Baht rise adds to woes of producers, exporters

Kobkarn Wattanavrangkul, chairwoman of Toshiba Thailand, said yesterday that besides the surging baht, Thailand has been challenged by many problems that have handicapped the country against rivals such as Indonesia, Myanmar and Cambodia. The problems include higher labour and energy costs and the shortage of skilled labour.
Toshiba exports 30-90 per cent of its electric appliances and parts depending on the product category.
“We have got less of an advantage from buying raw materials and parts from overseas as we have already increased local content at our plants to 50-80 per cent of total raw materials,” she said. There were not so many complaints yet from local manufacturers and exporters, as many of their overseas customers tend to place orders about six months in advance.
“However, many Japanese customers have been entering the new fiscal year starting this month. We have seen clear signals of falling orders due to higher quotes compared to other countries,” she said.
The government needs to upgrade the skills and quality of workers and promote the shift towards producing higher value-added goods, she added.
Sumeth Laomoraphorn, CEO of international trading in rice and food products for CP Group, has urged businesses to take advantage of the strong baht to make investments and import machinery. The baht would continue climbing and the government should set up a fund to assist exporters in coping, he said.
CP Inter Trade’s Golden Umbrella brand of packed rice is now focusing more on the domestic market, especially the high value jasmine rice segment, but has also maintained its overseas market share.
Traders, especially for rice, have been devastated by the baht’s rise and expensive rice prices due to the government’s pledging scheme. All these factors will continue pushing up the rice price, he added.
Thirapong Chansiri, president of Thai Union Frozen Products, admitted that the jump in the baht compared to the currencies of rival export countries had hurt the company’s competitiveness and profitability.
“This year will be challenging with many factors, both foreign exchange and the continuous increase in raw material prices, especially for tuna, which will hit a new high of about US$2,350 (Bt68,230) per tonne in the near future. Such factors will have pressured the company’s profitability in the first and second quarters of this year,” he said.
Arak Suksawad, president of the Thai Furniture Industries Association, said furniture makers and exporters had taken a severe beating from the baht’s appreciation despite hedging against forex risk, which covers only two to three months.
Although major producers had protected themselves from currency volatility to some extent, small manufacturers would feel the full impact, as they had not taken any steps to cushion themselves from the strong baht.
The association, in cooperation with the Thai Furniture Industry Club of the Federation of Thai Industries, has already submitted a letter to authorities asking for their assistance to tackle the baht crisis.