thailand southern border economic corridor

Thailand to develop a Southern Border Economic Corridor (SBEC)

The government is mulling the establishment of a Southern Border Economic Corridor (SBEC). The SBEC will span the southern border provinces of Pattani, Yala, Narathiwat, along with four districts of Songkhla province which are Chana, Na Thawi, Saba Yoi and Thepha. The SBEC will ensure greater efficacy in terms of development plans for the region.

Bordin Rassameethes, acting deputy secretary-general of the Southern Border Provinces Administration Centre (SBPAC), said the government has plans to develop the region. This idea is similar in form to the existing flagship Eastern Economic Corridor (EEC). For this reason, the SBPAC brought up the SBEC idea.

“SBEC needs to have its laws enacted in the same way as the EEC to control development, covering city planning, investment privileges and public and environmental management,” said Mr Bordin. “I believe SBEC development can upgrade the quality of life, create jobs and generate income for people in these areas.”

Less economic growth reported in SBEC region in 2018

Most people living within the SBEC area are lacking. A 2018 report by the state planning unit, the National Economic and Social Development Council (NESDC), showed that the gross provincial product (GPP) per capita of Narathiwat residents was 62,066 baht, ranking 74th among 77 provinces. Pattani’s GPP per capita stood at 75,997 baht, Yala at 91,815 baht and Songkhla at 151,918 baht, respectively. The country’s average GPP per capita tallied 236,815 baht.

SBPAC is responsible for the economic development plans for these four southern provinces. The SBPAC will have a lofty target of improving the income of villagers in those areas.

The government announced an investment promotion policy in 2016 for industrial development in the southern border provinces to boost investment. The goal was to develop the local economy, supporting efforts to enhance security in the restive area.

The government also designated Nong Chik district in Pattani as a model agricultural development industry city. The government designated Betong district in Yala as a model sustainable development city. Finally, the government designated  Sungai Kolok district in Narathiwat as a model international border city.

In January 2020, the cabinet approved the addition of Chana district in Songkhla province to the investment promotion zone as a model bio-economy industry city project in the region.

Under the two-year extension (2021-22) to promote investment in five southernmost provinces (Narathiwat, Pattani, Satun, Songkhla and Yala), investors are eligible for three, five and eight years of corporate income tax exemption depending on the category.

Attractive tax exemptions for investors

Investors in 14 targeted industries are entitled to a maximum of eight years’ corporate income tax exemption. These investors are also entitled to a 50% corporate tax reduction for five years. The 14 targeted industries include agro-industry, fisheries, textile, garment, leather, furniture, jewellery and ornaments, medical equipment, plastics and tourism.

The minimum investment requirement is 500,000 baht, excluding the cost of land and working capital.

Currently, infrastructure development in Nong Chik, Betong and Sungai Kolok has been completed. In the meanwhile, the private sector is handling infrastructure development in the Chana project.

SBPAC anticipates more active investment in the southern border provinces after the pandemic and the Board of Investment’s approval of a two-year extension (2021-22) to the incentives available in the five provinces.

During 2017-19, these areas saw relatively low investment levels. Above all, only 24 investment projects worth 15.6 billion baht applying for privileges.

A significant project belongs to Palm Pattana Southern Border Co (PPSBC), a palm-crushing firm and biogas and biomass power producer.  PPSBC produces electricity from by-products of the crushing process. The firm plans to invest 500 million baht between 2022-25 and another 600 million during 2026-29.

Betong Airport Ready to serve SBEC region

SBPAC expects Betong airport, once operational, to help generate more tourism income to the areas.

The construction value of the airport is 1.9 billion baht. It was completed earlier this year. The airport is ready to begin commercial operation this month. However, it delayed due to the pandemic’s second wave breaking out. SBPAC expects the operation of the new airport to be viable by this year’s fourth quarter.

Two airline operators — Bangkok Airways and Nok Air — have already agreed to operate flights at Betong airport. Bangkok Airways will operate flights firstly from Bangkok to Betong. Secondly from Betong to Phuket and Hat Yai. Nok Air will operate flights from Bangkok’s Don Mueang airport to Betong.

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