Export levels of Thailand's top 10 products, including electronics, textiles, garments and rice, are expected to show slower growth in the second half of the year, partly because political instability and a stronger baht have prompted importers buy goods from other countries.

Alarmed exporters are demanding the government set clear economic policies on the exchange rate, the free flow of labour and new investments.

Katiya Greigarn, chairman of the electronics and electrical-appliances wing of the Federation of Thai Industries, said exports of these goods should reach their targets for the whole year of 20-per-cent and 10-per-cent growth respectively but the second half would at best equal the first.

"The political turmoil has delayed new investments by both domestic and foreign companies, and we are afraid this will lead to a reduction in the growth of exports."

Early this year a leading electronics company in the United States invested in Vietnam instead of Thailand because of the political instability.

Katiya said the government should give a positive signal to international companies to attract investment from them.

According to a Commerce Ministry report, exports of electrical appliances grew by 3.65 per cent to US$5.9 billion (Bt225.2 billion) in the first five months of the year. Exports of electronics grew by 23 per cent to $10.2 billion.

Vallop Vitanakorn, general secretary of the Thai Garment Manufacturers' Association, expressed his concern at the slow growth of textile and garment exports. He said the appreciation of the baht in the first half of the year would lead to a drop in export levels in the second half.

"Despite the strong baht, export figures for the first half of the year were not affected because we [garment-exporters] usually set up contracts four to six months in advance tied to a guaranteed exchange rate."

Exports of textiles and garments rose 5.8 per cent to $2.7 billion from January to May, while the association expects exports for the year to rise by 8 per cent to $3.5 billion.

Exporters had expected the exchange rate to be Bt39 to the dollar, but it moved to Bt37-Bt38 to the dollar, Vallop said.

He added that exporters could not reduce their prices in line with the appreciation of the baht as the market was too competitive.

Labour shortages have also limited production capacity.

Rice exports dropped by 4.2 per cent to Bt954.5 million in the first five months of this year.

Rut Subniran, a Thai Rice Exporters' Association board member, said that despite high demand for rice this year, Thai rice-exporters were running a great risk.

"Buyers have been getting rice from Vietnam, because it is cheaper," he said. "They only turn to Thailand when the Vietnamese stocks are exhausted."

Rut said Thai jasmine rice gave the country an edge over Vietnam but that if the Vietnamese managed to increase production levels to meet world demand, Thailand might lose its position as the world's largest rice-exporter.

He predicted the total rice export volume this year would be 7.2 million tonnes, while the Thai Rice Exporters' Association has set it at 7.5 million tonnes.

Petchanet Pratruangkrai

The Nation