Thai textile exports set to pick up

Bangkok Post
H2 likely to see orders shifted from China
Writer: VICHAYA PITSUWAN and NANCHANOK WONGSAMUTH
Published: 23/07/2009 at 12:00 AM
Newspaper section: Business

Textile exports are expected to improve in the latter half of the year as international buyers shift from higher-cost Chinese producers to local firms, says Virat Tandejanurat, director of the Thai Textile Institute.

Foreign buyers have also shied away from countries suspected of using child labour, he said.

The industry's peak sales season falls in the latter half of the year. Orders for this period have increased as buyers move away from China, he said.

"Customers see Thai products as a better choice because the quality is higher while the prices are relatively indifferent. We have also seen more orders shift away from Sri Lanka and Bangladesh who face child labour exploitation allegations," Mr Virat said.

The Thai textile and garment industry will contract by 7% to 10% on average, an improvement from the 14.9% contraction recorded in the first half of the year.

In that period garment exports contracted by about 13.9% and textiles by 15.9%.

International shipments to all markets contracted in the first half, except those to Japan, which account for about 8% of the industry's exports, and where purchase orders grew by 10%.

Thai textile and garment shipments to the US, which consumes about 40% of the sector's exports, contracted by 28% in the first half, due mainly to its slumping domestic economy and fierce competition from producers whose countries have free trade agreements with the US.

Europe, Thailand's second largest market, contracted by 5.9%.

The industry's total exports are expected to fall to $7.2 billion this year from US$7.4 billion in 2008.

About 56 new factories have been opened in the first half of the year, employing some 20,000 workers, while 40 factories with a combined 6,000 employees have shut down.

"The least competitive operators with outdated technologies are being forced to shut down because of falling orders," Mr Virat said.

However, he hopes to see a brighter end to the year from easing external factors, such as crude oil prices and exchange rates.

"Local factors such as political instability are equally important as we want new customers to expand the export market. New customers are sensitive to the local political situation," he said.

The institute is also seeking co-operation from the Board of Investment to design special incentives to target foreign direct investment in the local technical textiles segment.

"We need technical textiles to support the local automotive industry. I have also seen FDI increase in this industry elsewhere, if we can bring them [production] here it will be useful for our existing industries," Mr Virat said.

Thailand also has a strong position in producing synthetics, the raw material for technical textiles. Local demand for technical textiles is expected to reach 50 billion baht this year.

The institute's survey on the market will be released by September.