.37% 68.40%
China 36.71% 37.13% 37.26% 37.69%
Gross private domestic investment
USA 14.43% 15.55% 15.99% 16.49%
China 47.33% 46.45% 46.49% 46.04%Government consumption
expenditures and gross investment
USA 20.42% 19.55% 18.69% 18.17%
China 13.53% 13.69% 13.78% 13.54%
Net exports of goods and services
USA -3.73% -3.50% -3.05% -3.05%
China 2.43% 2.73% 2.46% 2.73%
In 2007, China’s net exports accounted for 8.8% of GDP, reaching its peak.
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1. The new landscape in the world economy (3): Asia is rising and transitioning from production base to both production and consumption bases
Emerging and Developing Asia has becomes the world’s growth engine
• In recent years, Asia has contributed more than 50% of world economic growth, and China contributed more than 50% of Asia’s growth.
• In 2014, China contributed 27.8% of world’s growth, while the United States contributed 15%; In 2015, China continued to contribute more than 25% of world’s growth.
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Rising Asia - Shares in world trade volume(%)
China US EUAsia(excluding
Japan)Asia(including
Japan)
1980 n.a. 11.44 43.24 17.30 23.48
1990 1.35 12.56 45.47 16.32 23.91
2000 3.52 13.52 38.45 23.45 30.11
2010 9.18 9.73 35.26 31.47 36.05
2013 10.41 9.76 33.53 34.14 37.71
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Rising Asia - Shares in world FDI inflows(%)
China US EUAsia(excluding
Japan)Asia(including
Japan)
1980 0.11 31.27 39.33 1.08 1.59
1990 1.68 23.26 47.01 11.07 11.94
2000 2.88 22.19 49.67 11.71 12.30
2010 8.07 13.93 26.98 29.15 29.06
2013 8.53 12.92 16.96 30.18 30.34
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Rising Asia - Shares in world FDI outflows(%)
China US EUAsia(excluding
Japan)Asia(including
Japan)
1980 0.00 37.52 42.73 2.33 6.98
1990 0.34 12.82 54.34 4.67 25.69
2000 0.07 11.49 65.20 7.92 10.46
2010 4.69 18.93 32.91 20.77 24.61
2013 7.16 23.98 17.75 23.46 33.08
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Affluent financial resources in Asia
As of March, 2015, Asia’s foreign exchange reserves reached $7.8 trillion,
accounting for 2/3 of world’s total.
China: $3.73 trillion
Japan: $1.22 trillion
Saudi Arabia: $0.698 trillion
Republic of Korea: $0.358 trillion
Singapore: $0.249 trillion
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Rising Asia: another evidence
Rising middle classDefinition: a range of USD10 to USD100 in PPP per capita per day.
Source: Kharas, Homi (2010): “The Emerging Middle Class in Developing Countries”, OECD Development Centre.
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Numbers (millions) and Share (percent) of the Global Middle Class
Size: From 1.8 billion people in 2009 to 3.2 billion by 2020 and 4.9
billion by 2030. 85% of this growth comes from Asia.
Purchasing power: From USD21 trillion in2009 to USD56 trillion by 2030.
Over 80% of the growth in demand comes from Asia.
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A new shift underway in Asia
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15
World Economic Power (GDP 2014)
United States22.6%
China13.4%
Japan6.0%
Germany5.0%United
Kingdom3.8%
France3.7%
Brazil3.0%
Italy2.8%
India2.7%
Russian Federation
2.4%
Canada2.3%
Australia1.9%
Korea, Rep.1.8%
Other28.7%
Rank
ingEconomy
(millions of US
dollars)GDP growth
1United
States 17,419,000 2.4
2 China10,360,105
7.4
3 Japan4,601,461
-0.1
4 Germany3,852,556
1.6
5United
Kingdom 2,941,886 2.6
6 France2,829,192
0.2
7 Brazil2,346,118
0.1
8 Italy2,144,338
-0.4
9 India2,066,902
7.4
10Russian
Federation 1,860,598 0.6
11 Canada1,786,655
2.5ทีม่า: The World Bank
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Greater Mekong Sub-region(GMS)
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Guan Lei Port
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Guan Lei Port
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Goods Loaded at
Guan Lei Port
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Tourist at Guan Lei Port
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ท่าเรือกวนเหล่ยGuan Lei Port
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ท่าเรือกวนเหล่ยGuan Lei Port
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Myanmar – Laos Bridge under Construction
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Myanmar – Laos Bridge under Construction
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Myanmar – Laos Bridge under Construction
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Myanmar – Laos Bridge under Construction
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Myanmar – Laos Bridge under Construction
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Myanmar Police
ท่าเรือบ้านโป่ง (พม่า)Wan Pong Port (Myanmar)
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Laos Police
Wan Mom Port (Laos)
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Chiangsean Port 1 (Thailand)
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Chiangsean Port 2(Thailand)
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Chiangsean Port 2 (Thailand)
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Chiangsean Port 2 (Thailand)
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Lanes of the commercial port of Chiang Saen port(Thailand) - Guan Lei.(China's southernmost pier)
total distance of 265 KigometersWater depth from 1.5 to 7 meters in different seasons.
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VietnamLao
Cambodia
Thailand
YunnanMyanmar
Mae Sai
Mae Sa rieng
Chiang Sean
Chiang Kong
Maesod
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Luang Phra Bang
Chaya Buri
Luang Nam Ta
Bo TenMeng La
Jing Hong
เชียงตุง/Chiang
Tung
เมืองลา/Muang La
TaChiLeik
Mae Sai
Chiang Khong
Chiang Rai
Chiang Mai Nan
Laos PDR
Yunnan, China
Myanmar
เChiang San
Viang Pu ka
Huay Sai
Huay Kon
Taung Gyi
Mandaley
Muze
Bo-Han
Ruli
Chaya Buri Dam
Route R3A
สะพานขา้มแมน่ า้โขงเมยีนมาร ์- ลาว
Route R3B
Route R3A
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Thai-Lao Friendship Bridge no.4
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Border Control Facility (Thailand)
Acccess road
Bridge
Border Control Facility (Lao
PDR)
Traffic Interchange
Composition of Bridge Structure
Intermodal Facility
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R3A Economics Road Thai-Laos-China
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Boten Laos Border
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Boten Laos Border
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เส้นทาง R3A
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Jing hong Gate
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เส้นทางรถไฟความเร็วสูง จีน-อาเซียน
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58
Why we have to understand
China role for GMS?• China is a major trading partner of Thailand.
• China's role in world political and economic
stage.
• China is fast developing policies, strategies and
goals for new releases.
• Note that Thailand trades with China less than
Malaysia, Vietnam, Singapore trade with China.
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Contents
1
China of China Trade and Investment
World Economic Power1.
2
.
A Case Study of Thailand3.
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• For economic and
financial stability.
• For energy security
• Through the Silk Road
Strategy
60
Why “Go Global”(走出去)?
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61
The investment objective of the Chinese
economic and political power.
ทีม่า : https://botanwang.com
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62
Economic power, China Based on the Strait of Malacca has high risk
Sudan
and
Angola
Strait of Malacca
Pass
Myanmar
From Russia
Kazakhstan
and
Turkmenistan.
Iran And
Saudi
Arabia
From Canada
From
Venezuela
and Australia
Channel Japan
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63
AIIB: Tools for success of the Silk Road.• World Bank: USA
• ADB –Japan
• China: President Xi Jinping is
set concept. The Asian
Infrastructure Investment
Bank (AIIB) is1. Sources of funding for
developing countries
2. Leading international reserves to
exploitation.
3. Linking transportation network
in Asia. (For trade and
investment in China).
4. Push the yuan as a major world
currencies.
5. Co-founder of 21 member
countries, 57 countries will
embark in late 2015.
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Strength• Economic
-ASEAN is an important partner of China (12%)
were the major markets of China.
-As a source of raw materials such as rubber,
cassava, fruits.
-Chinese investment is very low-wage Natural
Resources.
• Energy supply gas and oil.
-More countries are Partnering with China
Challenges• Economic
– FTA-ASEAN - China's tax cuts, but
increased NTB.
– Different levels of economic
development.
• Energy
– the Middle East are vulnerable
Malacca Strait.
• Politics
– ASEAN is the strategic importance
of China and the United States.
68
China looks ASEAN as important and
Challenges
ทีม่า : http://www.ciis.org.cn/chinese/2013-11/07/content_6438775.htm
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o Relations with China (the latest).
Thailand, Laos, Cambodia, the Philippines, while
China has a problem with Vietnam, Myanmar,
Malaysia.
o Trade
-Jan - Aug 15, Chinese trade with Asia 54%
(China's trade with ASEAN, Thailand 12%, 2%).
o InvestmentAt the end of 2014, Chinese investment
(cumulative) 68% Asia (ASEAN 5.4% Thailand 0.3%).
o Financing
BSA China and ASEAN countries Using Chinese
renminbi trade with all countries.
69
Relations Between China-ASEAN
Asia54%
Africa5%
Europe18%
Latin America
6%
North America
16%
Oceania1%
Trade b/w China-other regions
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The attempt to link the Silk Road to The ASEAN. In
addition, there is a marine railway.
China
China
Japan
• The railway in Laos
-Boten(Laos)- Vientiane (China).
• Indonesia (China) 16-Oct-58.
• Railway in Thailand
- Bangkok - Nong Khai (China)
– Bangkok - Chiang Mai (Japanese.
China
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1
A Case Study of Thailand3.
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• The location is at the center of Thailand
with ASEAN. As the strategic importance
of the Silk Road on the sea.
• FTA trade cooperation in the field of
agriculture.
• Cooperation investments such as railway
eastern lines.
• Other areas of cooperation; tourism,
exchange of personnel Etc.
73
Cooperation Thailand - China today Through various partnerships as part of the "Silk Road".
ทีม่า : http://www.voachinese.com/content/indonesia-high-speed-rail-
20151016/3010652.html
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Security of China in the region. The Chinese interest to dig
Kra Isthmus, Southern Thailand
Strategic "marine Silk Road"• For energy security
• To stabilize the political and
military. China's expanding
influence between the Andaman
Sea.
• To stabilize the economic security
Distance• 102 km wide and 400 meters deep and 25
meters.
• 10-year investment of 28,000 million USD.
• The fleet sailed garden together.
ทีม่า :
http://news.ifeng.com/a/20150518/43783020_0.sht
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• China is spearheading a gigantic financing scheme for the engineering part of the long-coveted and Chinese-dominated project of digging a 60 mile long canal across the Kra Isthmus in Southern Thailand on the Malay Peninsula.
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Reason:1. Tackling the strategic Strait of
Malacca, Indonesia, Singapore
2. China's trade will grow because of
increased shipping options.
3. Shorten the time and cost of
shipping (1200 km).
4. China and Thailand will both
benefit
Affects to other countries:
1. The Strait of Malacca is greatly
reduced. Singapore, Indonesia,
Malaysia, the company reduced
the bargaining power in the
country
2. Reduce dependence on the US
And turn to more Chinese.
3. Singapore, Malaysia and
Indonesia will lose business
interests.
4. US influence in the South China
Sea decline.
5. Thailand increased security risk.
79
China is interested to Kla Isthmus more than
Thailand because it has more benefits than
Thailand
ทีม่า : http://bbs.tianya.cn/post-worldlook-1481459-1.shtml
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China has tightening up relationship to Thailand
• China's policy of proactive strategies. Long-term
ASEAN and its neighbors in the region. Located
in the heart of ASEAN, Thailand Build networks
with other countries in the region, Thailand is
also a longtime ally of the United States.
• The Chinese government has a policy of not
criticizing Thailand.
• Future strategic relationship Thailand - China will
be more systematic.
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Thailand’s strength• Thailand is a prime location as
market base. (Vietnam as a
production base. Singapore is
finance and accounting bases).
• Thailand is a major food
manufacturer for China.
• China is a major trading partner
of Thailand, as Thailand is
China's third largest trading
partner in ASEAN.
Thailand’s Weakness• Thailand has the people with
knowledge of social science
rather than science.
• Thailand ‘s SME still lack the
knowledge to take advantage of
the Framework Agreement.
• Thailand has less skill language
with English and Chinese.
• Thailand faced by SME's cost
competitiveness of the CLMV.
81
China looks at Thai economy: Thailand is
more important.
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82
In addition, Thailand is a country to invest.
1. The size of the market, high consumer
price level stable and high levels of
market opening
2. Thailand infrastructure is better than
many countries in the region.
3. The level of openness and optimism.
4. Bilateral Cooperation Thailand - China.
5. Long experience of FDI from abroad .
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CLMV competitiveness
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84
Market- Rising purchasing
power- Organic Growth- Connectivity
Production- Young Labor
Force- Natural
Resources
- Production Network
OpportunitiesL
K
A
Exports
Investment
CLMVT is a major potential market for Thai economy.
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Myanmar
Nominal GDP $64.3 bil
Real GDP Growth(5 Year Average)
27.96%
Total Population 53.4 mil
GDP per capita $4,800
Lao PDR
Nominal GDP $12.0 bil
Real GDP Growth (5 Year Average)
7.92%
Total Population 6.7 mil
GDP per capita $5,000
Vietnam
Nominal GDP 186.2 bil
Real GDP Growth(5 Year Average)
5.86%
Total Population 90.7 mil
GDP per capita $5,700
Cambodia
Nominal GDP $16.8 bil
Real GDP Growth(5 Year Average)
6.95%
Total Population 15.3 mil
GDP per capita $3,300
Source: World Bank, CIA, ASEAN
Thailand can easily access to CLMV as it is located in the center of the region.
85
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86
Source: World Bank
During the past decade, CLMV economies have been growing rapidly.
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Thailand and CLMV’s Population Pyramid in 2016
Source: World Bank
Thailand is transitioning to the aging society while CLMV’s labor forces are growing with younger population.
87
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Thailand and CLMV’s Population Pyramid in 2050
Source: World Bank88
Thailand is transitioning to the aging society while CLMV people is younger and more vibrant.
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* Exclude petroleum and petroleum productsSource: International Trade Centre
CLMV market has become more important asThai trading partners.
89
Thailand Export structure to CLMV*
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Source: Bank of Thailand
CLMV market is more important in terms of Thailand’s outward investment.
90
Stocks of Thailand Outward Direct Investment (as of 2015 Q3)
Thailand’s Outward FDI in CLMV Countries
Source: Bank of Thailand
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Food and beveragesCP, THAIBEV,
MITRPHOL, KSL, BETAGRO
CP, THAIBEV, MITRPHOL, KSL,
BOONRAWDCP CP, THAIBEV
Chemical, Plastics, Paper Products
DOUBLE A TOA
Mining and Petroleum PTT BANGCHAK, PTTEP PTT, PTTEP
Electricity
BANPU, RATCHABURI ELECTRICITY,
EGCO
EGAT
Construction SCG CK, SCG ITD, SCG SCG
Wholesale & Retail Trade
SAHAPAT CENTRAL GROUP
Financial Activities BBL, SCBBBL, SCB, BAY,KTB,
BBL,SCB, KTB BBL,SCB, BAY
Real Estate Activities DUSIT,BAIYOKECENTARA, AMATA,
PRUKSA
Others
TG, BANGKOKAIRWAYSBANGKOK HOSPITAL
TG TGTG, BANGKOK
HOSPITAL
Currently, most Thai firms investing in CLMV are large companies.
Source:
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WEAKNESSES
Infrastructure shortage
Unskilled labor
Low purchasing power
High logistic cost
High electricity cost
Fair financial and banking system
Small domestic market
No marine borderline
However, CLMV still lack infrastructure and skilled labors.
92Source: Bolliger and Co.
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OPPORTUNITIES
Developing infrastructure
Special Economic Zone
FDI openness policy
Production for domestic and export
Generalized Systems of Preferences(GSP)
Trans-Pacific Partnership Agreement (TPP)
Each government has promoted FDI by developing infrastructure and setting up Special Economic Zone.
93Source: Bolliger and Co.
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THREATS
Unstable regulation
Skilled labor shortage
Language barrier
High competition
Ethnic minority conflict
Unstable regulation is the primary obstacle for doing business in CLMV.
94Source: Bolliger and Co.
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Cambodia Lao PDR Myanmar Vietnam
Agro-manufacturing and Agriculture Products
Contract Farming
Processed Seafoods
Construction and Construction Materials
Housing Projects
Infrastructure Development
(Transportation,
Buildings, Electricity, Water and
Urbanization)
Textiles, Garments and Footwears
Automotive Vehicles and Repair Shops
Cars, Motorcycles
and Repair Shops
Motorcycles and Repair Shops
Animal Food
Electricity and Energy
Minerals Rich
(Natural Gas, Oil, Electricities, Mining,
Water energy)
Forestry
Agricultural Machineries
Thus, each country in CLMV has investment potentials due to untapped markets.
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Source: Bank of Thailand
The OFDI from Thailand accelerated since 2012 to facilitate economic integration, particularly in regional trade flows under the AEC.
Inward FDI and outward FDI of Thailand, 2005-2014
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Northern Thailand Economy on ASEAN context
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Trade
Services
FDI
Labor
Capital Movement
Prefer intra-regional tradeMore Good flow across country using
cooperations and agreements provided
Increase competition, services plays more an economic driver Tourism and health care services
Competitive ability Loss make company moves out
Invest outbound
Relaxing restriction for neighboring country
Increase skill labor : language andInternational standard
More freely flow of capital, currency more votality
Entrepreneurs need to accelerate the adjustment in management costs and
exchange rate risks.
Thailand Stand Point
alwww.tanitsorat.com
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Opportunities and Challenges of Thailand
Logistics Infrastructure
North – South Corridor in Northern Thailand–Chiang Kong : International Road Gateway (KM –BKK)
–Chiang Saen: Mekong River Gateway (Chiang Saen/Guan Lei)
–Mae Sod : Regional Road Gateway (Maewwadi – Mae sod)
98www.tanitsorat.com
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Opportunities and Challenges
Positioning & Strategy
◦ Border Economic Special ZOne/Border Industry Zone
◦ Logistics
◦ Transportation
◦ Tourism
◦ Education/Health Care regional Hub
Risk Management
Study the regional-risk in each basis: Cross-border mobility of people
,Transnational circulation of goods&serives ,and Transnational interactions
and their results formed each transitions
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Thailand : Opportunity
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AEC via NORTH – SOUTH ECONOMIC • Border Trade & Contract Farming , Investment• Regional Logistics Hub• Neighbor Investment (Industrial, Agriculture, Gas Resources)• Border Industrial• Immigrant Labor• Agriculture Investment• Regional Financial & Stock Market• Tourism Hub• Heath/Education/Service Center• Port Link/Land Bridge/ Airport Link/ Rail Link
100 www.tanitsorat.com
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China's richest man, Jack Ma, says it will take '30 critical years' to get fully internet-integrated includingreplacing huge companies with small business. (Photo courtesy of Government House)
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Jack Ma and Prime minister of Thailand on Oct.9.2019
• Mr Ma reaffirmed the need for an "e-road", akin to the Silk Road, to help small businesses flourish.
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Jack Ma said
• "In the future, no matter how small a country is [or] your business is, if you have a big heart, open mind, and embrace tech knowledge and inclusive globalisation, you can be powerful too."
• Jack Ma in ACD meeting in Bangkok, Thailand(Oct.9.2016)
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• "Data will be the new resource. So the next 30 years are critical for all nations in the ACD. To Asia, it is very critical," he said.
• He recalled that few people believed Chinese e-commerce could grow rapidly due to poor infrastructure for online trading.
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Q&A
Thank you