Low oil prices to hurt exports as spending power wanes

TNSC chairman Nopporn Thepsithar said Thai exporters still needed to be aware of many negative factors, despite the lower oil prices and weakening baht spurring some export opportunities.

“Spending power in many markets, mainly in the Middle East, Russia, and some countries in Africa, could be affected [negatively] by lower oil prices as consumers in those markets would have lower spending power. Moreover, after the end of tariff privileges in the European Union, Thai shipments to that market could face higher costs and tougher competition,” he said.

He added that manufacturers were well aware that oil prices could climb again, making it difficult for them to plan for export-oriented production.

Other potential negative factors are the political conflicts in some countries, while climate change could hit agricultural production.

Still, the TNSC foresees the baht continuing to weaken to about 33-34 against the US dollar, which will facilitate export growth this year. The lower oil price should also reduce production and shipment costs.

The council has expressed concern that many shipping companies have insisted on raising their terminal handling charge (THC) by 75 per cent, despite the lower oil price.

Nopporn called for relevant government agencies to pressure shipping companies to adjust their fees in accordance with actual costs.

“It is unreasonable for shipping firms to raise their charges amid lower global oil prices,” he said.

Vallop Vitanakorn, vice chairman of the TNSC, said the loss of tariff privileges under the EU’s Generalised System of Preferences, slower economic growth in China, and sluggish recovery of the Japanese economy would also challenge Thai export growth this year.

He pointed out that despite Thailand focusing more on the Asean market, Asean countries still needed to rely on exports to China, the EU and Japan, and therefore would also be hit by slowing growth in those economies.

Meanwhile, Thai rice exports this year could be lower than last year’s 10.5 million tonnes as exporters expect falling shipments of parboiled rice to Nigeria and other African countries.

Vichai Sriprasert, honorary president of the Thai Rice Exporters Association, said the value of rice exports in 2014 could be Bt170 billion. However, that figure could decline this year because purchasing power in some markets could be hit by the lower oil price.

For instance, Nigeria, which is a major importer of Thai parboiled rice, could cut back this year because more than 90 per cent of its national income depends on oil exports.