วันอังคารที่ 20 มิถุนายน พ.ศ. 2560

Thailand’s (Non) Special Economic Zones

Wannaphong Durongkaveroj
Ph.D. Candidate
Arndt-Corden Department of Economics
Crawford School of Public Policy
College of Asia and the Pacific ANU
E-mail address: Wannaphong.durongkaveroj@anu.edu.au
 


https://www.scbeic.com
Figure source: https://www.scbeic.com

Presently, the global economic system is increasingly interconnected in terms of economics, social affairs, and politics. A technical term in economic textbooks such as ‘Isolated Country’ was replaced by ‘International Economic Interdependence’ which refers to the economic interaction condition by using a business to be a main instrument for connecting each economic system to one another. 

It is well recognized that Thailand is an export-oriented country. There are many supportive policies for encouraging international trade such as the free trade agreements, economic integration, and foreign exchange intervention to devalue the currencies. However, the international trade can be expanded by the foreign direct investment (FDI) by which the foreign companies can open businesses or factories in Thailand, use Thailand as a manufacturing base, exploit local resources, and export goods. Currently, one of the most important economic policies of Thailand inevitably is the Special Economic Zones (SEZs) policy which aims to boost the investments among Thai and foreign investors for some certain businesses. It can be regarded as a practical policy which promotes and supports the trade and financial liberalization, resource allocation, and stimulates the economic growth and structural change. Moreover, it can be viewed as an effective instrument for nourishing industrialization. Especially among East Asian countries (Ge, 1999; Aggarwal, 2007; Zeng, 2015), the successful establishment of Chinese Special Economic Zones brought about the expansion of the aforementioned policy to several countries, for instance, Mexico and India (Ge, 1999; Gleason, Lee, & Mathur, 2002; Bontempi & Prodi, 2009).

In Thailand, the National Policy Committee on Special Economic Zones was established to consider, approve, and draft the rules and regulations of the Special Economic Zones as well as controlling, following, and assessing the operation results. There were the establishments of 6 subcommittees who are responsible for different areas such as 1) The Subcommittee on the Privilege, Area Scope, and One Stop Service Investment Center, 2) The Subcommittee on the One Stop Service Labor, Public Health, and Security, 3) The Subcommittee on the Infrastructure and Customhouse, 4) The Subcommittee on the Real Estate Procurement and Administration, 5) The Subcommittee on the Marketing and Public Relations, and 6) the Subcommittee on Special Economic Zones mobilization at Area-Level, legislation, announcements, and order for supporting the Special Economic Zones Operations (National Council for Peace and Order, 2014). Nevertheless, although the success of the establishment of Special Economic Zones in many East Asian countries such as China, Singapore, Malaysia, and South Korea may appeal other countries, not every Special Economic Zone always succeeds. This is similar to the case of the Special Economic Zones in Sub-Saharan Africa which were initially established in 1970; however, the amount of investment and employment barely grew up compared with other continents. This is mainly because of the lack of good business qualities (Farole, 2011; Zeng, 2015).

Establishment Law

            An important law which supports the establishment of Special Economic Zones is the Announcement of National Policy Committee on Special Economic Zones No.1/2558 and No. 2/2558. The details are described down below (Thailand Office of the Board of Investment, 2015):

1.      The Special Economic Zones for Stage 1 According to the Announcement of the National Policy Committee on Special Economic Zones No.1/2558

1.1 Tak Special Economic Development Zone consists of 14 sub-districts in 3 districts which are:

- Mae Sot District (8 sub-districts consist of Mae Sot, Mae Tao, Ta Sai Luat, Phra that Pa Daeng, Mae Gasa, Mae Pa, Mae Ku, and Mahawan)

- Phop Phra District (3 sub-districts consist of Mae Charao, Mae Ramat, and Khane Chue)

- Located close to Myawaddy Special Economic Zone in Myanmar.

 

1.2 Mukdahan Special Development Zone consists of 11 sub-districts in 3 districts which are:

- Mueang Mukdahan District (5 sub-districts consist of Si Bun Rueang, Mukdahan, Bang Sai Yai, Kham Ahuan, and Na Si Nuan)

- Wan Yai District (4 sub-districts consist of Bang Sai Noi, Chanot, Wan Yai, and Pong Kham)

- Don Tan District (2 sub-districts consist of Pho Sai and Don Tan)

- Located close to Savan-Seno Special Economic Zone in Laos.

 

1.3 Sakaeo Special Economic Zone consists of 4 sub-districts in 2 districts which are:

- Aranyaprathet District (3 sub-districts consist of Ban Dan, Pa Rai, and Tha Kham)

- Watthana Nakhon District (1 sub-district consists of Phak Kha) 

- Located close to Poipet O’Neang Speical Economic Zone in Cambodia.

 

1.4 Trat Special Economic Zone consists of 3 sub-districts in 1 district which are:

- Khlong Yai District (3 sub-districts consist of Khlong Yai, Hat Lek, and Mai Rut)

- Located close to Koh Kong Special Economic Zone in Cambodia.

 

1.5 Songkhla Special Economic Development Zone consists of 4 sub-districts in 1 district which are:

- Sadao District (3 sub-districts consist of Samnak Kham, Samnak Taeo, and Padang Besa)

- Located close to Iskandar Special Economic Zone in Malaysia.

 

2.      The Special Economic Zones for Stage 2 According to the Announcement of the National Policy Committee on Special Economic Zones No.2/2558

2.1 Chiang Rai Special Economic Zone consists of 21 sub-districts in 3 districts as which are:  

- Chiang Khong District (7 sub-districts consist of Khrueng, Bun Rueang, Rim Khong, Wiang, Si Don Chai, Sathan, and Huai So)

- Chiang Saen District (6 sub-districts consist of Ban Saeo, Pa Sak, Mae Ngoen, Yonok, Wiang, and Si Don Mun)

- Mae Sai District (8 sub-districts consist of Ko Chang, Ban Dai, Pong Ngam, Pong Pha, Mae Sai, Wiang Phang Kham, Si Mueang Chum, and Huai Khrai)

- Located close to Huay Xai Special Economic Zone in Laos.

 

2.2 Nong Khai Special Economic Zone consists of 13 sub-districts in 2 districts which are:

- Mueang Nong Khai District (12 sub-districts consist of Khai Bok Wan, Nai Mueang, Ban Duea, Phra That Bang Phuan, Pho Chai, Phon Sawang, Mi Chai, Wiang Khuk, Si Kai, Nong Kon Ko, Hat Kham, and Hin Ngom)

- Sakhrai District (1 sub-district consists of Sakhrai)

- Located close to Vientiane-Nonhthong Special Economic Zone and Chaiyasathan Development Zone in Laos

 

2.3 Nakhon Phanom Special Economic Zone consists of 13 sub-districts in 2 districts which are:

- Mueang Nakhon Phanom District (10 sub-districts consist of Kurukhu, Tha Kho, Na sai, Na Ray Khwai, Nai Mueang, Ban Phueng, Pho Tak, Nong Yat, Nong Saeng, and At Samat)

- Tha Uthen District (3 sub-districts consist of Non Tan, Ram Rat, and Woen Phra Bat)

- Located close to Thakhek Specific Economic Zone and Phoukhyo Specific Economic Zone in Laos.

 

2.4 Kanchanaburi Special Economic Zone consists of 2 sub-districts in 1 district which are:

- Mueang Kanchanaburi District (2 sub-districts consist of Kaeng Sian and Ban Kao)

- Located close to the Dawei City in Myanmar.

 

2.5 Narathiwat Special Economic Zone consists of 5 sub-districts in 5 districts which are:

- Mueang Narathiwat District (1 sub-district consists of Khok Khian)

- Tak Bai District (1 sub-district consists of Chehe)

- Yi-ngo District (1 sub-district consists of Lahan)

- Waeng District (1 sub-district Lochut)

- Su-ngai Kolok (1 sub-district consists of Su-ngai Kolok)

- Located close to the Kelantan state in Malaysia.

 

          These 10 Special Economic Zones shared the boundaries with the following neighboring countries:

1.      Myanmar (Tak Special Economic Development Zone and Kanchanaburi Special Economic Zone)

2.      Laos (Chiang Rai Special Economic Zone, Mukdahan Special Development Zone, Nong Khai Special Economic Zone, and Nakhon Phanom Special Economic Zone)       

3.      Cambodia (Sakaeo Special Economic Zone and Trat Special Economic Zone)

4.      Malaysia (Songkhla Special Economic Development Zone and Narathiwat Special Economic Zone)
           The main objective of Special Economic Zones is to attract foreign direct investment which increases country’s capability, spreads prosperity to provincial part, reduces inequality, and also improves quality of life of people in the country. The Special Economic Zones can be divided into stage 1 and stage 2. Stage 1 consists of the Special Economic Zones in 5 provinces which are Tak, Mukdahan, Sakaeo, Songkhla, and Trat (National Policy Committee of Special Economic Development Zones, 2558a). Stage 2 consists of Chiang Rai, Nakhon Phanom, Kanchanaburi, and Narathiwat. This shows that the areas of these 10 provinces are the frontier areas in the Great Mekong Subregion Economic Corridors (GMS Economic Corridors) which allow the entrepreneurs in Special Economic Zones to nationally and internationally access the factors of production market. The strategy of Special Economic Zones consists of 3 main areas which are 1) to build new economic areas, especially along the borders which are connected with neighboring countries, 2) to support Thai SMEs and continuous investment in neighboring countries, and 3) to organize border economic areas and to resolve the illegal alien labor and smuggling of agricultural products from neighboring countries problems. (National Policy Committee of Special Economic Development Zones, 2558b; Office of the National Economic and Social Development Board, 2015)
 
Support from the Government Sector

            The corporations investing in the Special Economic Zones generally receive governmental support such as tax incentives and organization facilitation. Moreover, if it is a business in the target activities, the owner will receive more fiscal privileges and benefits, for instance, the measures provided by the Office of the Board of Investment (BOI) and the Ministry of Finance.    

          The requirements for considering a target business of Special Economic Zone are: 1) it must be a high labor-intensive business; 2) it must be a business that uses materials made from agricultural products or materials made in the region or neighboring countries; 3) it must not be a heavy industry; and 4) it must not be a business that can cause pollution. 

          In terms of the investment promotion measures under BOI, business activities can be divided into 2 types as follows:

1.      General Activities (under the BOI’s list of eligible activities)

2.      Targeted Activities (13 industrial sectors)

          The investment promotion measures of these 2 groups are listed below in Table 1.

Table 1 The Investment Promotion Measures under BOI’s List of Eligible Activities

In case of general activities under the BOI’s list of eligible activities 
Targeted Activities (13 Industrial Sectors)
Exemption of corporate income tax for a 3-year period, but altogether not exceeding 8 years
Exemption of corporate income tax for a period of 8 years (not exceeding 100 percent of investment value, excluding the cost of land and working capital)
For projects in the A1 or A2 category, which are entitled to 8-year corporate income tax exemption, an additional 50 percent reduction of corporate income tax for a period of 5 years will be granted
50 percent reduction of corporate income tax for a period of 5 years
- Double deduction from the costs of transportation, electricity and water supply
- A 25 percent deduction of the project infrastructure installation /construction costs from the project capital (in addition to the deduction in depreciation expenses)
- Exemption of import duties on machinery
- Exemption of import duties on raw or essential materials used in manufacturing of export products
- Permission to employ foreign unskilled labor
- Other non-tax incentives such as land ownership and bringing in foreign skilled labor or experts
Same as general activities

Remarks: The projects in A1 are knowledge-based activities, focusing on design and R&D to enhance the country’s competitiveness, for example, industrial zones or industrial estates, biotechnology, and electronic design. The projects in A2 are activities in infrastructure for the country’s development, activities using advanced technology to create value added, with none or very few existing investments in Thailand such as manufacture of fibers with specialty qualifications, production of electricity from renewable energy, rail transport, and ocean marina service.

Targeted Activities

            The targeted activities in the Special Economic Development Zones have 7 sections which are categorized into 13 industrial sectors. They can be separated into 62 activities as shown in Table 2:

Table 2 Target Activities in the Special Economic Development Zones

Section 1 Agriculture and Agricultural Products
Agricultural, fishery and related industries
- Livestock and aquatic animal propagation
- Livestock husbandry or aquaculture
- Slaughtering
- Grading, packaging and storage of plants, vegetables, fruits or flowers
- Modified starch or starch made from plants that have special properties
- Oil or fat from plants or animals
- Natural extracts or products from natural extracts
- Primary processed rubber
- Preservation of food, beverages, food additives or food ingredients using modern technology
- Cold storage or cold storage transportation
- Trading centers for agricultural goods
Section 2 Mining, Ceramics and Basic Metals
Ceramic Industries, ceramic products
 - Manufacture of ceramic products (except earthen ware and ceramic tiles)
Section 3 Light Industry
Textile and garment industries
- Manufacture of natural or synthetic fibers
- Manufacture of yarn or fabric
- Manufacture of garments, clothing accessories, and household textiles
- Manufacture of non-woven fabric or hygienic products made of non-woven fabric
- Manufacture of bags or shoes or products made of leather or artificial leather
- Manufacture of sports equipment or parts
Manufacture of furniture
- Manufacture of furniture or parts
Gems and jewelry
- Manufacture of gems and jewelry or parts including raw materials and prototype
Medical equipment
- Manufacture of medical devices or parts
Section 4 Metal Product, Machinery and Transport Equipment
Automotive, machinery, and parts
- Manufacture of multi-purpose engines and equipment
- Manufacture of machinery, equipment and parts and/or repair of mold and die
- Assembling of machinery and machinery equipment
- Manufacture of other vehicle parts
- Manufacture of motorcycles (except less than 248cc engine displacement)
Section 5 Electrical Appliance and Electronics
Electrical appliance and electronics
- Manufacture of electrical products
- Manufacture of LED lamps
- Manufacture of compressors and/or motors for electrical appliances
- Manufacture of wire harnesses
- Manufacture of parts and/or equipment for other electrical products
- Manufacture of audio visual products
- Manufacture of office electronics
- Manufacture of other electronic products
- Manufacture of hard disk drives and/or parts
- Manufacture of top covers or base plates for hard disk drives - Manufacture of flexible printed circuits and/or multi-layer printed circuit boards
- Manufacture of other memory storage equipment
- Manufacture of printed circuit board assembly
- Manufacture of parts for audio visual products
- Manufacture of parts for office electronics
- Manufacture of parts for other electronic product
Section 6 Chemicals and Plastics
Chemical and plastic industries, manufacture of plastic
- Manufacture of plastic products for industrial goods
- Manufacture of multilayer plastic packaging
- Manufacture of aseptic plastic packaging
- Manufacture of antistatic plastics packaging
- Manufacture of plastic products from recycled plastic.
Medicine
- Manufacture of medicine
Section 7 Service and Public Utilities
Logistics
- Container yards or inland container depots (ICD)
- Distribution Center (DC)
- International Distribution Center (IDC)
Industrial estates/zones
- Industrial zones or industrial estates
- Gem and jewelry industrial zones
- Logistics Park
Tourism-related industry
- Ferry services or tour boat services or tour boat renting
- Tour boat port services
- Amusement parks
- Cultural centers or arts and crafts centers
- Open zoos
- Aquariums
- International exhibition centers
- Health rehabilitation centers

 

          However, these 10 Special Economic Zones have a variety of supportive measures for different industrial sectors in each area. The details are shown below in Table 3.   

Table 3 Targeted Activities Promoted in Each Area

 
Tak
Sa Kaeo
Trat
Mukdahan
Songkhla
Chiang Rai
Nong Khai
Nakhon Phanom
Kanchanaburi
Narathiwat
1. Agricultural, fishery and related industries
x
x
x
x
x
x
x
x
x
Using incentives under the investment promotion measures in the southern boarder provinces according to Special Economic Zones policies. 
 
2. Ceramic Industries, ceramic products
x
 
 
 
 
 
 
x
x
3. Textile, garment, and leather industries
x
x
 
 
x
x
x
x
x
4. Manufacture of furniture
x
x
 
 
x
x
 
x
x
5. Gems and jewelry
x
x
 
 
 
x
 
x
x
6. Medical equipment
x
x
 
 
 
x
 
x
x
7. Automotive, machinery, and parts
x
x
 
 
 
 
 
x
x
8. Electrical appliances and electronics
x
x
 
x
 
 
 
x
x
9. Plastics
x
x
 
 
 
x
 
x
x
10. Medicine
x
x
 
 
 
x
 
x
x
11. Logistics
x
x
x
x
x
x
x
x
x
12. Industrial estates/zones
x
x
x
x
x
x
x
x
x
13. Tourism related industry
x
x
x
x
x
x
x
x
x

           

          Moreover, there are 10 additional targeted activities which will be announced later as follows:    

1.      Crop drying and silo facilities
2.      Products from agricultural by-products or agricultural waste
3.      Fabrication industry
4.      Production of printed matters
5.      Manufacture of animal feed or mixes for animal feed
6.      Manufacture of construction materials and pre-stressed concrete products for public utilities projects (except ceramic roof tiles, wall tiles, and floor tiles)
7.      Manufacture of body care products such as soaps, shampoos, tooth pastes
8.      Manufacture of plastic for consumer products such as plastic packaging
9.      Manufacture of fiber or paper articles such as carton box
10.  Real estate development for industrial plants and/or warehouse

However, the Board of Investment (BOI) also has set the Seven-Year Investment Promotion Strategy (2015-2022) which changed the terms of incentives for promoting activities from allocating incentives to each zone (zone 1-2-3), in which Zone 3 received the highest number of incentives, to two new approaches of privilege and benefit allocation as follows: 1) activity-based incentives which are separated into Group A (A1 are knowledge-based activities, focusing on R&D. A2 are activities using advanced technology and have complex manufacturing process) and B; and 2) merit-based incentives such as additional corporate income tax exemption if there are investments or the total consumption is not less than one percent of the total sale volume over the first three years (The board of Investment, 2014). Nevertheless, due to the changing strategies of BOI, some activities no longer received the support from BOI, for example, forestry plantation, smelting, and manufacture of abrasive paper. Furthermore, there was also an issue about the areas that BOI no longer supported. In addition, Table 4 shows the connection between the BOI’s former strategic plan and Special Economic Zones for analyzing each area.   

Table 4: The Connection between Special Economic Zones and the Former Investment Promotion Measure

 
Special Economic Zones
 
Stage 1
Stage 2
Area outside the SEZ
Total
BOI’s Former Strategic Plan
Zone 1
-
-
Bangkok, Nakhon Pathom, Nonthaburi, Pathum Thani, Samut Prakan, Samut Sakhon
6 Provinces
Zone 2
-
Kanchanaburi
Chachoengsao, Chonburi, Nakhon Nayok, Ayutthaya, Phuket, Rayong, Ratchaburi, Samut Songkhram, Saraburi, Suphan Buri, and Ang Thong
12 Provinces
Zone 3.1
Tak, Trat, Mukdahan,  Sa Kaeo, Songkhla
Chiang Rai
Krabi, Kamphaeng Phet, Khon Kaen, Chanthaburi, Chainat, Chumphon, Chiang Rai, Chiang Mai, Trang, Nakhon Ratchasima, Nakhon Si Thammarat, Nakhon Sawan, Prachuap Khiri Khan, Prachinburi, Phang Nga, Phatthalung, Phichit, Phitsanulok, Phetchaburi, Phetchabun, Mae Hong Son, Ranong, Lopburi, Lampang, Lamphun, Loei, Sing Buri, Sukhothai, Surat Thani, Uttaradit, and Uthai Thani
36 Provinces
Zone 3.2
 
Narathiwat, Nong Khai, Nakhon Phanom
Kalasin, Nan, Buri Ram, Pattani, Phayao, Phrae, Maha Sarakham, Yasothon, Yala, Roi Et, Si Sa Ket, Sakon Nakhon, Satun, Surin, Nong Bua Lam Phu, Chaiyaphum, Ubon Ratchathani, Udon Thani, and Amnat Charoen
22 Provinces
Total
 
5 Provinces
5 Provinces
66 Provinces (67 including Bueng Kan)
76 Provinces
(77 Provinces including Bueng Kan)

Source: The Committee on Special Economic Zone Policies (2558a)

          Table 4 shows that the Special Economic Zone policies were mostly implemented in Zone 3.1 and 3.2 according to the former strategic plan of BOI. This appointed 10 provinces as the Special Economic Zones supported by the government. However, caused by the changing strategies of BOI from giving incentives based on the production activities in each area, 49 provinces were deprived of getting support. This may affect the economy and the society due to the moves of industries and factories to new supported areas.

          Presently, apart from the Special Economic Zones organized by the government and the investment promotion measures under the Board of Investment, there is also another policy so-called ‘cluster promulgation’. A cluster is the gathering of interconnected businesses and related institutions that operate within the same geographic areas. The purpose of promoting business clusters is to boost the level of support and cooperation in all facets of the business, in order to strengthen the industrial value chain. There are the Special Economic Zones in form of clusters which have goals consisting of 2 stages: 1) super clusters which include clusters of businesses using advanced technology and future industry such as automotive and parts, electrical appliances, electronics and telecommunication equipment, and medical hub; 2) other targeted clusters such as agro-processing products, and textiles and garment (Board of Investment, 2015). The principle of clusters is unchangeably about tax and non-tax benefits, for example, 8-year corporate income tax exemption and additional 5-year 50% reduction, and permission for foreigners to own land to implement the promoted activities. Therefore, nowadays, the government has many proactive policies emphasizing on manufacturing and service.

          In conclusion, according to the Special Economic Zones of Thailand, there are interesting issues as described below:

1.      The Special Economic Zones policy can be regarded as a ‘top-down’ policy; the central government (or the Office of The National Economic and Social Development Board) selects certain specific areas to be the Special Economic Zones, then decentralizes duties, and responsibilities to each area (towards the provincial governors). In fact, it found out that Special economic Zones in each area were initiated due to the need of each area. After having the public discussions with the local people, the provincial governors proposed the areas under their own responsibilities to be Special Economic Zones. All of these areas are the areas along the borders. Moreover, different industries receiving such support were also chosen from the provincial governors’ proposals; this reflected the need of local people towards seminars or public discussions.

2.      The Special Economic Zones policy is the distorted incentive policy for producer market. In other words, the government has clearly identified areas, targeted industries that need the support, and incentives; this affects the decisions of the private sector on the favorable types of industry for manufacturing and the most appropriated areas for their own industries. The Special Economic Zones policy can be regarded as a market intervention activity.  

3.      The Special economic Zones of Thailand were established after Thailand participated in the development of neighboring countries’ Special Economic Zones. This issue was susceptible in terms of politics and international relations due to the fact that neighboring countries may consider the Special Economic Zones of Thailand as the competitors of their Special Economic Zones. Therefore, this policy did not promote the economic integration (the AEC in particular) which has become in effect since 2015.

4.      The laws supporting Special Economic Zones were still limited at the level of announcements under the National Policy Committee on Special Economic Zones. The private sector, especially foreign investors, may consider this as the instability in terms of laws. Although the Special Economic Zones Act is in the consideration process, the process which occurred after the establishment of the Special economic Zones is too delayed; therefore, the initial stage of this policy may cause some hesitation to invest or make any contract for renting long-term areas which limited to minimum of fifty years among the investors.  

5.      All of these ten areas of Special Economic Zones are the border areas which are the connecting points of ASEAN Highway Network. Hence, they do not cause a lot of economic impacts which derived from mega projects because there were the infrastructure operations such as roads, electricity, water supply, and other public utilities settled in the areas already. However, the policy will support the fast development of logistics system in ASEAN. Furthermore, the government should operate the infrastructure development without delay in these ten areas simultaneously. Since the original conditions of each area are diverse, the amount budget and time may be differently spent as well. The government should focus on the areas where the level of development is still low in order to boost up the confidence of the private sector and facilitate their decision-making on the moves of production bases in different areas. 

6.      In terms of incentives, investors can use incentives after installing their factories. During the first two to three years (the period of time may be different as it depends on the type of the industry), the companies may not gain much profit, so they do not have to pay the corporate income tax. Therefore, the companies may not receive any advantage from this policy in terms of tax incentives, so the government should increase additional incentives apart from the tax incentives to the companies at the initial stage of investment.

7.      There are no special differences that can attract Thai and foreign investors between the following tax incentives which are: 1) general activities which have been supported by the BOI according to the announcement of the Board of Investment No.2/2557 focusing on the investment promotion policies and measures for investing in general activities in the country, and 2) targeted activities according to the Special Economic Zones policy specified by NC-SEZ (the national Committee on Special Economic Zone Development). Therefore, the Special Economic Zones policy will be considered as special only in terms of public utilities inside the industrial estates in each area of Special Economic Zones.

8.      The regulation for considering targeted activities of Special Economic Zones does not conform to 20-Year National Strategy, BOI policies, and Thailand 4.0 Policy because it is implemented for the labor-intensive industries while other policies focus on the capital/technology-based industries. Therefore, the Special Economic Zone Policy does not support Thailand’s advanced industries but the unskilled and low-cost labors in light industry.

9.      The government should consider what local people can receive from the establishment of the Special Economic Zones. In terms of hiring alien labors, the negative and positive impacts on Thai citizens or local labors in the Special Economic Zones should be considered.

10.  The Special Economic Zones aim to promote environmentally friendly production. However, the policy still allows the double deduction of delivery, electricity, and water expense for 10 years. This policy does not support or promote the awareness of the companies on the environmental issues or productive usage of electricity and water supplies because of the double deduction. Therefore, this measure contradicts to the principle of the Special Economic Zones.    

11.  Each province has different targeted activities promotions, so there are differences in amount of investment and investment atmosphere. The government should realize the impacts in regards to the different welfare and future production expansion. 

12.  Trading and manufacturing are not the same issue. Although a border area is an area where a high number of cross-border trades and high value exists, it is not necessary to produce goods in this area to export products and services to neighboring countries where customer purchasing power is lower than in Thailand. To choose a manufacturing area (including establishing an industrial estate) should be based on the basis of capital and delivery advantages; this does not only require the consideration on the volume of trade numbers, but also the overall image of trading partners.

In conclusion, the Special Economic Zone policy is a new policy of Thailand which promotes international trade effectively. However, the incentives, targeted industries, and patterns and mechanisms should be modernized and conform to other policies.
 

References
 
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Zeng, D. Z. (2015). Global experiences with special economic zones - With a focus on China and Africa. Washington, DC: World Bank.