Thailand: Exporters fret over currency’s influence

• Dec 14, 2017

Food export value is likely to miss its target by 30 billion baht this year as the strong local currency has led to a drop in orders of many items such as shrimp, canned tuna, tapioca and fruit juice.

Yongvut Saovapruk, president of the National Food Institute (NFI), said the value of food exports is estimated at 1 trillion baht this year, down from an earlier target of 1.03 trillion baht.

The NFI projected food exports would grow 5.3% this year from 950 billion baht.

“The strong currency is taking its toll on food exports,” Mr Yongvut said. “But we are hopeful next year’s prospects will recover to record strong growth.”

The institute forecasts food exports to grow 7% next year to 1.07 trillion baht driven by the fully recovered economies of key trading partners, decent raw material supplies, and the government’s support measures for the farm sector.

But the NFI remains concerned about the negative impact from ongoing baht appreciation, higher energy prices and higher wages.

The institute predicted promising prospects for fresh fruit, energy drinks, bakery products, dairy, food supplements excluding vitamins, and ice cream.

Key export markets are Cambodia, Laos, Myanmar, Vietnam, Japan, the US, China and Europe.

Poj Aramwattananont, vice-chairman of the Thai Board of Trade, said the baht’s gain is the key area of concern for 2018 as it has appreciated 10% this year to 32.6 per dollar from 35.4 per dollar in late 2016.

Left unharnessed, Mr Poj said the baht will weaken export competitiveness, particularly against key rivals such as Indonesia and Vietnam.

“Every baht gain will affect the value of exports in baht terms. This will eventually result in lower income for farmers and small and medium-sized enterprises,” he said. “The government needs to step up its efforts to control the baht, ensuring it moves in the same direction as the currencies of competitor countries.”

Mr Poj said another concern is the impact of a daily minimum wage hike from 300 baht, saying it will raise production costs for exports.

The National Tripartite Committee, consisting of representatives for workers, employers and the government, agreed earlier this month to raise the daily minimum wage from 300 baht by up to 5% next year, or 15 baht.

The rise of 0-15 baht is based on average inflation of 0.4%, still in the range of the 0.6-1% inflation target set by the Commerce Ministry for this year.

The committee’s decision is in line with the Federation of Thai Industries’ estimation of an increase in the daily minimum wage of 0-15 baht, bringing the new rate to a range of 300-400 baht next year.

Source: https://www.bangkokpost.com/business/finance/1378299/exporters-fret-over-currencys-influence