OIE sees brighter days for industry

OIE sees brighter days for industry
By CHALIDA EKVITTHAYAVECHNUKUL
THE NATION
Published on May 7, 2009




The manufacturing production index (MPI) would plunge by only 10-12 per cent this year on the rosy assumption that domestic and global consumption will gradually recover, thereby lowering inventory and raising industrial output, according to the Office of Industrial Economics.
The OIE's prediction for manufacturing this year is still much worse than last year, which saw a slight rise in the MPI of 3.9 per cent year on year, as manufacturers faced both political chaos and the beginning of financial crisis.

The MPI started turning negative in the fourth quarter of last year, falling by 9.7 per cent, but the slide accelerated in the first quarter of this year to 20.8 per cent as the global economic crisis and local political turmoil wreaked even more damage.

OIE director-general Arthit Wuthikaro said yesterday that the manufacturing situation would see better days in the last three quarters of the year thanks to an increase in orders in some industries, particularly electronics.

The OIE forecasts that the MPI's nosedive will start to level out this quarter, to a fall of 14 per cent.

Manufacturing output would drop 8-10 per cent this year in line with the MPI, he said. Industrial output declined 6.8 per cent and 14.9 per cent in the fourth quarter of 2008 and first quarter of 2009, respectively.

The OIE was optimistic in forecasting a 14.49-per-cent drop in the output of electronic goods and a 15-per-cent shrinkage in exports.

However, Katiya Greigarn, president of the Thai Association of Electrical and Electronics Industries, believes that exports would probably fall 20-25 per cent this year.

Although the food industry has suffered less than other big industries, it is expected to face a sharper drop this quarter due to lower consumption both domestically and internationally.


Sales of the automobile industry would also decline further because of the economic slump in its export destinations and stricter loan conditions at banks in the country, he said.

However, the slash in automobile production will be less deep, from 46.7 per cent last quarter to 41.2 per cent this quarter, as inventories are worked down.

The textile and garment industry would show the best outlook because of reduced competition from China and Bangladesh and high demand for good-quality products from Vietnam, Laos and Cambodia.

"The government needs to consider the situation in detail and offer funds to help manufacturers sector by sector. Importantly, the government's financial institutions such as the SME Bank should take a greater role in boosting circulation in the market by easing loan conditions for potential operators," Arthit said.

The government should not steer the economy only by reducing interest rates but should also inject its budget into the industrial sector with more focus, he said.

Otherwise, local exporters might lose their markets to rivals whose governments could solve the economic crisis more quickly.

The Industry Ministry has proposed to the Cabinet a Bt18 billion budget for next fiscal year, but that will probably be chopped back to only Bt5 billion-Bt6 billion.