THAILAND has long dreamed of becoming the gateway to Indochina. But until very recently, the gate has only been half open. Now, however, a confluence of geographic, economic and political factors suggest that Bangkok’s longstanding vision may finally be within reach.

Thai Prime Minister Yingluck Shinawatra is firmly behind the idea, promising billions of dollars in investment in transportation projects in an effort to accelerate the process. 

Efforts to improve relations with Cambodia have also helped. A bilateral trade agreement was signed in June this year. And last month, the two countries decided to postpone talks on the divisive Preah Vihear Temple border dispute in order to focus on cooperation in other areas, including a long-delayed joint visa scheme.

There have also been positive changes in other Indochinese states. The most important of these, of course, has been the opening up of Myanmar.

Thailand now stands as a likely regional base for the Western and other multinational companies now considering expanding into the country. Thai industrial giant Ital-Thai is already in charge of the US$48 billion (S$59 billion) Dawei deep-sea port and industrial project on Myanmar’s southern coast that promises to give Thai-based companies a direct outlet to the Indian Ocean.

Laos is also welcoming foreign investors. The launch of the Lao stock exchange last year, together with the establishment of many special economic zones, suggests that the government is beginning to consider the need to formulate business-friendly policies. The hotel sector is already booming, particularly in tourist spots such as Vientiane and Luang Prabang.

Apart from low labour costs, the attractions of Laos to foreign investors include surplus electricity (much of which is sold to Thailand) and preferential trade access into Europe and the United States.

Two “friendship bridges” across the Mekong link Laos with Thailand. The East West Economic Corridor (actually a 1,450km road) runs across Laos and Thailand, linking Myanmar in the east with Vietnam in the west.

With bilateral trade booming, Vietnam and Thailand held a joint Cabinet meeting in October. There are also plans to establish a Thai-Vietnamese Business Council. Meanwhile, Thailand’s biggest oil and gas producer, the Petroleum Corporation of Thailand, is considering building a giant oil refinery and petrochemical complex in the central coastal province of Binh Dinh.

With the Asean Economic Community just two years away, Thailand is already at the centre of a growing network of important roads, railways, ports, electricity grids and gas pipelines linking it to the rest of the sub-region.

The country is also a key member of Acmecs, a political, economic and cultural organisation of Indochinese states founded in May 2004 at the suggestion of former Thai prime minister Thaksin Shinawatra.

Apart from geographic location and positive political developments, other factors favouring Bangkok as a sub-regional hub include Thailand’s well-developed legal system, familiarity with Western business practices and the wide acceptability of the Thai baht in border areas.

But several issues also stand in the way. Thais are unfamiliar with neighbouring countries and cannot speak other Indochinese languages well. Not surprisingly, one recent survey suggested that, apart from large business organisations, Thai entrepreneurs were generally ignorant of the opportunities awaiting them.

Potentially more serious internal obstacles include political instability and an inability or unwillingness to implement disaster mitigation plans.

During Thailand’s recent political troubles (2008 to 2010), and the 2011 flooding, Laos reacted by inaugurating direct flights with Malaysia, Vietnam, Singapore and South Korea. The result was a reduction in the regional role of Bangkok’s Suvarnabhumi Airport.

And while ambitious development projects in neighbouring countries offer the promise of lucrative returns, there is no guarantee that they will be successful. The Dawei project, for example, is already reported to be facing difficulty raising the necessary finance.

International relations will also need careful handling. Ties with Cambodia may be cordial now, but the highly emotive Preah Vihear Temple dispute has yet to be resolved. Many Cambodians also resent what they see as Thailand’s economic and cultural dominance. In 2003, there were widespread attacks on Thai businesses in Phnom Penh when a Cambodian newspaper article falsely alleged that a Thai actress claimed that the iconic Angkor Wat temple belonged to Thailand.

Thailand also has a history of rivalry with Myanmar going back hundreds of years. Border clashes occurred as recently as 2010.

Relations with Laos have generally been better. But in 2006, the impending release of a Thai satirical film which initially referred to the Laotian national soccer team led to diplomatic tension.

Vision is one thing. Reality is another. Thailand’s future as the gateway to Indochina cannot be taken for granted.

(C) Singapore Press Holdings Limited