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July 10, 2007

Baht appreciation a worry for shipments
The continued export growth against the stronger baht looks rather worrying because most exports are high-tech product items made by foreign entrepreneurs in Thailand, according to the Export and Import Bank of Thailand.

EXIM Bank president Apichai Boontheeraworn said the country’s exports in the US dollar-term expanded 18.4% in the first five months of this year despite the continued baht appreciation since last year.
However, it did not mean Thai exporters had positioned their products firmly in the international market because the export growth was mainly driven by high-tech product items, which account for 64% of the total exports.

More importantly, over 80% of the high-tech products are made foreign entrepreneurs in Thailand, who had been slightly affected by the baht appreciation since they counted on import contents and hedged against the currency volatility risks.

In fact, Mr. Apichai said, Thai exporters, particularly small- and medium-size enterprises (SMEs), had been quite adversely affected by the stronger baht because they had low bargaining power to fix products prices.

They needed to focus more on increasing the quantities than prices of products to maintain a market share and business connections.

In the first five months of this year, the export value increased 18.4% in the dollar term while the baht-term export value edged up only 7%.

“It is time for Thai exporters to adjust themselves concretely in the long run. They must improve the production standard and upgrade the quality of products to avoid the price competition.

“Given the baht strengthening and low interest rates, the entrepreneurs should invest in the machinery import to enhance production efficiency or shift their production base to the countries where labours and raw materials are cheap,” he said. TNA


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