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KRISSANA PARNSOONTHORN
Printing and packaging companies were busy and enjoyed solid growth during the first half of this year despite surging oil and newsprint prices affecting their operation costs. So far, the printing and paper packaging sector grew by 10-15% without much help from the Samak-led government, which prioritised the rice and sugar industries and tackling the impact from rising fuel prices.
Kriengkrai Thiennukul, chairman of the Federation of Thai Industries' Printing and Paper Packaging Industry Club, said the sector performed well and its outlook remained bright for the year.
Sector growth came from two areas. The first was from Thais gradually changing their behaviour to read more books. Secondly, the paper packaging segment, which represents half of the industry, is being driven by robust demand from agricultural and food-processing companies as well as Otop (One Tambon, One Product) goods, which require striking packages to attract consumers.
Last year, Thai paper consumption was 45-48 kilogrammes per person, up from 26 kg in 2000. The total consumption of paper in 2007 was worth more than 300 billion baht, of which 50% each was for printing and packaging.
''Packaging is a key tool to help many businesses gain more sales. It will also include direct mails, sale and shopping catalogues and product instruction manuals. This area has growth potential. When more Thai products are exported, it means that packaging firms have more work to do as well,'' said Mr Kriengkrai, who is also managing director of the printing firm New Waitek.
At the same time, product manufacturers, which are focusing mainly on local sales, have not overlooked the importance of packaging.
Companies are reluctant to raise product prices while their production costs are rising due on skyrocketing prices for oil and other raw materials. They might do something with their product packaging to boost sales.
For example, they might resize their packages. Some producers might silently reduce the sizes to avoid consumer resistance and some might make simple packages to save costs.
''I think these changes will make printing and packaging companies busy year round and that's good for us,'' Mr Kriengkrai said.
Another area with potential is the export of printing products from Thailand. Last year, the export value of Thai printing products stood at US$840 million or 28 billion baht, jumping 715% from $103 million in 2006.
During the first quarter of this year, the export growth for Thai printing products remained high at 50% growth.
Mr Kriengkrai said Thailand was close to its goal to become a printing hub in Southeast Asia. The export target of 30 billion baht will be achieved before 2010 as planned initially.
Presently, the standard of printing quality here is second to none and could surpass established centres such as Hong Kong and Singapore, he said. Thailand ranked first in the Asian Print Awards in 2007 and leading printing exhibitions such as Packprint International 2007 have already moved to Thailand.
Despite the story of sharp growth, printing and packaging companies have faced similar problems to many sectors as their operating costs have been rising because of higher oil prices and newsprint, which has already risen by 30% since the start of this year.
''In general, our costs have risen 10-15% on average and we are trying hard to improve our production efficiency and save costs. We will adjust our prices by 10-15% for the whole year of 2008,'' he said.
Plastic packaging producers have been facing more serious problems than paper packaging firms as plastic pallets have had higher prices on the back of soaring oil prices.
Currently, plastic pallet prices stood at $1,700 per tonne, up from $1,300 to 1,400 per tonne in early January. Crude oil prices rose from $90 per barrel in early January to about $130 per barrel by mid-June.
''Overall, the plastic packaging business is growing in line with the country's economic expansion. But production costs have risen sharply and the producers are trying hard to negotiate with clients to raise their prices,'' said Veerasak Kositpaisal, chairman of the FTI's Plastic Industry Club.
Moreover, plastic packaging makers should avoid fixing long-term prices as the costs of plastic pallets are fluctuating. At the same time, they should improve efficiency, reduce loss in the production and manage material inventory.
In fact, the local supply of key raw materials such as polyethylene, polypropylene and PVC is self-sufficient for plastic packaging.
Packaging technologies are changing all the time as manufacturers are demanding improvement to help them save costs and improve image and quality.
Mr Veerasak suggested consumers and manufacturers focus on reducing, re-using and recycling plastic packaging to help the world tackle global warming.
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