GARMENTS / STRONG BAHT
Strong baht takes a toll on garment industry growth
ARANEE JAIIMSIN
Bangkok Post, Thailand
The baht’s appreciation is expected to trim the textile and garment industry’s growth this year from the 4-5% earlier projected by the Thailand Textile Institute (TTI), according to Chen Namchaisiri, chairman of the textile industry club under the Federation of Thai Industries (FTI).
The TTI said the industry grew 2.6% in the first half this year and would expand by 4-5% to US$6.9-7 billion for the full year. This is due to the Japan-Thai Economic Partnership Agreement (JTEPA), which could help lift the sector’s overall exports to Japan from $400 million now.
”The TTI’s projection is considered rather high given the current environment,” said Mr Chen.
The industry’s uncertain outlook came after many foreign importers began switching orders to Thailand’s rivals, such as Bangladesh, Vietnam, India and China. The recent shutdown of Thai Silp South East Asia Import Export Co and Union Footwear Plc reflected the industry’s poor outlook.
”Exports of textile and garment products this year will be the same as last year or slightly higher,” said Mr Chen.
Many garment manufacturers started importing raw materials such as thread and fabric to cut production costs to take advantage of the stronger baht.
”The move will hit the textile industry hard,” he said.
The FTI is closely monitoring raw material imports to ensure they are not illegal.
Importing raw materials for garment manufacturing is easy because import duties on thread and fabric are as low as 1-5%.
In the future, all import duties on textile products will be terminated due to free trade agreements.
Mr Chen said Thailand could be a manufacturing hub for textile products in Asean as the local industry has a very well developed supply chain.
”If local garment producers relocate their businesses to low-cost countries such Laos and Vietnam, textile products from Thailand can still supply them.”
On the other hand, Thailand would not offer a bright future for garment manufacturers as their competitiveness is now below that of imported products, especially from China, he added.
