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Border a bottleneck to bustling Thai-M’sia trade flow

BANGKOK — Border trade between Thailand and Malaysia remains robust, but more needs to be done to reduce non-tariff barriers such as congested crossings and customs bottlenecks, especially at a time when world trade is slowing, experts on both sides say.

Facilities at the border crossing at Sadao in Songkhla need to be expanded to reduce customs bottlenecks. Photo: Bangkok Post

Facilities at the border crossing at Sadao in Songkhla need to be expanded to reduce customs bottlenecks. Photo: Bangkok Post

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BANGKOK — Border trade between Thailand and Malaysia remains robust, but more needs to be done to reduce non-tariff barriers such as congested crossings and customs bottlenecks, especially at a time when world trade is slowing, experts on both sides say.

Thailand and Malaysia share a border that stretches 647km, and their bilateral trade is already the largest in the Association of South-east Asian Nations (Asean) in terms of value. In the last two years, Thai-Malaysian border trade averaged 500 billion baht or US$14.4 billion (S$20 billion) per year, accounting for more than half of all Thailand’s border trade, which also includes Cambodia, Laos and Myanmar.

Border trade accounts for 65 per cent of the total trade value between Thailand and Malaysia of US$22 billion a year.

There is still a lot of work to be done to improve the free flow of trade and tear down non-tariff barriers via regional agreements as well as bilateral talks. Both governments have also agreed to build at least two more bridges to improve logistics and transport capacity.

Non-tariff barriers are currently the biggest obstacle to the mobility of trade in goods and services, and the movement of people within the region, said Mr Chua Tee Yong, Malaysia’s Deputy Minister of International Trade and Industry. Removing these barriers requires continuous engagement with all 10 Asean countries, but it also takes time as it involves many parties.

“We look at (lowering the non-tariff barriers) as something that we need to do on a gradual basis since we are different from the European Union,” said Mr Chua. “The EU is governed by one central agency, but for us it is more a matter of consensus-building, and that is the reason why Asean has been able to grow progressively with the cooperation of every member state.

“This consensus-building is something that is important, and it should be maintained for us to have strong growth prospects both for our economies individually and also for the region.”

Mr Winichai Chaemchang, Thailand’s Deputy Commerce Minister, said Asean has been trying to reduce non-tariff barriers as much as possible. A special committee regularly reviews the particular problems each country may have, and there is a contact point to facilitate improvements in each nation. However, he believes that bilateral talks on trade facilitation are even more essential.

“I sometimes think that trade facilitation is worth more than (the) reduction of tariffs or non-tariff barriers, and it is up to the governments of Asean to engage in solving this problem,” he said.

Mr Chua said Asean must acknowledge that countries are at different stages of economic development and growth, with wide variations in income per capita and population. Thus there is a need to find a common platform to resolve the problem of trade barriers.

“We hope Asean countries can increase their efforts to establish common standards, namely in halal, ICT, building materials, services, banking, customs and logistics, among many others, to facilitate greater expansion of regional trade under the AEC (Asean Economic Community),” he said.

“This continuous engagement, such as the Asean FTA (free trade agreement) with China and separate engagements between Asean member states, is a process that we need to continue in order to find a solution as time goes by.”

Mr Winichai offered the specific example of the Sadao border crossing in Songkhla province as a place where customs bottlenecks exist, so there is an ongoing agreement to expand facilities in order to alleviate congestion.

“World trade is slowing down, particularly in the developed markets, and that is why we concentrate first on Asean as the region is Thailand’s biggest trading partner, and it is even (bigger) than China right now,” he said.

Mr Mustapa Mohamed, Malaysia’s International Trade and Industry Minister, said the two governments had agreed to improve or, if possible, build new bridges at the checkpoints between Rantau Panjang in Kelantan, Malaysia and Sungai Kolok in Narathiwat, Thailand; and between Tak Bai (Narathiwat) and Pengkalan Kubor (Kelantan).

“In the annual discussion between the two Prime Ministers in Bangkok last month, it was decided that the two bridges should be given priority since there is congestion where the current bridge between Rantau Panjang and Sungai Kolok is, (and it is) already 50 years old,” he said. “There has been a decision to either expand or build a new bridge there, and this is most welcomed by the people of Kelantan since it would improve the flow of people and trade between the two countries.”

The minister said the countries would share the bridge’s construction costs equally, with work slated to start in the third quarter of next year. The Rantau Panjang-Sungai Kolok bridge is expected to cost about RM60 million (S$19.8 million), and the one linking Tak Bai and Pengkalan Kubor between RM140 million and RM160 million.

Mr Mustapa made the comments at the first Asean Border Trade (ABT) meeting held late last month in Kota Baru, Kelantan, where two memorandums of understanding (MOUs) were signed.

One was between the Malaysia External Trade Development Corporation (Matrade) and Bangkok Bank (BBL) on trade-promotion cooperation. BBL, Thailand’s largest bank by assets, which has five branches in Malaysia, will agree to bring interested clients to join future Matrade events.

The second agreement was between Gabungan Usahawan Parlimen Jeli (Malaysia Confederation of Entrepreneurs) and the Chamber of Commerce in Narathiwat for cooperation in trade events.

“The MOU will offer more opportunities to our clients and to buyers from the Matrade side to (engage in) more trade,” said BBL vice-president Ratana Yaowaratana.

“There has been a lot of talk about Thailand’s trade with the CLMV (Cambodia, Laos, Myanmar and Vietnam) countries, and it has been a hot issue in the past few years, but trade between Thailand and Malaysia is still (some) of the most important as (Malaysia) is the largest market of all the neighbouring countries,” she added.

The ABT was built on a pilot programme, Border Trade Fair 2015, which was arranged in Songkhla by the Thai government in June 2015 by Matrade, which also spearheaded the exhibition in Kelantan alongside Malaysia’s International Trade and Industry Ministry. The event comprised an exhibition, business-matching sessions, seminars and forums, and a business clinic joined by about 100 Malaysian companies from the agricultural produce, apparel, food and beverage, electrical and electronic goods, furniture, gifts and souvenirs, and beauty sectors.

The exhibition involved 150 exhibitors and 100 buyers from Malaysia, Thailand, Myanmar and Singapore, where most of the buyers (43) were Thais. It attracted 3,700 visitors and was estimated to have generated around RM72.1 million in transactions at the event alone. “The reason for the exhibition is to promote trading activity within the Asean region ... and we feel positive that with all these future developments, we (would) continue to enhance trade within the Asean region,” said Mr Chua. BANGKOK POST

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