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Thailand still Asia-centric despite rise in connectivity

Jun 17. 2013
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By The Nation

Thailand has swiftly climbed the ranks in overall connectivity from 2005 to 2011, according to the second DHL Global Connectedness Index (GCI) survey.
In the past year alone, the country has jumped to 15th from 20th. By category it places 17th in breadth but 33rd in depth. 
Thailand is one of the six Asian countries or territories in the top 25 for overall connectedness – a measure of both depth and breadth of connectivity. Singapore ranks second, Hong Kong 12th, South Korea 14th, Malaysia 16th and Taiwan 21st.
Jerry Hsu, chief executive officer for Asia-Pacific at DHL Express, said yesterday that the GCI debunked the damaging myth of total globalisation as “globaloney”.
“The index reveals a world operating in a range of 10-to-20-per-cent globalisation with 50-60 per cent of international flows happening intra-regionally. 
“This means there’s still huge potential for greater connectivity between countries, especially since levels remain lower than [before] the financial crisis. The potential gains could reach trillions of dollars and during this period of slower growth, greater international connectedness should be embraced as a vital engine for economic recovery and prosperity,” he said.
Thailand is one prime example that sees its strategies being complemented by private-sector-led development that adopts regional, integrated, multi-country production points. Thailand’s strong showing in the trade pillar, ranking fifth worldwide, is consistent with its export strategy that has been the key driver of its economic development.
However, Thailand’s trade remains predominantly Asia-centric, with its top export destinations being mainland China (12 per cent), Japan (11 per cent), Hong Kong (7 per cent), Malaysia (5 per cent), Singapore (5 per cent), Indonesia (4 per cent) and Vietnam (3 per cent).
The GCI report concludes that the world’s shifting economic centre of gravity is reshaping industry connectedness. The migration of production and consumption to emerging markets has specific implications for three industries – pharmaceuticals, passenger cars and mobile phones. 
China, being Thailand’s top destination country, was projected to deliver the largest absolute growth through 2016. IMS Institute has classified it alone as the Tier I “pharmerging” market. From 2011 to 2016, China’s pharmaceutical spending was projected to grow from US$67 billion (Bt2.1 billion) to $161 billion. 
The remaining BRIC countries of Brazil, Russia and India were classified as Tier 2 and were projected to grow from $60 billion to $103 billion. Although the pharmaceuticals trade in Thailand leans heavily on imports, the nation’s drug-export industry has risen robustly by 66 per cent and imports by 65 per cent since 2006 and is currently valued at $4 billion.
Thailand’s emergence as an auto-parts manufacturer and exporter has also added to its strong trade growth. 
The Thai Autoparts Manufacturers Association forecasts that exports will grow to $15 billion this year from $11 billion to $12 billion last year. Exports account for 48 per cent of Thailand’s auto-parts industry, giving the country its status as the top auto parts exporter in Asean. 
The GCI measures and analyses the global connectedness of 140 countries, covering 99 per cent of the world’s gross domestic product and 95 per cent of its population. It measures the depth and breadth of countries’ trade, capital, information and people flows. 

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