Private sector confident exports will rise 3 percent

3Representatives of the private sector told Commerce Ministry officials last week that they believe export growth of 3 percent is achievable in 2016, but want the government to do more to support the farming sector as commodities exports are a crucial part of economic growth and social stability.

The government also announced it would add nearly 5,000 acres of land to Special Economic Zones being developed along the Kingdom’s borders, another conduit for exports. Border trade, while relatively modest compared to overseas shipments, is nonetheless growing steadily and can expect a boost with tariffs eliminated under the recently launched ASEAN (Association of Southeast Asian Nations) Economic Community, or AEC, a 10-nation free trade area.

The Ministry of Commerce is actually hoping for export growth of 5 percent this year, but gloomy forecasts about the global economy by the World Bank and others have made private sector executives more cautious and conservative in their outlook. In particular, the continuing economic slowdown in China has translated into weaker demand for many goods from exporting nations, especially in Asia, and including Thailand.

In response, private sector executives also asked the Ministry of Commerce to do more to find new markets for Thai products.

Thailand’s economy has been export-driven for decades. The country’s allure and advantages as a manufacturing base for multinational corporations has helped create a diverse menu of products that the Kingdom exports. Thailand is among global leaders in exports of computers and parts, automobiles, rice, sugar, rubber, seafood, jewelry, plastics, petrochemicals and organic chemicals.

But while that lineup provided resilience in exports for many years, competition has been increasing in recent times as less developed nations begin to build their own manufacturing bases and can rely on lower labor costs than the Kingdom.

Executives, therefore, urged the government to support Thai companies in making their own products and creating their own brands, to help increase the value of the Kingdom’s exports. This includes supporting the creation of value added for agricultural products, as prices for many commodities have been tumbling on world markets, driving down incomes for Thai farmers.

Deputy Commerce Minister Suvit Maesincee agreed that a restructuring of the export-sector is needed, with a shift from relying mainly on multinational corporations to the involvement of more local companies in exporting. According to a study by the Commerce Ministry and the private sector, 43 percent of export value comes from goods produced by multinationals, 27 percent from joint-venture companies, and only 30 percent by Thai firms.

He added that the government will also support the export of services, which account for 25 percent of gross domestic product. Thailand is establishing six Special Economic Zones along its borders this year as manufacturing and export bases to increase shipments to its neighbors, three of which – Cambodia, Laos and Myanmar – are emerging markets. At least three more Special Economic Zones will be founded by 2018.

The projects have the added benefits of bringing more development to the country’s border regions, while also providing easy access to jobs for migrants from neighboring countries. That access is also part of Thailand’s strategy to fight human trafficking, as migrants from neighboring countries often turn to people smugglers to find them work in the Kingdom.