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Asean is now Thailand’s top trade partner

Thailand’s total trade value with Asean skyrocketed 52 per cent to US$17.63 billion (Bt570 billion) in the first quarter this year, thanks to the full implementation of zero tariff under the Asean Free Trade Area (Afta).

Aishwarya Gupta

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Thailand’s total trade value with Asean skyrocketed 52 per cent to US$17.63 billion (Bt570 billion) in the first quarter this year, thanks to the full implementation of zero tariff under the Asean Free Trade Area (Afta).

Of the total, exports accounted for $10.52 billion, up 67.3 per cent while imports amounted to $7.11 billion, a 33.88 per cent increase, yielding a trade surplus of $3.4 billion.

Deputy Commerce Minister Alongkorn Ponlaboot said yesterday that Asean is the biggest export market for Thailand, accounting for 23.7 per cent of total exports. Exports to Asean have already exceeded the traditional top three markets -European Union (11.7 per cent), Japan (10.3 per cent) and the US (10 per cent).

Thailand’s exports within ASEAN in the first quarter of 2010 have increased by 67.3% year-on-year, owing to the ASEAN Free Trade Agreement (AFTA) enforced at the beginning of the year.

According to Deputy Commerce Minister Alongkorn Ponlaboot, the trade value of Thailand with the other 9 ASEAN nations in the first quarter of the year stands at 17.6 billion THB, increasing by 52% from last year when AFTA was not yet adopted. The figure contributes up to 20.4% or the majority of Thailand’s overall trade value. This includes a 67.3% increase in exports to ASEAN, worth 10.5 billion THB, and a 33.88% increase in imports, worth 7.1 billion THB, leading to a trade surplus from ASEAN of 3.4 billion THB.

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Thailand's total trade value with Asean skyrocketed 52 per cent to US$17.63 billion (Bt570 billion) in the first quarter this year, thanks to the full implementation of zero tariff under the Asean Free Trade Area (Afta).In the first stage, only the six original members of Asean - Thailand, Malaysia, the Philippines, Indonesia, Singapore and Brunei - have enforced the zero-import-tariff mechanism.

Major Thai exports during this period to Asean were sugar, tapioca products, finished oil products, car and car parts, air-conditioners and parts, integrated circuit, and rubber. The major export markets were Malaysia, Singapore, Indonesia and Vietnam.

Shipments to emerging East Asia already surpassed the 2008 peak level but those to EU, Japan and ASEAN are slow.

Most of the infrastructure development in Thailand has been responsive to demand rather than forward-looking. Availability and accessibility appear to no longer be a challenge. The next step for Thailand is to put more emphasis on quality of service delivery, management, and sound regulation.

Thailand government’s first stimulus package, may have helped limit the negative multiplier effect on household consumption.

Key risks to the outlook are (i) political uncertainty and (ii) the timing of the withdrawal of fiscal and monetary stimulus. Increased political tensions may have a long-lasting impact on investment, and withdrawal of stimulus (in Thailand and the advanced economies) must be precisely timed to avoid macroeconomic imbalances (including new asset bubbles) while also ensuring that the recovery is on a sufficiently solid footing.

The approved Financial Institution Business Act (FIBA) facilitates increase in foreign ownership in Thai foreign institutions. The Financial Institution Business Act (FIBA) became effective on 3 August 2008 as planned. The FIBA allows financial institutions to raise the foreign limit from 25 percent to 49 percent with permission from the BOT and foreign investors may own more than 49 percent equity stake in Thai banks with permission from the Ministry of Finance and recommendation by the BOT. The increase in foreign limit would encourage Thai banks to seek foreign strategic partners to strengthen the capital base, improve core banking business, IT platform, know-how and add inorganic growth to Thai banks.


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