The country registered exports of Bt734.2 million in 2002 and Bt880.8 million last year.

During the first four months of this year, Thailand exported around Bt314 million worth of silk, an increase of 14.3 per cent over the same period last year.

KRC said favourable factors this year included increased state promotion and support to boost productivity.

The government has also hired international experts to help producers improve their quality.

The research house said Thailand could now produce an unprecedented variety of silk goods, whether by hand or machine.

Another favourable factor is the stable economies in the major US, European Union and Japanese markets.

The demand in new markets such as Australia, Eastern Europe and the Middle East has increased, although the combined income has accounted for less than 10 per cent of silk exports each year.

However, KRC said producers and exporters were suffering under surging production costs stemming from the rising oil price and the strong baht.

Producers have also encountered a shortage of domestic raw silk, which means they often rely on costly imports.

This has made them lose their competitive edge to the Chinese, the company added.

KRC claimed that silk-producers should be wary of increased global competition and smaller producers might struggle to overcome low levels of management expertise in a changing market.