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Published on October 20, 2007

That prediction is based on the appreciation of the euro, a more stable baht and the Japan-Thailand Free Trade Agreement (Jtepa).

Thai Garment Manufacturers Association (TGMA) president Dej Pathanasethpong yesterday said clothing exports faced a bright future next year because of better conditions to facilitate export growth.

"We're confident of a brighter future despite many negative factors affecting export growth this year," Dej said, adding that the sector would also benefit from indirect exports, with Thai investors expanding business to neighbouring countries.

The association predicts that this year, exports will face flat growth of $3.4 billion, due to the strengthening baht and increased competition. Exports in the sector dropped 4.02 percent to $2.26 billion in the first eight months of the year.

The European Union market, which is one of top three export destinations for Thailand, is expected to have high demand for Thai garments next year. This is because of the euro becoming stronger against the US dollar and higher labour costs and shortages of raw materials making many garment factories in Europe shut down.

The euro has appreciated against the dollar since midyear, from 1 euros to the dollar to 1.34 euros (Bt65) to the dollar now and expected to increase gradually to 1.50 euros to the dollar soon.

Exports to Japan will also grow 30 percent next year, thanks to soon-to-be implemented Jtepa decreasing tariff barriers, Dej said.

Garment exports to Japan dropped 17.8 percent to $127 million in the first eight months of the year.

Due to rising competition in the sector, garment manufacturers will attempt to develop their skills to compete in the market, which will enhance Thai garment-export growth next year.

Consumers will see more Thai garment brand names in international markets next year, because brand-name production will increase export value for the sector, he added.

Rachane Potjanasuntorn, director-general of the Department of Export Promotion, said despite the drop in the garment sector's export growth this year, it had never been considered a sunset industry, because manufacturers were attempting to develop their competitiveness.

Thai garment manufacturers have plans to invest abroad, particularly in China and Southeast Asia, where they have export privileges to major export markets like the US and the EU, said Rachane.

TGMA vice president Sukij Kongpiyacharn said the industry would benefit from indirect exports from neighbouring countries as more Thai garment manufacturers moved to establish garment factories there.

At this stage, less than 10 percent of the more than 2,000 garment manufacturers have invested in China, Vietnam, Laos and Cambodia.

Sukij said Thailand's garment exports would benefit from such indirect exports as more Thai investors expanded into those countries.

Petchanet Pratruangkrai

The Nation