The private sector says that whether average logistics costs can be pruned back to 13 per cent of gross domestic product by 2010, from 16 per cent now, depends partially on the government's implementation of measures to upgrade the country's logistics system.

Advanced countries like the United States, Japan and Singapore enjoy logistics costs less than 10 per cent of total costs.

Following the recommendations of a National Economic and Social Development Board (NESDB) study on the country's logistics-development strategy from 2006-2010, the government has set priorities as improving logistics, opening trade lanes and optimising logistics networks, internationalising logistics services and enhancing trade facilitation and building capacity.

Though a year has passed, many industry-watchers have criticised the lack of progress. They say that if the government is serious about implementing the plan, it should not be difficult to establish a world-class logistics system to support Thailand as Southeast Asia's trade and investment centre.

Not only is efficiency in its sights: the NESDB also wants to create added economic value from logistics, according to its study.

Under the five-year plan, the NESDB defines for each priority the direction, the parties responsible and the major steps to implement.

The NESDB has suggested that not only does the government have to enhance outsourcing and encourage clusterisation in order to optimise the supply chain, it also has to develop new trade lanes to the Middle East, Africa and Europe via the Andaman Sea, using integrated multimodal transport.

To develop logistics service-providers and logistics-related businesses, to upgrade Thai logistics service-providers to international standards and to train more personnel with logistics skills for industry will also be focuses of the plan.

"The concept for logistics development strategy is good, but it needs to go into more detail and be more specific on which transport routes should be constructed, for example," Krizz Chantjiraporn, senior adviser to the Thai Logistics and Production Society, said last week.

If the objectives of the logistics-development strategy can be achieved, this would help firms save tremendously on costs, which translates into sharper competitiveness, he said.

Danai Galassi, vice president for supply chain of Central Retail Corporation Ltd, said development of the country's logistics system was now better, though whether the logistics cost-to-GDP ratio fell to 13 per cent by 2010 or not depended on the speed with which the government executed the strategic plan.

"The government has to encourage small to medium-sized enterprises and industries to realise the benefits from logistics management in cutting costs," he said.

Support from other state agencies including the Board of Investment (BoI) and development of new ports would accelerate development of a world-class logistics system in the country, he said.

BoI secretary-general Satit Chanjavanakul said companies focusing on logistics activities were targets for promotion by the BoI. The eight investment categories that are eligible for BoI privileges are land transportation, sea transportation, pipeline transportation services, air transportation services, distribution centres, logistics service-providers, international procurement offices and logistics parks.

Krikkla Sonthimas, president of Evergreen Container Terminal (Thailand), earlier said the Bt7-billion Pak Bara Port project would be a deep-sea container hub of the future, as it had the potential to be a point of departure as well as a destination. Pak Bara will also link Thailand to the Middle East and Europe, which will save time for shipments. There will be no need for vessels to pass through the Malacca Strait.

Sasithorn Ongdee

The Nation