The private sector and academic sources agree that targeted export growth of 12.5 per cent set by the Commerce Ministry for this year will be hard to achieve because a number of factors continue to dampen prospects.

They see the biggest problems as the continued strengthening of the baht, the global economic slow-down and trade barriers.

The strong baht will directly affect exports by increasing exporters' costs as they seek to defend against exchange risks. This will mainly hit the export of industrial goods.

Despite receiving these views

at a recent meeting with the

Joint Private Committee - comprising the Federation of Thai Industries, the Board of Trade

of Thailand, and the Thai

Bankers Association - the Commerce Ministry insists

that projected export growth

of 12.5 per cent to US$145.9 billion (Bt5.2 trillion) is achievable this year.

However, private and academic sources project export growth at between 10 per cent and 11.6 per cent.

Vallop Vitanakorn, secretary-general of the Thai Garment Manufacturers Association, said the baht's appreciation would

be the key factor obstructing textile and garment export growth. As a result, the association is predicting that textile exports will grow only 3 per cent to $7.42 billion this year.

 Garment exports are forecast to increase slightly, by 2.1 per cent to $6.84 billion. However, garment exports dropped by 2.6 per cent in December because of the baht's unusual appreciation.

Although the government's currency-control measures have been managing the baht's value at Bt35.50 to Bt36 per dollar, the rate is still a burden on garment exporters. They want to see the unit at Bt37.50 to facilitate exports, as a stronger unit will undermine competitiveness.

"The government should have specific measures to stabilise the baht, ensuring that it is in line with export rivals' currencies in order to maintain export competitiveness," Vallop said.

The private sector is trying to absorb price differentiation and increase export competitiveness by focusing on value-added and high-quality manufacturing, he added.

Nipon Surapongrakcharoen, vice chairman of the Federation of Thai Industries, said the Commerce Ministry had set a challenging target that will be hard to reach. As a result, it should encourage the manufacturing and service sectors to concentrate more on exports.

Pornsilp Patcharintanakul, secretary-general of the Board of Trade, said exports would grow by 10 per cent in line with projected economic growth of 3.5 per cent. Exports account for 60 per cent of gross domestic product.

To maintain competitiveness, exporters need to reduce not only manufacturing costs but also operating costs. In addition, they have to shoulder price differentiation derived from the exchange rate, said Pornsilp.

However, the International Trade Studies Centre has a more positive view, forecasting that exports will increase by 11.6 per cent. Director Aat Pisanwanich said this was the maximum level achievable.

Kunyaphan Raengkhum, deputy director-general of the Export Promotion Department, said the agency would conduct a road-show programme to promote exports in potential markets.

The department has already planned at least 44 activities that will include participating in more than 300 international trade and exhibitions.

For instance, the ministry's high-level officials will lead exporters to promote fruit sales in China and Hong Kong. They will also visit major Japanese cities such as Tokyo and Osaka to promote health products and fashion goods.

The department has also established an incubation programme for enterprises in each region to become exporters. Initially, it targets promoting 1,200 local enterprises per year, Kunyaphan said.

The department is focused on boosting exports to traditional markets - the United States, the European Union and Japan - with a goal of achieving growth of 7.4 per cent to $79.1 billion this year. Exports to new markets - primarily China, India, the Middle East and African countries - are projected to increase by 19.2 per cent to $66.76 billion.

Major export markets currently account for 54.3 per cent of overall exports.

Exports to new markets are projected to grow as follows: China by 25 per cent; Indochina, Eastern Europe, Middle East and India, all by 20 per cent; and Africa by 12 per cent.

Petchanet Pratruangkrai

The Nation