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Published on July 23, 2007

Their only hope is that the measures approved on Friday will stabilise the baht and ensure their incomes do not fall further.

Jirabul Vitayasingh, president of Thai Gifts and Premium Decorative Association, said 50-100 enterprises in the sector would be forced to shut down in the next two months if the baht continued to appreciate.

Most enterprises in the industry are small or medium-sized OTOP manufacturers with low credit ratings, he said, and the government must provide soft loans and allow them to hold dollars longer to ensure their businesses run smoothly despite the strengthening baht.

Lifestyle and home-decoration exporters have temporarily stopped taking orders due to the recent sharp rise in the baht, said Pathreeya Parshujarratpong, president of the Home Decorative Design Association.

She said exporters were trying to adjust so as to maintain competitiveness.

The association notes that the baht has appreciated by 20 per cent in 18 months while the currencies of competitors have risen less than 10 per cent.

The home-decoration sector is targeting export growth of 5 per cent, worth US$387 million (Bt12.9 billion) this year. However, in the first five months of this year, exports of the sector grew only 1.9 per cent year on year to $130.5 million.

Pathreeya added that ex-porters in the sector now faced tough competition from Viet-nam and China, which have lower manufacturing costs and more stable currencies.

Sukij Kongpiyajarn, vice president of the Thai Garment Manufacturers' Association, said the government had to stop its propaganda that the strengthening baht would not harm business.

"To say that the strengthening baht has not had any negative impact suggests that the government has no intention of solving the economic problem," he said.

"The private sector is now wondering whether the government is waiting for a new government to solve a problem it knows it can't tackle itself," he said.

Sukij likened private exporters to a patient and government to a doctor with the power to cure by action or kill by negligence.

The shutdown of Thai Silp Southeast Asia Import Export, a large garment-manufacturer, is often cited as an example of the impact of the strong baht.

Last week, under pressure, the government approved a number of projects including allowing exporters to hold dollars longer and measures encouraging capital outflows.

Petchanet Pratruangkrai

The Nation