Planning for the end of the current Thai export boom
Bangkok Post Article July 10, 2007
TRADE EXPORTS
Exim: High growth won't last
Thailand's export growth rate is unlikely to be sustained, according to Apichai Boontherawara, the president of the Export-Import Bank.
He noted that the 18.4% gain in exports in US dollar terms through the first five months of the year had been driven by high-technology products.
IT exports accounted for 11.6% of the total growth in the first five months, and in turn accounted for 64% of total exports.
Dr Apichai said over 80% of high-tech exporters were foreign-owned companies that had only been modestly affected by the stronger baht due to their high import content and currency hedging policies.
But Thai exporters, particularly small and medium-sized companies, were facing shrinking profit margins due to the stronger baht and needed to boost their export volumes and expand into new markets to survive, he said. Exports in the first five months rose only 7% in baht terms.
"In the long run, Thai exporters will have to significantly improve production efficiency, accelerate machinery imports to take advantage of the rising baht and declining interest rates or relocate to other countries with lower wages and more readily available raw materials and market opportunities," Dr Apichai said.
He said that exporters should take advantage of the strong baht and low interest rates to import new machinery to boost their production capabilities.
Relocating operations to other countries offering new market opportunities and cheaper labour and raw materials was another possible strategy.
