Export Sector to Receive Government’s Assistance

(24/08/2012)

The Ministry of Commerce is seeking urgent measures to provide assistance to the export sector, which remains Thailand’s major income earner. Emphasis is placed on key export industries, so that Thailand will achieve the export growth target of 10 percent in 2012. Permanent Secretary for Commerce Yanyong Puangrach said that, since the export sector is the main driver of the Thai economy, there is a need to increase exports, or at least maintain export growth. As for measures to help exporters, he said, the Government would offer tax incentives to reduce import tariffs on raw materials for food and jewelry industrial clusters. Value-added tax on imported uncut gemstones and auto parts would be waived, and tax exemptions or tax deductions would be provided to organizers of trade fairs. Moreover, the Government will consider waiving tax for Thai overseas, with Indonesia, Myanmar, and Vietnam as priorities. Apart from the three countries, other target nations include India and China. In the initial stage, the Ministry of Commerce is planning to seek potential new markets, such as China, India, and Russia. Mr. Yanyong said that, during the past six months, most flood-affected industries have started to pick up. Although many markets are available for product distribution, production for export remains insufficient. So the Government needs to offer assistance in order to increase production capacity, so that more goods will be produced to satisfy local and overseas markets. Thai exports in the past year were threatened by a combination of discouraging factors, such as prolonged economic woes in key markets. Other factors included baht volatility, oil price increases, and massive flooding in the country. The flood crisis alone caused the export sector to decline by 12.4 percent in value term for the first time in 25 months in November 2011. But for the entire 2011, export value rose by 17.2 percent, exceeding the Ministry of Commerce’s 15 percent growth target. The share of export value in Thailand’s gross domestic product increased to 65.4 percent in 2011, compared to 61.1 percent in the previous year. Thai exports rose in nearly all markets, although at a slower pace. Exports to the United States grew by 8.2 percent, plunging dramatically from 21.2 percent in 2010. Export growth in other key markets in 2011 also saw a decline. For instance, exports to the European Union dropped from 20.2 percent in 2010 to 10.7 percent, and those to Japan decreased from 29.8 percent to 17.9 percent. As for emerging markets, exports to China continued to grow substantially. On the other hand, Thai export growth in ASEAN markets fell from 36.5 percent in 2010 to 22.5 percent in 2011.