# Presentation: 750234

## Logistics Development through EWEC

**By**
**Kenan Institute Asia**
**Shangri-La Hotel, Chiangmai**
**Mar 18,2008**

## Background

**Thai-Laos Friendship Bridge was opened in Dec 2006**
**East-West Economic Corridor**
**Myanmar, Thai, Laos, Vietnam, Cambodia and Yunan**

**Notes:**
East West Economic Corridor or EWECwas initiated by ADB link 6 countries Myanmar, Thai, Laos, Vietnam, Cambodia and link to Yunan by NSEC. 
And The Friendship Bridge is the vital part to connect EWEC and was opened in Dec 2006. 

## Background

**Notes:**
Our study start from Mukdahan in Thai and through Laos and Danang in Vietnam.
GMS รวม 6 ประเทศ ผ่าน 6 จว. ของไทย จาก ตาก พิษณุโลก เพชรบูรณ์ ขอนแก่น กาฬสินธ์ มุกดาหาร

## EWEC Route

**In Myanmar                                       50 km.**
**In Thailand                                      900 km.**
**In Laos                                            237 km.**
**In Vietnam                                      273 km.**
**                                  ****Total                1450 km.**

## Background

**Route no. 9 is intersect with road no. 13 at Seno and intersect with road no.1 in Vietnam and able to go to Danang**
**Instead of Laem Chabang, Exporter in NE has option in Using Danang Port 500 km. away**
**ADB to promote the growth of GMS (by connecting Asian 450, China 1300 and India 1000 million people)**

## Distance and Time usage

- Mukdaharn to Savannakhet only a bridge
- Savannakhet to Dansavan 4.5 hours approx. 237 KM,
- Laobao to Hue, 4 hours approx. 163 KM
- Hue to Danang, 2 hours approx. 100 KM
- Total from Mukdaharn to Danang 500 KM,10.5 hours

## The 2nd Friendship Bridge

**Notes:**
The building is Customs in Savannakhet.

## ด่านมุกดาหาร

## Objectives

**Study the impact of the opening of the 2****nd**** Friendship Bridge and the highway across Laos for movement of goods between Thailand, Laos and Vietnam**
**Make recommendations to the Lao and Thai governments to improve the benefits of the new route **
**Make recommendations for Thai and Lao businesses on use of the route**

**Notes:**
1 Study the impact of the openning of the bridge and also the movement of the goods along this highway between Thailand Laos and Vietnam.
2 Give recommendation to Thai and Laos Gov to improve the benefits of new route
3 Give recommendations to Thai and Laos business on using this route.

## People moving into Thailand

- 2006:  192,158  people
- 2007:  347,522  people

## People moving out of Thailand

- 2006:  196,065  people
- 2007:  366,702  people

## Import & Incoming Transit Goods

- Import Oct 06-Sep 07 amount 9,605 mil. Baht
- Import Oct 05-Sep 06 amount 2,318 mil.Baht

**Notes:**
-นําเข้าทองแดงในปี 2007 สูงถึง 2800 ล้านบาท (ทองแดงเป็น ผลพลอยได้จากเหมืองทองในสุวรรณเขต และอาจจะถึงจุดสูงสุดเร็วๆนี้ขึ้นกับ กําลังการผลิตหรือการทําเหมือง) 
- การเปิดสะพานยังไม่มีผลกระทบกับสินค้าอื่นๆมากนัก

## Export & Outgoing Transit Goods

- Export Oct 06-Sep 07 amount 6,144 mil. Baht
- Export Oct 05-Sep 06 amount 6,140 mil.Baht

**Notes:**
-การเปิดสะพานยังไม่ได้ทําให้การส่งออกเพิ่มมากขึ้นอย่างสังเกตได้
-สินค้าที่ต้องการไปประเทศที่ 3 ที่ท่าเรือดานังยังน้อยมาก
-ยังมีอุปสรรคบนเส้นทางสาย 9 มากอยู่

## Project Findings

**Exports from Thailand to Laos increased 10% for the first 4 months after the bridge opening**
**Imports to Thailand from Laos increased more than 2,226% when compared month by month (copper was the import that increased the most)**
**Transit goods from other countries moving from Thailand to Laos more than doubled**

**Notes:**
1 Export from T to L increase 10% for the first 4 months of this year.
2 Import from Laos to T increase more than 2000%
3 Transit goods from other countries moving fm T to L increased more than doubled.

## Project Findings

**Current trucking regulations restrict efficient movement of goods along the new route**
**Thai trucks cannot go into Vietnam**
**Vietnamese trucks cannot go into Thailand**
**Lao truck can go into both countries, but Lao trucks are inadequate in number and inferior in quality and capacity**

**Notes:**
The movement of goods through this rout is inefficient because of the current regulations.
Thai trucks cannot go into Vietnam and Vietnamese trucks cannot go into Thailand.
 Lao trucks can go into both countries.

## Project Finding

**Customs documentation and processes increase shipping times – sometimes by days**
**Very few cargo ships stop at Danang port**
**Due to customs delays, unofficial and official fees, trucking costs and shipping costs the new route currently provides no cost advantage over shipping from northeastern Thailand through Laem Chabang**

**Notes:**
5 The shipping time along this route use many days because of custom documentation and the process of the official.
6 There are no many cargo ship stop at Danang port because most of them still use Haiphong and HCM port.
7 Because of custom delays and the unofficial fee provide no cost advantage over shipping fm the NE to Laem Chabang port. 

## Danang Port

**Notes:**
-ลึก 12.7 เมตร
-รับเรือขนาด 50,000 DWT
-มีสายเรือแวะที่ท่านี้ค่อนข้างน้อยอยู่

## Project Finding

**Savan – Seno Special Economic Zone provides 10 years of tax incentives compared to 8 years in Thailand and 4 years in Vietnam**
**Laos has the lowest unskilled labor costs but lacks adequate skilled labor**
**Thai tourist visits to Laos increased significantly**

**Notes:**
8 Savan seno provide the best tax incentive compare to Vietnam and Thai
9 Laos has a lot of unskilled and cheap labors.
10 Since the openning of the bridge a lot of Thai tourists going to Laos and Vietnam

## Recommendations

_**To improve export value from Thailand**_
**To Government **
**Shorten document preparation and cargo inspection time and fee costs**
**Improve multi modal transport: Rail from East and North-East to land road at Mukdahan using rail shippable containers**

**Notes:**
1 We would recommend gov try to shorten the doc preparation and inspction time
2 eliminate the unofficial fees.
3 The multi modal transport will help in transportation cost reduction if The rail fm the North and NE are connected to Mukdahan and then using land road
Currently North Rail pass Pisanulok, NE Rail end at Ubonratchatani. 

## Recommendations

_**To improve export from Thailand**_
**To logistics provider**
**LSP should take an active role in meeting with governments to reduce regulatory obstacles **
**Improve staff capability with training**
**Improve utilization of trucks currently returning empty**
**Establish container yards to facilitate transition to trucks of different gauge or different nationality **

**Notes:**
1 LSP should take an active role in dealing with the GOV for reduce regulatory obstacles.Or to be more proactive.
2 Staffs of the LSP should be improved by training.Most of the staffs just only finish at Primary or Secondary school.
3 Truck utilization should be improved. Currently more than 50% are empty truck or one way transport only.
4 The establishment of the container yards are needed to facilitate the transition the diff in size and diff.nationality trucks.  

## Project Finding - Analyze

**	**_**Laos gains little benefit from the route**_
**Because of the short distance, tourists can have breakfast in Mukdaharn and lunch in Hue, Vietnam**
**Some interesting tourist attractions but the sites are not well managed and very few marketing**
**Savan – Seno Special Economic Zone still just empty land**
**Very few hotels along the route -- the best hotel is only 3 stars and provides little incentive to tourists**

**Notes:**
Laos has little benefit from the route.
-Short distance Thai tourist prefer start traveling very early and have lunch in Hue.
-Most Tourist attraction points are not well managed.
-Savan seno still has only empty land.No infrastructure has been made.
-a few hotel in Laos are on this route. 

## Recommendations on Laos benefits

_**For Lao Government**_
**Warehouse locations need to be identified and incentives provided for warehouses and container**
**Encourage establishment of joint venture logistics providers along the route to take advantage of fact that  Lao trucks can go into both Thailand and Vietnam**
**Encourage establishment of roadside services ****including gasoline stations and rest stops**

**Notes:**
Warehouse and container yard should be built along the route since at Savan – Seno area is the intersection between road number 9 and road number 13 from north to south but the exact area need to be identified in the next step by using center of gravity model by weighting transportation cost per ton, distance, and product weight (ton)
Container yard also be a potential investment since the rule and regulations by 3 countries still need to change the trucks along the route.
       Logistics provider along the route is most favorable to Laos’ company since Laos trucks can go into both Thailand and Vietnam but this 2 countries trucks cannot go into another country.
3 Promote the investment of the road side services such as Gas station, rest stop or handicrafts outlets.

## Recommendations on Laos benefits

_**For Savan–Seno Special Economic Zone**_
**Infrastructure in the zone needs to be ready**
**Incentives offered must be concrete and not undercut by local government taxes and restrictions**
**Rules and regulations on crossing border should facilitate the transportation of goods**
**Need to develop skilled labor**

**Notes:**
The Savan Seno should has the masterplan for the infrastucture development to assure of the project supporting to investors.
     Infrastructure in the zone: Electricity from Pakbo plant, Telecommunication system, even if no investors projected to invest now, the Savan Seno Special Economic Zone Authority (SEZA) should contact all related departments to get the information to be ready to inform the investors about how to and the cost to get all the infrastructure in the zone.
2 The incentives that offered must be consistent throughout the years, and must be accepted by both local government and central government since there are some conflicts of some tax incentives by local and central government.
3  The zone situated on the EWEC route which connected to 4 countries so the rule and regulations in transporting goods across borders are the vital role that causes the success of SEZ. The authority need to push forward all the agreement in facilitating border trade to make the agreement workable in the operating level
4  Labor supply in Savannakhet is adequate for the non-skilled labor but lack of skilled labor so SEZA or the local government need to fill this gap by partnering with labor sourcing companies or co-organize a training program with Mukdaharn and The Thai Skilled Development Center

## Recommendations on Laos benefits

**Develop good marketing strategy to promote the zone**
**Invite investment in duty free shops and department stores**

**Notes:**
SEZA need to develop a very good salesperson and other marketing materials such as website, billboard, brochure, project model and etc. in order to promote and advertise the zone to investors. The first thing that should be done is website that contains all the incentive and how to invest since the investors can get the information easily and can compare with other investment zone.
To done all above recommendations the financial support must be defined The recommendation on financial supports are:
Small commercial zone near the bridge such as duty free shop, department store, tourism center, gas station, etc. These businesses use small amount of investment and easy to gain profit, if the local government provide some incentives these businesses should be interested in investing and that will gain income to SEZA and will lead to higher amount of investment in the future.
Seek financial support from Non profit organization in order to promote the EWEC route ADB, JETRO, JICA and many other institutes have fund for this. SEZA can send in some proposals for the project that will help the EWEC works

## Recommendations on Laos benefits

**Tourism**
**Government should develop tourism by:**
**Provide incentives to build hotels**
**Improve road condition with good signboards**
**Improve tourism facilities – rest rooms, markets, hotels, tourist attractions**

**Notes:**
Government should invest in developing the tourism infrastructure for every tourism sites especially on this following topics
Make sure that no unexploded bombs left near the tourists sites
Invite investor to build a hotel and other recreation site in the area with high incentives
Road to the sites should be in good condition with good signboard that inform direction and distance. (Not have any at this time)
On site facilities; bus parking area, clean toilette, souvenir shops to generate income for covering the administrative cost and also provide tour guide, and restaurant or small vendors

## Recommendations on Laos benefits

**Simplify the visa on arrival service**
**Provide money exchange services**
**Market tourism more actively**
**Focus on sustainable tourism, eco-tourism**

**Notes:**
-Simplify the service of visa on arrival for tourists, Thais tourists are okay but for other nationalities Visa on arrival and high fees still be a problem
-Improve local commercial bank to facilitate the tourists
-Marketing the tourism area to public especially in Thailand by participating the trade show or use print ads in Mukdaharn to attract Thai tourists to spend a day or more in Savannakhet
-Focus on sustainable tourism, eco-tourism since Laos is well - known about the undisturbed nature the forest, river and etc.

## Private Firms Cooperation

- Thai Firms

- Vietnam Firms

- Lao Firms

- 1) Seeking area of  mutual    benefit
- 2) Each Association or Industries arrange group of meeting
- 3) Association push and support Gov with enough info and country benefit
- 4) Research for specific topic and industry should be done

## Internal Logistics

**Enterprise level**
**Inventory Management**
**Sales Forecasting**
**Packaging**
**Time of Delivery**
**CRM, SRM**