Rigid rules snags for Thai SEZs

Although Thailand is keen to promote investment in special economic zones (SEZs) in border areas, some regulations are still out of sync with the current situation, making SEZs across the border in Myanmar a more attractive prospect.

The SEZ in Myawaddy — some 45 kilometres from Mae Sot district on Thailand’s western border — was set up a few years ago and is drawing a great deal of interest, says Tin Tin Mya, president of the Myawaddy Chamber of Commerce.

Myanmar assigned 8,000 rai of land for SEZ development in Myawaddy and offered attractive privileges to foreign investors, mostly from Japan and China. The SEZ consists of an import-export zone with a warehouse area and an industrial estate where some factories are about to be built.

“With better logistics after the 45-km highway f rom Mae Sot to Myawaddy was finished, five investors decided to invest in the Myawaddy SEZ,” Tin Tin Mya says, referring to a road the Thai government built for Myanmar to boost border trade and bilateral ties.

Businessmen say Thailand’s investment privileges for SEZs are similar to those offered by Myanmar. But the latter has an edge because of the zero tariff the EU grants to less-developed countries for exporting goods to Europe. (Thailand no longer qualifies as a less-developed country as defined by EU.)

“This means you can produce at lower cost, plus you have the right to export to the EU market with no tariff,” says Somsak Kaveerat, the Tak Chamber of Commerce chairman.

Thai Rubber Latex Corporation invested in the southern Myanmar town of Myeik, which borders Kanchanaburi, a few years ago for lower costs and better logistics once the Dawei deep-sea port finishes construction.

Chief executive Vorathep Wongsasuthikul says Myeik is another economic zone the Myanmar government is sinking money into. “Our factory there makes rubber gloves and semi-finished rubber latex. Nearly 100% of production is exported from there.”

Rubber in Myeik costs about 40 baht a kilogramme, against 55 baht in Thailand, which forbids the import of rubber products to protect its farmers.

“We had to comply with Thai law and we needed lower costs at the same time, so we decided to risk it in Myanmar,” says Mr Vorathep.