Ranking sixth among the Kingdom's foreign-exchange earners, the sector is likely to grow only 10 per cent to US$4.1 billion (Bt146 billion) this year, compared with the original targeted increase of 20 per cent.

The figure has been halved from the previous export target set by the Commerce Ministry.

"The industry has been hit by the stronger baht and world economic slow-down," Vichai Assarasakorn, chairman of the Thai Chamber of Commerce's Gem and Jewellery Business Club, said yesterday.

Earlier, the Commerce Ministry predicted jewellery exports would jump 20 per cent to $4.37 billion this year.

"The baht's further rise by another 10 per cent against the US dollar and other currencies in Southeast Asia will increase difficulties for exporters. If the baht appreciates to 33 to the dollar, it will be difficult," said Vichai.

The baht rose 16.6 per cent last year, affecting the competitiveness of exporters.

Vichai said that besides the continued strength of the currency, important factors that would reduce export growth included the global economy slowing 4.9 per cent and a predicted drop in major jewellery markets like the US, Japan and the EU. "The problem will absolutely lead to export growth missing the Commerce Ministry's target," said Vichai.

Jewellery exports grew 12.7 per cent to $3.6 billion last year, but exports to major markets showed a significant drop. Exports to the US dropped 3.2 per cent, to Hong Kong oneper cent, to Israel 6.18 per cent, to Japan 1.3 per cent and to Belgium 1.4 per cent.

Thai Gem and Jewellery Traders' Association president Pornchai Chuenchomlada said exports this year would face flat growth if the negative factors turned even worse, in particular the strength of the baht.

The US announcement that it would maintain Generalised System of Preferences (GSP) benefits for Thai jewellery for only six months will also increase difficulties for the competitiveness of exports in the second half.

Due to higher competition in the sector, Thai jewellery exporters are worried about dwindling exports in the US if Congress decides to stop granting GSP benefits for the sector.

Last year, Washington announced it would maintain two years of duty-free treatment for 3,400 products from 133 designated beneficiary developing countries and territories. However, jewellery products can enjoy duty-free status for only six months.

An uncertain domestic political situation and conflict in Iran will also increase problems for Thai exporters, Pornchai said.

Meanwhile, to ensure Thailand's export targets will rise 10-12.5 per cent this year to $145 billion, Commerce Minister Krirk-krai Jirapaet will meet early next month with 58 commercial counsellors to draw up promotional plans.

Export Promotion Department deputy director-general Benjawan Ratanaprayul said the government would concentrate more on new markets. She said the government was confident exports would hit the target this year, despite the many negative factors. "The department will try to promote exports in particular sectors via exhibitions about Thailand," she said.

Petchanet Pratruangkrai

The Nation