Liberalization of cross border transport among 3 countries in Mekong region

Cross border transport will be drastically liberalized in Mekong region in which Japanese, American and European companies have been expanding their business. Vietnam, Laos and Cambodia concluded an agreement which simplifies custom clearance of trucks and buses. Logistics will be facilitated among Vietnam where parts makers have been expanding their business, Thailand where many makers have been assembling, and Myanmar where foreign investment has been accelerating. International specialization of industry will become easy with Laos, where labor cost is low. Supply chain of product parts may become more efficient that will attract Japanese companies’ investment.

Acceleration of business expansion by Japanese companies

Transport on 22 routes and 15 border crossing points among 3 countries are to be liberalized by the CLV MOU. The MOU will be effective by middle of April 2013. In the beginning, traffic permit is to be given to 450 vehicles (150 vehicles per each country) of trucks, buses and so on. Trucks with the traffic permit can drive among the 3 countries freely.

Although transshipment is needed so far for custom clearance and quarantine at border crossing points, the MOU enables trucks to cross boarder without transshipment. It is also planned to standardize the procedures such as custom clearance form etc. among 3 countries.

Between Vietnam where parts and metal die industry is growing and Thailand where automobile industry is major one, amount of trade is 8.2 billion USD as of 2011, and that has been grown 1.7 times in the past 5 years. In line with the expansion of trade, logistics between Vietnam and Thailand is increasing. Although lead time of ship transport and road transport between Vietnam and Thailand is now 7-10days and 3-4 days respectively, the MOU will shorten the lead time to 2 days.

ASEAN gets going on establishment of logistics infrastructure, in order to meet commencement of ASEAN Economic Community in 2015. Especially Mekong region is “important point for Logistics” in SE Asia. If road transport between Vietnam and Thailand is facilitated, labor-intensive industry will shift to Laos and Cambodia where labor cost is low, and international specialization of parts-manufacturing and assembling industry will be established among Thailand and other countries.

Arterial road construction between Vietnam, Thailand and Myanmar is on-going. With the assistance of Thailand etc., road rehabilitation and bridge improvement started, and it is expected that investment to Myanmar will expand by integrated transport network.

Japanese companies have started their business. Yazaki-group established its wire harness factory in Cambodia. The factory processes parts from Thai factory, and supplies them to automobile and motorcycle makers in Thailand. Minebea Co., Ltd, small motor maker, is dividing its assembling work of digital camera parts between factories in Thailand and Cambodia. Panasonic’s factory in Thailand is supplying some common parts of household electrical appliances to its factory in Vietnam. Nippon Express Co. opened its representative office in Yangon of Myanmar last July, and started to study its logistics business. Nippon Express considers establishing its local subsidiary in future. Nisshin, a middle-scale Japanese logistics company established a joint venture with Lao company last February in Vientiane Capital.

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