Malaysia-Thailand BEZ To Boost Trade, Cut Logistics Costs -- Economists
By Siti Noor Afera Abu
KUALA LUMPUR, July 22 (Bernama) -- The proposed Malaysia-Thailand border economic zone (BEZ) could significantly strengthen bilateral trade and regional economic development, with improved border infrastructure expected to lower logistics costs, enhance supply chain efficiency and attract more investments, an economist said.
Prof Emeritus Dr Barjoyai Bardai of Malaysia University of Science and Technology said about 40 per cent of trade between Malaysia and Thailand is conducted through cross-border cargo transportation, making efficient border infrastructure a key driver of future trade growth.
Projects such as the proposed second Rantau Panjang-Sungai Golok bridge, improved rail connectivity and enhanced customs procedures should reduce logistics costs and transit times, he told Bernama.
The BEZ initiative also builds on an already strong economic relationship between the two neighbouring countries, he said, noting that bilateral trade reportedly reached US$27.7 billion in 2025.
This implies that the two countries need only modest growth to achieve the US$30 billion target by 2027.
“The target is achievable, but it depends on execution. Trade would only need to grow by roughly four to five per cent annually to reach US$30 billion.
“Both governments have placed the target at the centre of bilateral economic cooperation and established mechanisms to promote trade and investment,” he said.
Barjoyai said the strong growth opportunities exist in tourism, agriculture, halal products, semiconductors, logistics, energy, and the digital economy.
“Achieving the target will require projects to move from announcement to implementation quickly,” he said.
Logistics and transportation sectors are likely to be the biggest beneficiaries, as improved roads, railways, ports, and customs clearance would lower transportation costs while increasing cargo volumes, he said.
“The proposed rail revival and border bridge projects directly support this sector,” he said.
On July 14, Prime Minister Datuk Seri Anwar Ibrahim said the development of the Malaysia-Thailand BEZ will provide Malaysian goods with wider access to the markets of Laos, Cambodia and Vietnam.
Anwar, who is also the finance minister, said Malaysian exports, particularly fisheries and agricultural products, had previously faced Thai customs restrictions when transiting to those markets, but Bangkok has agreed to ease requirements.
He said the relaxation will create greater trading opportunities for Malaysia's fisheries and agricultural sectors by allowing goods to move smoothly through the customs procedures.
Meanwhile, Universiti Utara Malaysia School of Economics, Finance and Banking senior lecturer Muhammad Ridhuan Bos Abdullah said Thailand has long viewed border economic zones as an important contributor to economic growth, underscoring the significance of closer economic integration between the two countries.
He said food and beverage products account for the largest volume of cross-border trade between Malaysia and Thailand, followed by electrical and electronics products.
According to him, trade flowing through the Bukit Kayu Hitam, Padang Besar and Durian Burung border crossings contributes significantly to bilateral commerce, particularly for the northern states of Perlis, Kedah, Perak and Kelantan.
“The development of rail connectivity and dry ports will further support bilateral trade growth,” he said.
However, he noted that security remains an important consideration, particularly in several districts in southern Thailand that are still subject to security measures.
He also stressed the need for both governments to reach a mutual understanding on key issues, including investment incentives, labour mobility and the movement of goods and services.
“The incentives provided should be tailored to the strengths of each border location instead of adopting a one-size-fits-all approach.
“For example, Perlis already has a dry port, Bukit Kayu Hitam records high cargo movement, while Durian Burung plays an important role in the movement of fruits.
“Labour mobility arrangements and tax incentives should, therefore, be designed according to the needs of each location,” he added.
-- BERNAMA