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Thailand In Asian Moves To Diversify Away From EU …

  • July 1st, 2012
  • Posted by EUEditor

bangkok-park-landscape.jpgWith the need for European states, and now banks, to get access to guarantee funds, (with Cyprus the fifth government to seek a bailout package); their trading partners are feeling the effects.

As Jessica Sier writes for EUAustralia, the Thai government has been wrestling with a slowing global demand for its exports, of which Europe is a leading cause:-

As a key strategy, Thailand is looking for new markets.

Although May figures indicate a rise in Thai exports, the Governor of the Bank of Thailand Prasarn Trairatvorakul says the outlook for industry exports is looking at an eventual decline.

Growth in Thailand is expected to reach 8% for 2012, but industries relying heavily on external trade are looking for new markets to sell to.

While it may be easier to export to highly developed countries, markets such as the Middle East and India are looking more attractive as they continue to exhibit a strong purchasing power. Also developing markets such as South America and Africa have potential to be buyers of Thailand’s goods.

Ministers are holding special meetings; on Tuesday those in the finance portfolios attended a session of the cabinet, to  discuss the fall-out on trade, banking and finance.

It makes it harder, that Thailand’s economy is underpinned by sectors that are trade and labour intensive, including textile production and electronics, now experiencing a definite slow-down in demand from Europe, China and the United States.

The European Union is the second largest destination for Thai products, with Thailand exporting €16-billion ($A19.8-billion;, 30.6.12) worth of goods to the EU annually.

After that cabinet meeting on Tuesday, the Permanent Secretary for Finance, Areepong Bhoocha-oom, was quoted in Bangkok media, saying Cyprus’s request for a possible, eventual bail-out of €10-billion (A$12.37-billion) will not have a great direct impact on Thailand, but the country would need to brace for lower demand.

The government he works for says that long-term plans must be put in place to shift the focus of the national economy from production to services.

It has also embarked on a program to mandate a new minimum wage of 300-baht a day (A$10), small by Western standards but very popular in country areas, where pay can be as low as 200-baht.

This goal is a sign of Thailand’s recent rise to middle-income status in its region; and that can be a trap.

Its prices are trending upwards, placing pressure on its competitiveness, especially with the speedy development of countries like Vietnam which have cheaper labour and can be turning out higher quality goods.

Picture  Bangkok townscape