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Exporters cautious over new 9% growth target as govt details aid package

Aug 22. 2012
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The export sector remains concerned about whether the government's export growth target for the year is achievable, even though it was revised downward from 15 per cent to 9 per cent yesterday.

Many are worried about a lack of positive factors that would point to an economic recovery in major markets.

However, given a raft of assistance measures announced Tuesday by the government, exporters will wait for overseas sales figures for the current quarter before forming a definite view on prospects for the full year.

“Exports do not rely on the government’s policy alone, but also depend on manufacturers’ competitiveness,” said Payungsak Chartsutipol, president of the Federation of Thai Industries.

The government should aid the cash flow of exporters through packing credit, as a slowdown in exports could result in a lack of cash flow, too, he said.

The government is targeting tax measures to strengthen the competitiveness of exporters, who need to achieve a monthly overseas shipment value of at least US$22 billion (Bt691 billion) for the remainder of the year to achieve the revised export growth target of 9 per cent.

Yesterday’s meeting of economic ministers expressed particular concern about four export sectors – textiles and garments, leather goods, gems and jewellery, and food and agricultural goods – that had been directly affected by the euro-zone crisis and the global economic slowdown.

Measures have been drawn up to reduce trade obstacles for exporters, following a proposal by the Fiscal Policy Office to waive import tariffs on raw materials for products that are subject to high production costs, such as gems and jewellery.

There will also be value-added tax exemption on raw gems used in the production process. This was approved by the Cabinet on July 30.

In addition, the Revenue Department has proposed a tax deduction for expenses incurred by exporters participating in trade exhibitions, as well as income-tax exemption on overseas investment that leads to products being directly exported to Thailand.

The department has also found a way to ensure faster tax refunds to manufacturers and exporters.

Commerce Ministry permanent secretary Yanyong Phuangrach said the measure had been implemented in relation to the ministry’s export promotion plan, which is focused more on sales to new markets.

Moreover, exporters will find their activities are facilitated after government agencies amend regulations that hamper exports, he added.

The government will also join with the private sector in seeking new sources of raw materials at a lower cost, while manufacturers will now also be allowed to use local content as a bank guarantee for VAT.

The Customs Department will also launch a 24-hour service to facilitate exports, as well as streamlining the process of cross-border transportation for exports.

“The government’s efforts are designed to achieve export revenue of $22 billion per month from now through the end of the year, otherwise it will be hard to achieve the new goal,” said Yanyong.

He added that while the National Economic and Social Development Board had projected that export value should reach $25 billion per month, only $19.8 billion was achieved in July.

Exporters commented that the government was on the right track in lowering the export target, as it would have been very difficult to maintain the previous growth goal of 15 per cent for the year.

Panisuan Jamnarnwej, president of the Thai Frozen Foods Association, said the sector’s exports were now forecast to increase by just 7 per cent this year. There had been a slowdown in key markets since the start of the year, with export demand in the US market in particular having plunged 22-23 per cent during the first half.

Prices have also fallen as a result, and the situation will carry through to the end of the year, he said.

“We can’t give a clear picture on exports as they have continued to drop, particularly in major markets, and we don’t see any positive factors for economic recovery [in those markets],” he added.

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