Thai Clothing Industry Eyes Outsourcing To Vietnam

Thai clothing industry eyes outsourcing to Vietnam: Thai official

Thai clothing firms are planning to outsource work to Vietnam to strengthen their export competitiveness in the American market if Thailand and the United States cannot reach a free-trade agreement this year.

Yotsaton Kijkusol, vice president of the Thai Garment Manufacturers' Association, said recently that Thai companies would enjoy 20-30 percent lower labour costs in Vietnam.

Vietnam will soon become a member of the World Trade Organization and is planning to form a free-trade agreement with the US. These moves will benefit Thai manufacturers setting up new production bases in Vietnam.

Yotsaton, who is also managing director of Vanson (Thailand) Co. Ltd., said Thai manufacturers were waiting for the conclusion of Thai-US free-trade talks.

"If the agreement is concluded this year, Thai manufacturers will continue investing in Thailand. If not, we are ready to expand into Vietnam, because that country may reach a free-trade agreement before Thailand," he said.

Leading Thai firms such as Hua Thai Manufacturing Plc and Thai Garment Group have already set up manufacturing bases in Vietnam.

Yotsaton said Vanson also planned to invest there.

Earlier, Kasikorn Research Center reported that Vietnam would be a major competitor to Thailand in trade, tourism and investment.

With natural resources including oil, Vietnam has rapidly become Thailand's major export competitor.

Its economy is on target to grow 7.6-8 percent in 2006, the best performance in the Asean region.

The research also showed that Vietnamese exports had more than quadrupled from US$7.3 billion in 1996 to $32.2 billion in 2005, a high growth of 20 percent per year on average.

By comparison, Thailand's exports doubled to $110.9 billion in 2005 from $55.9 billion in 1996, representing an average annual increase of 10 percent over the past 10 years.

Vietnamese export value was only one-third of Thailand's total.

However, it is forecast that Vietnam will overtake Thailand within the next 14 years, with exports expected to achieve $500 billion against Thailand's $463 billion by 2020, the research said.

Source: Thahn Nien Daily, Vietnam - June 26, 2006