The competitiveness of Thailand’s small and medium-sized entreprise (SME) business sector could be threatened once the Asean Economic Community (AEC) takes effect in 2015, according to the director of Thai Chamber of Commerce University Center for International Trade Studies.

Asst Prof Dr Aat Pisanwanich said increased competition in the marketplace is expected in the next three years, so strategies are needed now for Thai SME businesses to be able to compete more effectively and receive tax benefits by improved cost management, expanding their production bases to other countries, developing better quality products, setting up goods distribution centres in Indonesia and Myanmar, and setting up joint ventures with foreign companies.

Textiles and garment industries tend to shift their production bases from Thailand to Cambodia and Myanmar

For the past two years as the AEC has taken effect in six out of ten ASEAN countries, Thai exports to the region have dropped to their lowest level at 18.7 per cent. In 2010, Thai exports to the AEC group was some US$10.2 billion, and dropped to US$7.5 billion the following year due to higher production cost in the country from factors ranging from higher material costs to concerns about the government’s wage rise policy. Dr Aat said Brunei Darussalam’s exports to ASEAN increased the most at 46.9 per cent, followed by Cambodian exports at 27.6 per cent.

He predicted that textiles and garment industries tend to shift their production bases from Thailand to Cambodia and Myanmar, while seafood processors are likely to go to Myanmar and Indonesia owing to their abundant resources and lower labour cost. However, the exports of other industries such as electrical appliances, fruit and vegetables, leather, beverages, and tobacco have been going well, but Thai exporters should not be careless, Dr Aat said, for Indonesia has already been taking Thailand’s market share of these industries. According to the trade centre director, Thai exports are unlikely to expand more than 15 per cent as the world economy has not yet fully recovered. He advised the government to not make any moves to weaken the Thai baht in order to boost exports, for it will accelerate inflationary pressures. (MCOT online news)

Academic warns ASEAN community could weaken Thai SMEs

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