SME logistics firms fear liberalisation

"We will propose to the government to establish a fund of Bt20 billion, which can be used as working capital by local logistics service providers in all transport modes - sea, air and inland," said Thongyu Khungkant, president of the Import-Export Transport Association.

Discussing their problems and solutions at a workshop held yesterday by the Federation of Thai Industries, many companies said they wanted the government to back the logistics business, and especially small and medium-sized enterprises (SMEs), through capital support, relaxation of rules and regulations, and tax subsidies.

The workshop was aimed at helping Thai logistics providers brainstorm on anticipated problems after opening their business under the framework of the Asean Economic Community in 2013. The government will be urged to help strengthen the competitiveness of Thai logistics firms.

The workshop was the second of its kind, as repeated changes in government recently have led to a lack of continuity in the country's policy on enhancing the logistics industry.

Not surprisingly, most of the local providers - about 70 per cent of which are SMEs - are expected to be overshadowed by giant international logistics firms with large capital, superior technology and the backing of a worldwide network.

"The biggest competitors for Thai logistics providers will be from Singapore and Malaysia once the market is liberalised in 2013," said Tanit Sorat, vice chairman of the Federation of Thai Industries.

He added that Thai companies had a competitive edge only in management. If they are unable to adjust themselves or prepare for future business, they may be either forced to close down or be taken over.

"Now, we are experiencing our hardest time and we expect to see more intense competition in the logistics market," said Tanit.

Besides market liberalisation, the transport and logistics industry has been hard hit by the global economic crisis. Overall, logistics business has contracted by 40 to 50 per cent year on year.

"So far, I have seen the closure of numerous SME providers, and in the future more Thai companies will be taken over," warned Suvit Rattajinda, president of the Federation of Thai Logistics Service Providers.