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Dec 28, 2015 | 20:42 GMT

3 mins read

Economic Zones Could Be Key to Thailand's Future

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Economic Zones Could Be Key to Thailand's Future

In the early 1990s, Thailand launched an informal initiative called the Baht Economic Zone that sought to set up the Thai baht as the currency of choice in the northern portion of the Southeast Asian peninsula. The development of the Baht Economic Zone and Thailand's alliance with the West during the Cold War gave the state a major economic advantage over its neighbors. Today, the Thai baht is widely used, often viewed as more trustworthy than other domestic currencies, and many businesses choose to settle their accounts in Thai baht. 

But Thailand is beginning to lose its head start. Bangkok has been embroiled in several political crises, violent street protests have alarmed investors and frequent changes of government have led to inconsistent policymaking. Partially as a result, industry has been gravitating toward newer, more lucrative opportunities east of Thailand and, more recently, west to Myanmar.

To leverage its waning pre-eminent position, Thailand is trying to push outward to harness the growth of other Southeast Asian countries for its own benefit. The Asia Highway network — running from Bangkok, north across the Thai border at Mae Sot and to Tamu, Myanmar, where it crosses into India — launched a new spur in September. In mid-December, Cambodia and Thailand signed an agreement to complete another secondary track connecting the Thai and Cambodian rail systems by 2016.

In 2014, the Thai and Myanmar governments announced a plan to relaunch the Dawei economic zone with Japanese backing. One of three Myanmar special economic zones, and initially the most ambitious, Dawei has been outpaced by two other Japan-backed projects. For this reason, Thailand and Myanmar have scaled back Dawei significantly. It was originally conceived as a 196-square-kilometer industrial park with a deep-sea port, oil and natural gas processing facilities and an eight-lane superhighway — requiring a total of $10.7 billion in investment. Now, the partners are focusing on a $1.7 billion initial phase consisting of a 27-kilometer zone, liquefied natural gas terminal, jetty and two-lane highway to Thailand.

The current iteration of the project still makes Dawei an exemplary part of Bangkok's larger campaign to connect with the region. The 2014 resumption of the project coincided with Thailand's announcement of a plan to implement special economic zones in border provinces, again to branch outward and shore up investment to Thailand. The first tranche is already functioning: Tak province on the Myanmar border, Sa Kaeo and Trat provinces on the Cambodian border, Mukdahan province bordering Laos and Songkhla province bordering Malaysia. The second set will be inaugurated in 2016. This phase is particularly important because one of the zones will be in Kanchanaburi province, where the road from Dawei is set to cross into Thailand, overcoming the infrastructure challenges of building out a major project in the Dawei region. 

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