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Thailand risks losing out to CLMV
As the Asean Economic Community (AEC) enters its second year, Thailand is set to lose further market share in agricultural and processed agricultural products to Cambodia, Laos, Myanmar and Vietnam (CLMV), new research says.
According to Aat Pisanwanich, director of the Center for International Trade Studies at the University of the Thai Chamber of Commerce, the four neighbouring countries are becoming a new production base in lieu of Thailand, with many leading international firms relocating their plants from here.
Also being close to China, the CLMV countries are able to import Thai products for re-export to China’s massive marketplace.
More importantly, they boast the highest economic growth rate, averaging 7-8% a year, with prospects to continue expanding strongly over the next five years.
Mr Aat said it is likely that Thailand will lose market share for agricultural and processed agricultural products to those four countries, potentially up to 10% this year.
A year on from the AEC’s advent, Thailand fetched 321.5 billion baht worth of exports of agricultural and processed agricultural products to Asean in 2016, up 10.4% from 2015. The growth rate slightly dropped from an average of 10.5% for 2010-2015.
Asean’s overall agricultural and processed agricultural product market is large, having boasted robust annual growth before the AEC’s implementation.
In 2015, the market was valued at 3 trillion baht. Its values rose to 3.7 trillion baht in 2016 and is expected to reach as high as 4 trillion in 2017.
After a year of the AEC, Malaysia controlled the highest market share for shipments of agricultural and processed agricultural products to Asean (17.4%), followed by Vietnam (17.3%), and Indonesia (16.5%).
Vietnam was the biggest import market, with 503.6 billion baht worth of imports, a significant rise from an average of 365.6 billion before the AEC. Malaysia came second with imports worth 381.5 billion baht, up from 369.1 billion, followed by Indonesia at 344.8 billion, up from 324.1 billion.
Products for which exports fell after the AEC’s implementation include rice (white rice, hom mali, glutinous), rubber, coffee, tapioca, coconuts and mango, while corn, soybeans, bananas, processed meat and processed seafood reported higher shipments.
Mr Aat said that Thai manufacturers, particularly for products which saw exports fall, should shift their production and processing bases to CLMV countries. He further urged the government and related agencies to help speed up promoting and supporting the upgrade of product quality and competitiveness of Thai exporters.
Source: http://www.bangkokpost.com/business/news/1190445/thailand-risks-losing-out-to-clmv