Thailand will fail to achieve its target of 17.5-per-cent export growth this year because of several negative factors, according to the Thai Chamber of Commerce.

Increasing energy prices, the baht's appreciation, rising interest rates and political uncertainty will reduce growth to 12.5-14 per cent, it says.

A chamber survey concluded that exports would grow to US$124 billion-$126 billion (Bt4.7 trillion-Bt4.8 trillion), but the Commerce Ministry insists its projection of 17.5-per-cent growth to $130 billion will be achieved.

The chamber said Thailand's economic growth would not exceed 4.2 per cent because two-thirds of the economy is driven by exports.

It called on the government to encourage self-sufficient domestic consumption, promote tourism, start necessary investment projects and continue negotiations for free-trade agreements.

Caretaker Commerce Minister Somkid Jatusripitak said during a visit to Paris yesterday that exports would grow 17 per cent.

The record imports in May will not affect the trade balance because major imports were capital goods for producing export products.

Somkid has ordered the export promotion department to find ways to reduce imports to less than $1 billion per month.

Dusit Nontanakorn, secretary-general of the chamber, said climbing oil prices, increasing manufacturing costs, climbing interest rates and the appreciating baht had led to economic stagnation.

"These factors will hamper the country's exports in the remainder of the year and could carry on into next year. We can say that it could be a critical time for us [businesses]," he said.

Chamber members said that they faced a challenge to boost exports because the baht's strength and increasing interest rates would make Thailand less competitive than rivals.

According to a survey by the Centre for International Trade Studies, the industrial sector will be hardest hit by the baht's appreciation.

Aat Pisanwanich, director of the centre, said a one-baht rise against the dollar would reduce export growth by 4.24 per cent. Companies most at risk would be those producing cars, chemicals, plastics, steel and computers.

Suchart Chantaranakaracha, of the Thai Garment Manufacturers' Association, said textile and garment exports will grow by 5 per cent this year but the stronger baht will affect exports in the long term.

"The government should stabilise the currency in a competitive position," he said.

The suspension of free-trade negotiations with the United States and Japan, the major markets for textile exports, might also damage sales.

Sukit Wanglee, president of the Tapioca Exporters' Association of Thailand, said the export volume of tapioca should increase by 20 per cent this year but the value would decrease by 7 to 10 per cent, mainly because of the stronger baht.

Chookiat Ophawongse, president of the Rice Exporters' Association, said the volatility of the baht was hurting exporters.

Although rice exports this year should achieve the target of 7.5 million tonnes because of high demand in the world market, Thailand's competitiveness will decrease as a result of a widening gap between Thai and Vietnamese rice prices, said Chookiat.

He called for the government to urgently dispense clear information to traders, adding that the government's policy of intervening in rice prices had affected competitiveness.

Vorathep Wongsasuthikul, president of the Thai Rubber Latex Association, said rubber exports would be on target this year. However, he is concerned that the expansion of plantations may affect prices next year.

Petchanet Pratruangkrai

The Nation