AEC will lead to changes in property investment

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AEC will lead to changes in property investment

The advent of the Asean Economic Community (AEC) is having quite an effect already on the internal infrastructure of Thailand as it relates to business in the provinces, rather than Bangkok.

Thailand’s geographical position within Southeast Asia whereby it shares common borders with Cambodia, Laos, Myanmar, and Malaysia means that all the border provinces are currently enjoying varying measures of growth in terms of infrastructure development. Roads, ports, rail facilities and even airports are being either introduced, upgraded, or planned to try and take advantage of the perceived benefits of the AEC.

For example, the Thai government is looking to develop most of its border provinces and upgrade them to the level of Special Economic Zones (SEZs) in an effort to attract more foreign investment.

The first SEZ in Thailand was Mae Sot, in Tak province, although incentives for investors in this region are still being decided. The government has been looking to create other SEZs in Chiang Rai province (at Chiang Khong), as well as in parts of Songkhla in the south, Nong Khai, Nakhon Phanom, Mukdahan and Sakeo in the north-east, and Kanchanaburi in the west. Many of these Thai SEZs will mirror similar SEZs in neighbouring countries, potentially turning these areas into almost seamless ‘borderless’ regions with Lao, Cambodian, Burmese, or Malaysian nationals possibly travelling to their offices or businesses across the border each day into Thailand, before going back to their homes in the evening.

What the government has to decide on are the levels of incentives to attract foreign investors while at the same time making sure the extra business will help Thailand’s GDP bottom line.

While these rules, regulations, incentives and the like are still being hammered out in committees and conferences, it is noticeable how many shopping malls, for example, have begun to sprout up in these once far-flung provinces. The 7-11’s are now almost ubiquitous in all but the most remote of locations, but the likes of Tesco-Lotus, Tops, Big C, Robinson and others are all investing in areas they clearly believe will be growing when the AEC becomes a reality at the end of 2015.

Equally, provinces that are not on the borders but are located along the transport corridors, Phitsanulok being one example, are also experiencing strong growth in terms of business investment.

It’s also noticeable how a few property developers, with an eye to the period post-2015, have started producing condominium projects in cities like Udon Thani, Khon Kaen, and Chiang Mai in recent years. Even without the two-trillion baht infrastructure development package, it is clear Thai business investors are keen on expanding into those provincial areas where the AEC is likely to have an economic impact earliest.