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Seek new markets, Thai exporters told 

Apr 16. 2019
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By PHUWIT LIMVIPHUWAT
THE NATION

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AS THE ongoing US-China trade war continues to dampen Thailand’s exports, representatives from both the public and private sectors suggest that Thai exporters should look to new markets and find opportunities to replace Chinese goods in the US market to boost their shipments abroad.

 

Representatives from the private sector urged Thai exporters to focus on new markets to replace the drop in shipments to the US and China, two of Thailand’s current top trading partners.

From January to February this year, principal exports from Thailand to China and the US dropped significantly. China-bound exports of automatic data processing machines and parts fell by 18.9 per cent year on year, while rubber exports fell by 26.8 per cent and, most significantly, exports of motor cars, parts and accessories fell by 65 per cent, according to data from the Commerce Ministry.

“The trade war has become a long-term problem for Thai exporters, and the situation may likely worsen in the long-term as the two countries struggle to find a compromise solution,” Vikrom Kromadit, the top executive of Amata Corporation Plc, warned. 

The businessman suggests that Thai exporters seek opportunities to expand their production base in CLMV (Cambodia, Laos, Myanmar and Vietnam) countries.

“The CLMV is a fast-growing region with lower labour costs than Thailand. The area is a potential long-term solution for Thai exporters,” he said, adding that Thai manufacturers should look to move their production base to these countries and export Thai goods from there to cut costs in the long-run and remain competitive amid the US-China trade war. 

In a separate interview, Yunyong Thaicharoen, first executive vice president and head of Siam Commercial Bank’s Economic Intelligence Centre said, “To adapt to the trade war, Thai exporters should look to new markets and keep a close eye on the changing business trends.”

Yunyong suggested that exporters should make more use of e-commerce and try to gain a better understanding of consumer trends abroad, especially in the current market landscape that is constantly changing. 

The trade war is likely to continue in the long term. Hence, going forward, Thai exporters should make the trade war challenge a baseline case in their business strategy, said Somkiat Tangkitvanich, president of the Thailand Development Research Institute (TDRI).

Somkiat suggested that since the US has imposed tariffs on various Chinese goods, Thai exporters should look for opportunities to replace Chinese goods in the US market.

The TDRI president’s suggestion is in line with the Commerce Ministry’s strategy to boost Thai exports to the US through “food diplomacy”. 

“It is undeniable that the US-China trade war has both direct and indirect negative impacts on Thai exports. However, there are also indirect benefits to Thailand from the ongoing trade war, which Thailand needs to capitalise on,” said the director-general of the Commerce Ministry’s Trade Policy and Strategy Office, Pimchanok Vonkorpon.

“Many Chinese goods are losing market share in the US because of the tariffs. This has opened up gaps in the market which Thai products can fill,” Banjongjitt Angsusingh, director-general at the ministry’s Department of International Trade Promotion, said.

“One way Thai businesses can break into the US market is through food diplomacy,” she added.

Food diplomacy refers to the use of Thailand’s cultural and culinary influence in foreign markets to boost Thai exports, she explained. For example, there are many Thai restaurants across the US. In supporting these businesses, Thailand can boost its export of key seasoning ingredients used in Thai food, creating a new way for Thailand to penetrate the US market.

The Commerce Ministry is also urging exporters to cash in on the negotiated free trade agreements with various countries to boost Thai exports, particularly, with Thailand’s top trading partner, China. In 2018, trade value with China stood at US$80.136 billion (Bt2.545 trillion), increasing by 8.7 per cent year on year.

“We aim to boost Thai-Chinese trade by 12 per cent this year and have set a target of $140 billion for 2021”, said Auramon Supthaweethum, director-general of the Department of Trade Negotiations (DTN) under the Commerce Ministry. 

The ministry will promote exports of farm produce and processed products to China from small and medium enterprises in the Thai agricultural industry. Thailand has a free trade agreement (FTA) with China that also covers agricultural exports, Auramon stated. 

“However, there are many exporters in the agricultural sector who are not aware of their FTA privileges when exporting to China. They also may not possess the required knowledge on regulatory standards, intellectual property licensing and effective strategies,” she said. 

In 2018, only 58.4 per cent of Thailand’s total exports to China enjoyed privileges under the trade deal, according to the Commerce Ministry.

 

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