Written by Kasikorn Research Center / Edited by Mao Yuye

An Industrial Estate in Sa Kaeo Special Economic Zone to Bolster Cross-Border Exports to Cambodia

Written by Kasikorn Research Center / Edited by Mao Yuye

A trader pulling a cart through a checkpoint near the planned SEZ in Sa Kaeo province, Thailand

Sa Kaeo Special Economic Zone (SEZ), one of the pilot projects led by the Thai government, is ready for the setting up of an industrial estate, given that a new permanent border checkpoint in Ban Nong Ian, plus four such locales currently and the accelerating infrastructure development. All this will help bolster our cross-border trade with Cambodia.

Currently, Sa Kaeo has the highest border trade value of any provinces with Cambodia because it is located near the major Khmer economic city of Banteay Meanchey, which serves as an export transfer point en route to Phnom Penh, according to the survey by the KResearch Center.

According to the statistics, the average growth rate of import from Cambodia via Sa Kaeo from 2010 to 2015 reached 25.7% and the major import goods is cassava; while the average growth rate of the export from Sa Kaeo to Cambodia hit 17.6% and the major export goods include cars, motorcycle engines and components. Of particular note, the average growth rate of Thailand’s export via Sa Kaeo to Cambodia is higher than that of Thailand’s total cross-border exports to Cambodia (the latter average growth rate is only 15.4%) because the export products via Sa Kaeo, including cars and motorcycles, are of high value and there is a large demand in the Cambodian market.

During the first four months of 2016, however, the value of export via Sa Kaeo to Cambodia registered a 5.8% year-on-year decrease, because Cambodia’s economic growth has slowed down and the country has started to manufacture tractors, which has brought down the import of such products from Thailand.

Once Cambodia’s economy turns better, which will regain Thailand’s export to Cambodia. In addition, as Thailand-produced non-alcoholic drinks has long been popular with Cambodian consumers, it is expected to gain Thailand’s cross-border export value in the rest months of 2016. We at KResearch project that the value of cross-border exports from Sa Kaeo to Cambodia during 2016 will reach perhaps THB 61.2-63.0 billion, increasing by 0.2-3.2 percent, versus the 2.6 percent growth reported for 2015.

Although such figures would represent minimal growth, Sa Kaeo has bright prospects as our important cross-border export base in the future. Since Sa Kaeo is located in proximity to many agricultural raw material sources in Cambodia, as well as other potential export markets, i.e., Laos and Vietnam, KResearch is of the view that Sa Kaeo SEZ is an ideal location for beverage industry operations, particularly non-alcoholic drinks, given a large and thriving Cambodian market. It is also suitable for agro-processing since producers can take advantage of relatively cheap raw materials sourced from Cambodia.

There are ample investment opportunities for warehousing and distribution service providers in Sa Kaeo SEZ, as well, because demand for logistics services will likely expand in line with the bourgeoning border trade there.