Thai stakes in Asean countries can pay off in long run: agency
July 04, 2014 00:00 By Petchanet Pratruangkrai
More Thai investors are establishing plants in Asian countries to serve the upcoming Asean Economic Community and benefit from lower wages and logistic costs, causing a drop in exports from Thailand to the Asean markets, according to the International Tra
“Despite lower export growth to Asean, more investments to Asean, particularly by medium-sized enterprises, will benefit Thailand in the long run as Thai enterprises will have lower logistical costs and will not face the labour shortages in the domestic market,” said the department’s director-general, Nuntawan Sakuntanaga.
According to the Commerce Ministry, exports in the first five months of the year dropped 1.2 per cent to US$92.86 billion (Bt3 trillion). Exports to Asean markets declined 3.5 per cent to $23.77 billion.
Nuntawan warned that exporters needed to monitor rising exports from China to Asean closely as some Chinese products could compete with Thai exports.
To ensure rising trade growth in Asean, Nuntawan suggested enterprises look at starting businesses in Asean countries, especially neighbouring ones, as there was high demand for Thai products and low labour costs.
She said enterprises should also focus more on innovation to create differentiation from the products from China and other countries.
Investors could also enjoy ownership in Asean countries. For instance, Vietnam allows foreign investors to have 100-per-cent ownership and offers a grace period for tariff payments.
Some neighbouring countries also enjoy a Generalised System of Preferences in developed countries, meaning Thai investors could make more exports to third countries.
Nuntawan said that to ensure a smoothly run business operation, investors should carefully study market demand and form joint ventures with trusted local partners.
She pointed out that about 50 Thai garment companies of all sizes were considering investing in Vietnam, Myanmar and Cambodia.
Currently, about 100 Thai investors have interests in Asean nations, she said.
To promote shipments to Asean during the current third quarter, Nuntawan said the department would form closer ties with private enterprises to penetrate each market.