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7 Oct 2015

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Flourishing Thai-Southern China Commerce: A Boon to Border Trade(Current Issue No. 2664 Full Ed.)

The government considers border trade one of its effective tools in inducing an economic turnaround, hoping to reach a value of THB2 trillion by 2017. Exports to southern China, despite a relatively small contribution to overall ‘border trade', skyrocketed 38.7 percent YoY over the first seven months of 2015, the highest increase in value of border trade over other destinations during the same period. This reflects that Thai-southern China border commerce can potentially become a lucrative market with a more crucial role in Thailand's overall border trade.
Currently, cargo sent from Thai borders is transported to southern China using the Bangkok-Guangxi route via Nakhon Phanom checkpoint (R12), Mukdahan checkpoint (R9), as well as the Bangkok–Yunnan route via Chiang Rai checkpoint (R3A). Most shipments to Guangxi are intermediary electronics, while 90 percent of cargo to Yunnan crossing at Chiang Rai checkpoint is typically agro-produce for consumption, e.g., vegetables and fruit. The R3A route is considered an important gateway to inner China, notably to Chengdu and Chong Qing, where opportunities are growing for Thai exporters to test the market there given that both are newly-established industrial development zones. Opportunities are more propitious for intermediary merchandise, including computer parts and electric circuit boards, etc., since China is looking to upgrade electronics manufacturing in both cities. In Chong Qing, auto parts are also required for a thriving auto industry. The R3A route also offers Thailand a competitive edge in sales of auto parts and electronics products, given a short shipment time versus other countries sending goods to Chinese inland provinces.

To ensure viability, exporters are advised to take the following matters into consideration: tax barriers on certain products and transportation agreements that impose restrictions to transport to China via Lao PDR. On a brighter note, revisions to the Cross-Border Transport Agreement (CBTA) and other economic cooperation will probably help reverse perceived impediments over time.

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