Logistics costs slated to fall in new national development plan

The National Social and Economic Development Board, the formulator of Thailand’s five-year development plans, is predicting the country’s logistics costs will fall from 14 percent to 12 percent of gross domestic product under its 12th development plan as the government makes massive investments in new infrastructure.

“Thailand needs to speed up key transport infrastructure projects from this year onward. Infrastructure development is vital for supporting the country’s economic development, redistributing income and reducing the income gap,” said Danucha Pichayanan, deputy secretary-general of the National Economic and Social Development Board (NESDB).

Although governments devise and implement their own economic policies, in general they broadly adhere to the five-year development plans, goals and recommendations of the NESDB. Infrastructure development was a key feature of the 11th plan. The 12th plan calls for that infrastructure development to accelerate.

The current government of Prime Minister Prayut Chan-o-cha has committed to a massive nationwide infrastructure upgrade to maintain and advance Thailand’s competitive advantages and spur economic growth. Some of the infrastructure projects, particularly high-speed rail and other rail lines, have seen delays in starting construction because of tough negotiations with investors and the need to conduct environmental and other impact studies.

More extensive and modern infrastructure connecting all regions of the country and connecting the country with its neighbors will result in a reduction in the costs of logistics. The lower the costs of logistics, the more competitive the country will be. For decades, Thailand had some of the best infrastructure in the region, but it is aging and other countries have been investing in their own infrastructure to compete, grow and close the gap.

The 12th development plan targets a rise in the rail transport load to 4 percent of total transport from 1.4 percent, and goods transported through waterways up to 15 percent from 12 percent. It calls for reducing the road transport load to 80 percent of total transport in 2021 from the current 88 percent.

Today, Thailand’s double-track rail network amounts to only 8 percent to 9 percent of total rail transport. The 12th plan calls for the development of 14 double-track rail projects, which will increase the double-track rail network’s coverage to 1,553 miles by 2021, up from just 223 miles now.

The plan also aims to provide internet access to 85 percent of the country’s villages nationwide, up from 30 percent in the previous plan. The government has already committed to providing high-speed ADSL internet access to all of the country’s villages and is making steady progress towards that goal.