Tanit Sorat, a vice chairman of the Federation of Thai Industries (FTI) and head of its Logistics Industry Club, who has 28 years' experience in the logistics industry, said while the national logistics development plan is on the right track, it is still inefficient. He says the government should institute bold reforms of the State Railway of Thailand and integrate budgets, planning and targets in an effort to make the country a hub of world-class logistics services.
Under the country's logistics strategic development plan, do you think this government has understood the word "logistics" well?I believe many ministers in this government have a better understanding of logistics than previous governments, as they worked with the FTI for a period in this regard when they were in opposition. Our national logistics development plan is under the framework of five aspects, namely production, infrastructure, trade logistics, logistics business, and human resources. The National Logistics Committee was initiated by the government of former prime minister Thaksin Shinawatra in 2003. In the Samak Sundaravej government, there was talk on this matter at one time, but it did not set up a committee. In the Surayud Chulanont government, a committee was set up and there were two meetings.
So far, we have found many difficulties in our logistics strategy development, as it is fragmented and under supervision by many ministries such as Agriculture, Public Health, Information and Communications Technology, Finance, and Labour and Social Welfare. Each ministry has set its own plans and its own budget to achieve its own targets, but these are not integrated.
Our country's total logistics cost was 19 per cent of gross domestic product in 2003 and 18.6 per cent in 2008. We took five years to reduce the cost only 0.4 percentage point. If we multiply the budgets spent by each ministry by five years, it means a huge amount of money pouring into the logistics system, money spent fragmentally and redundantly.
Do you think the plan has been implemented?
The plan is good but has not been implemented, owing to discontinuity of the government. Some aspects are not integrated, with no direction, no strategy and no action plans.
Our transport cost is high because 86 per cent is by road, 12 per cent by water, and 2 per cent by rail. Road transport costs 3.5 times as much as rail and seven times that by water.
If the politicians do not take care of the SRT, this will create hurdles to the organisation's competitiveness. There is no clear direction whether the SRT will be a regulator or operator. The railway development plan has not moved. The locomotives, tracks and sleepers are old. The single-track railway also runs at just 49 kilometres per hour.
The double-track railway from Chachoengsao to Laem Chabang initiated by the Banharn Silpa-archa government in 1992, which will inaugurate services next year, took 15 years in transforming the idea to reality. That's very slow.
In addition, we've never talked about water transport. Once Section 76 (2) of the Constitution is effective, any project involving water transport will not be easily implemented, as it will be required to make environment impact assessment and health impact assessment reports if its activities affect wildlife or community lifestyles. Large-scale deep-sea ports will not easily happen - even Pak Bara deep-sea port, people don't want it.
Therefore, SRT reform needs bold government action. If demand for shipments by rail increases, for example from Inland Depot Containers at Lat Krabang to Laem Chabang deep-sea port, how will the SRT cope?
If SRT reform is not clearly implemented, the plan to reduce the total logistics cost to 16 per cent of GDP will not be easy to achieve. At maximum, we might make it 18 per cent in 2011 or 2012.
Has regional logistics development been sufficient?
The plan has been on the right track, but not efficient and not clear. We concentrate on shipments by road, like other Asean countries such as Vietnam, Laos and Burma. Our road-transport cost - provided by 10,000 firms owning 700,000 trucks across the country - is lower than others thanks to high competition. Malaysia is an exception in the region, as its total logistics cost is 13 per cent of GDP. However, we have the best road network in the region and will have paved roads nationwide next year.
Has the government remedied any hurdles to national logistics development yet?
Not yet, fragmentation of budgets, planning and targets still exist. The National Economic and Social Development Board [NESDB] is now acting as a coordinator for logistics development.
How can we resolve all the limitations to national logistics development?
A subcommittee of the Senate, of which I'm a member, has just proposed the establishment of an Office of National Logistics Policy and Planning along with the NESDB. This would help integrate budgeting, planning and setting of goals for all logistics tasks.
The organisation would be directly under the Prime Minister's Office and responsible for screening and considering all projects regarding logistics matters. It would have a board of directors appointed by the government. The prime minister would chair the board and directors would be representatives from participating ministries and the private sector.
Though the government is unstable, the logistics plan's implementation is still going ahead.