Garment exports to benefit from US, Japan recovery

Garment exports to benefit from US, Japan recovery

Thailand's garment industry anticipates an improved export situation this year.

Sukij Kongpiyajarn, president of the Thai Garment Manufacturers Association, said foreign shipments will improve by 5% from last year on the back of the economic recovery in the US and Japan..

Meanwhile, the euro zone's economy will neither worsen nor improve much, while Asean markets are still growing, he said.

In the first 11 months of last year, garment exports totalled US$3 billion, down by 4.2% year-on-year.

The export sector has not been directly affected by the latest round of domestic political unrest, but it could be hit hard if the protests start disrupting logistics.

However, Mr Sukij does not see the situation as worrisome, as violence has so far been minimal.

"If customers are reluctant to come here, we can go to them instead," he said.

"In my experience, Thai entrepreneurs cope with unrest quite well. They've had to adjust their business before and not only survived but emerged stronger each time."

Meanwhile, the trend among exporters of relocating to neighbouring countries continues, said Mr Sukij.

He said over the past five years, large garment manufacturers have invested in Cambodia, Laos, Myanmar and Vietnam.

This year, about 10 medium-sized enterprises are preparing to follow suit, mainly to tap the lower wages in these neighbouring countries, said Mr Sukij.

The low wages are a big incentive for Thai entrepreneurs, who have seen their labour costs spike dramatically at home in recent years.

As well, they have an opportunity to benefit from the Generalised System of Preferences (GSP) in European countries and the US.The EU plans to lift the GSP this year, meaning the import tariff will rise to 12% in 2015 from 9.6% now.

But Mr Sukij said GSP privileges for Thai garments is on the list of free trade agreement negotiations between Thailand and the EU.

However, he is concerned that prolonged political unrest in Thailand will likely put a deal on hold.

"If these talks are successful, the import tariff on Thai garment exports to the EU will be eliminated," Mr Sukij added.

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