Bumpy
road to Thai-China trade efficiency
By David Fullbrook
CHIANG RAI, Thailand - Last year's free-trade agreement (FTA) between China and
Thailand has provoked both hope and fear in northern Thailand's Chiang Rai
province, feelings exacerbated by efforts to make road, river and rail routes
between the two countries, via Laos and Myanmar, faster and more efficient.
Indeed, with better transport comes increasing opportunity as Thailand becomes
an export route to the world for China's isolated hinterlands.
And trade with China is not one-way - Thai exports of tropical fruit such as
durian, along with commodities such as rice, rubber and palm oil, are rising.
Trade with China through Chiang Rai currently is worth about 6 billion baht
(US$153 million) a year, with Thailand officially enjoying a 1 billion baht
surplus. A sharp increase is expected as infrastructure and trade monitoring
improves, with the balance likely to tip in China's favor.
"We are not sure if the surplus really goes to Thailand, because border trade
is not yet under the international trade system - some goods that come from
Laos or Myanmar may actually originate in China," said Sermchai
Kittirattanapaiboon, president of the Chiang Rai Chamber of Commerce.
Regardless, goods from China are spreading quickly along shelves in Thailand
thanks to the FTA. Some stores even are stocked only with Chinese products.
According to Sermchai, such is the rising tide of Chinese exports, and Thais
must learn to adapt, riding the wave rather than trying to turn it back.
"Thailand must find more goods to export, encourage Chinese companies to invest
in Chiang Rai, [and encourage] Chinese tourists and Thais with skills and
knowledge to invest in China. Thailand needs to position itself as a service
center for China and as a gateway to the West for China," Sermchai said.
Gains for Chiang Rai and the rest of Thailand will outweigh the pain of
reinventing the economy in the long term, said Wuttilert Narawitthayanurak,
general manager for shipping agency Northern Intertrade and Service's Chiang
Saen port bureau. "Overall I think the positive impacts will outweigh the
negative impacts," he said. "There will be more jobs, more Chinese tourists and
more Chinese businessmen" in Thailand.
That said, Chiang Rai harbors big hopes that many more Chinese tourists will
arrive overland, especially if visa-free travel is approved. If so, "the permit
will allow them [Chinese tourists] to visit for a week, which will give them
just enough time to visit the sea, which many have never seen," said Wuttilert.
FTA doesn't please everyone
Not everybody is pleased by the FTA, however. Traders fume that commodities
such as rice, oil and gas take a month or longer to reach Chinese customers
because they must be shipped via Laem Chabang, a deepsea port near Bangkok, to
Shanghai. Exporting directly from Chiang Rai to China's Yunnan province would
be cheaper and much quicker, and though officials such as Sermchai use every
opportunity to promote new trade routes, for now the situation remains the
same.
In addition, Thai exporters think China needs to work harder at implementing
the deal. "Communication between Beijing and local government is not clear. So,
for example, this means local authorities are still collecting taxes abolished
by the FTA," said Wuttilert. By the time the roads, ports and factories are
finished, bureaucrats in all four countries may have ironed out most of the
trade kinks - at least that is where hopes lie. Problems impeding trade on the
Thai side involve many government agencies, including trade offices and safety
inspectors, which are not in Chiang Rai province where they should be, said
Wuttilert.
Banking is another bugbear, however, Wuttilert offers a solution:
"Standardizing banking practices for trade between the two countries would
greatly help in solving trade problems," he said.
Still, many Thais worry that Chinese imports will destroy local factories and
efforts to grow temperate produce in the northern provinces. They also fear
competition from Chinese entrepreneurs. Chinese businessmen are already buying
businesses or starting new ones in Chiang Rai and beyond. This year, work will
start on an industrial park near the Golden Triangle's Chiang Saen, which will
house "clean" factories paid for by Chinese investors.
By 2007, with the clearing of reefs and rapids crucial to fish breeding,
300-tonne freighters will move down the Mekong River plying between Jinghong,
China, and a new port that will replace Chiang Saen's old, congested port.
Canalization may follow, allowing vessels five times as large as the current
100-tonne limit to sail among the two countries.
"Once completed, the [new port] will benefit Chiang Rai and China trade,
providing more opportunities and security for local people," said Sriprom
Homyog, Chiang Rai's vice governor.
River trade has problems, though. Sailing is restricted to every third day as
China diverts water to fill two new Mekong dams in Yunnan province. At least
six more will follow over the next decade. As an alternative, "the Thai
government and private sector are seeking to develop land routes", said
Wuttilert.
New trade routes are faster, less hassle
Faster roads are crucial for Thailand's tropical fruit, which can perish on the
three-day boat trip to Jinghong. A trip between Thailand's Mae Sai border post
via Myanmar's Kyaing Tong and Yunnan province's largest city, Jinghong, now
takes about 12 hours, rather than two or three days, after the rebuilt Route 3
West was officially opened in March.
Export formalities will consume less time too. "A one-stop service center will
also be built on 200 rai [32 hectares] of land, opening next year. Already a
temporary center has been established," said Sriprom.
Bumps remain, though. "Domestic politics in Myanmar are, however, a problem, as
the road passes through different ethnic territories. Hence the Thai
government's efforts to improve relations with Myanmar and foster a better
political climate there through the Bagan process and roadmap," said Wuttilert.
A less-troubled alternative will be completed in 2006. Work on Route 3 East
through Laos, linking Chiang Kong, another Chiang Rai Mekong port, with
Jinghong, should start this year. The $90 million bill for the project will be
footed by China, Thailand and the Asian Development Bank.
Next year the Kunming-Jinghong six-lane highway will open. A new four-lane
highway also will bypass Chiang Saen, with its medieval temple ruins, running
direct from the new port, being built a few miles south of town, to Chiang Rai
and other highways leading south.
Chiang Rai is earmarked for railways as well. "Some studies have been done and
the government even started buying land for the route, but this stopped because
the government is considering switching the Thai railway gauge to the wider
Chinese gauge," said Sermchai.
China, however, is considering building a railway through Laos into central
Thailand. "I expect the [Chinese] railway will be finished in five to six
years," said Sriprom.
Whichever comes to pass, a new rail route will connect Mekong ports and Mae Sai
to Laem Chabang, which offers a shortcut to world markets for central China, up
to four weeks away from clogged east coast ports by sclerotic roads and rail
freight.
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