Thai exporters prepare for loss of GSP privileges

[Redhawk]

This is much more serious then people realise. It is absolutely not just 2.4% as some people think.

 

The reality is that GSP (General system of preference) being taken away from Thailand is an indication that it is no longer considered a "poorer" country. The EU have made the first initial decision but the US is and will be following and so will India (India has already announced some "significant" changes will be made)

 

For the Asean region that is different because it will be free trade. The other thing to consider is the 0% duty into China for many products, it is possible that this could follow as well. What generally happens is once the import privileges start to fall they all fall.

 

The real problem I see is that I am not sure that Thailand is able to compete without GSP. I work for a Thai manufacturer and although there have been huge improvements over the last few years they are still behind the Chinese factories in terms of expertise and cost management.

 

When China lost its privileges it was already dominant in manufacturing at low cost for global exports. Thailand is not in that place.

 

The nett result of this will be that companies will move, simple as that. It won't just be Thai manufacturers that move either, foreign companies will start to weigh up the odds on why they should continue in Thailand when its cheaper next door, and they have better language skill..

 

in summary

difficult visa requirements

difficult to invest

No duty benefits anymore

higher salaries then neighbouring Asean countries (also with GSP)

Political instability

Tourism visa clamp down

loss of English teachers coming

 

All looking very challenging, it's going to get very difficult for the Thai economy next year.

 

 

 

Very well said and a realistic assessment! Tanks!
 

[Payboy]

 

Well there's always the fallback option to keep the rural economy running - the real GSP.... Good Supply of Poontang.

Intellectually bankrupt.

 

 

I'll declare a bankruptcy any day as opposed to your blinkered apologetic lobotomy.

[baboon]

A free trade deal with the EU and UK would open their eyes, instead of the huge import duties placed upon these countries products, due to " protectionism "  

The Australians on here may have something to say about that. Some have commented that their free trade deal is somewhat one sided..

[GAZZPA]

 

Unfortunately for poor Thais, the crap runs downhill. So the fall out from this Thai chaos and military dictatorship will be that ordinary working Thais will be laid off and hiring will hit bottom. Thais will not be able to pay their debts. Rich Thais have nothing to worry about. They will not be closing their clubs, country clubs, golf courses, and polo clubs out there in Rayong. But they will cut back on employees and staff. The ordinary Thais will bear the weight of this Thai circus.

Huh!

The loss of GSP privileges (what this thread is about) was first announced when YL was PM. Actually, it has nothing to do with Thai politics. The EU has changed the countries that qualify and Thailand no longer qualifies. There has been a one year grace period and it begins January 2015.




Sent from my iPad using Thaivisa Connect Thailand

 

It has everything to do with Thai politics. Its the governments job to manage the political arena and create an economic environment where its country can compete and trade internationally. The old government did just this side of bugger all to try and ready the countries manufacturers for the blow.

 

Its not just the EU, the US is doing the same and so is India.

 

On the plus side manufacturing is way out of balance today, far too much moved to the East from the West resulting in big trade deficits across many Western countries. 

 

Taking away a huge amount of countries privileges may start to balance things a little. Manufacturing is slowly starting to return to some Western countries as China is not the cheap country it once was.

 

The only thing left is to have a fair trade for Western countries now so they can export products to the East more.. That means countries like Thailand will have to open the doors a little more and stop the ridiculous 110%+ duty on things like European cars just to try and protect their local manufacturing.

 

Anyway, back to the point Thailand is going to have a  tough time next year and I think it is probably going to have to grow up very fast and learn how to play the game of International trade. 

 

It's going to be interesting.

 

 

[Benmart]

 

This is much more serious then people realise. It is absolutely not just 2.4% as some people think.
 
The reality is that GSP (General system of preference) being taken away from Thailand is an indication that it is no longer considered a "poorer" country. The EU have made the first initial decision but the US is and will be following and so will India (India has already announced some "significant" changes will be made)
 
For the Asean region that is different because it will be free trade. The other thing to consider is the 0% duty into China for many products, it is possible that this could follow as well. What generally happens is once the import privileges start to fall they all fall.
 
The real problem I see is that I am not sure that Thailand is able to compete without GSP. I work for a Thai manufacturer and although there have been huge improvements over the last few years they are still behind the Chinese factories in terms of expertise and cost management.
 
When China lost its privileges it was already dominant in manufacturing at low cost for global exports. Thailand is not in that place.
 
The nett result of this will be that companies will move, simple as that. It won't just be Thai manufacturers that move either, foreign companies will start to weigh up the odds on why they should continue in Thailand when its cheaper next door, and they have better language skill..
 
in summary
difficult visa requirements
difficult to invest
No duty benefits anymore
higher salaries then neighbouring Asean countries (also with GSP)
Political instability
Tourism visa clamp down
loss of English teachers coming
 
All looking very challenging, it's going to get very difficult for the Thai economy next year.
 
 

Well put.

It appears that the years of economic neglect, corruption, inward thinking and political turmoil are bearing bitter fruits.
 
 

 
In your post previous to the one cited above you asserted "I am, however, an expert on knowing my intellectual boundaries and not purporting I know more than I do."
 
Apparently you're not an expert even in that small domain.  Over the past ten years Thailand's economy has grown enormously. Several major automobile Pmanufacturers have chosen to make it an export hub.  The European Union dropped Thailand's tariff exemption precisely because it has been doing so well economically.

Please reread my post. There is no mention of you, but only references to myself.

Please don't take offense to a post that points out my lack of expertise and knowledge on various matters. I don't know you or have any knowledge of your expertise, therefore it would be presumptuous for me to comment on it.

However, I yield to my lack of knowledge concerning this "small domain as you have so thoughtfully pointed out. I will continue to profess that I do not know-all-see-all. No reference to you, of course. Edited August 4, 2014 by Benmart

[Benmart]

 

Well there's always the fallback option to keep the rural economy running - the real GSP.... Good Supply of Poontang.

Intellectually bankrupt.
 

 
I'll declare a bankruptcy any day as opposed to your blinkered apologetic lobotomy.

I agree with that.

[Old Man River]

This is much more serious then people realise. It is absolutely not just 2.4% as some people think.

The reality is that GSP (General system of preference) being taken away from Thailand is an indication that it is no longer considered a "poorer" country. The EU have made the first initial decision but the US is and will be following and so will India (India has already announced some "significant" changes will be made)

For the Asean region that is different because it will be free trade. The other thing to consider is the 0% duty into China for many products, it is possible that this could follow as well. What generally happens is once the import privileges start to fall they all fall.

The real problem I see is that I am not sure that Thailand is able to compete without GSP. I work for a Thai manufacturer and although there have been huge improvements over the last few years they are still behind the Chinese factories in terms of expertise and cost management.

When China lost its privileges it was already dominant in manufacturing at low cost for global exports. Thailand is not in that place.

The nett result of this will be that companies will move, simple as that. It won't just be Thai manufacturers that move either, foreign companies will start to weigh up the odds on why they should continue in Thailand when its cheaper next door, and they have better language skill..

in summary
difficult visa requirements
difficult to invest
No duty benefits anymore
higher salaries then neighbouring Asean countries (also with GSP)
Political instability
Tourism visa clamp down
loss of English teachers coming

All looking very challenging, it's going to get very difficult for the Thai economy next year.

GAZZA, your responses are all over the place and like Noitom, prone to take shots at the coup. Anyone who takes the time to read your second post, can easily see that while you made some valid points, 3 of your 7 summary points are almost identical and were hardly discussed.

It would be easier for all concerned if you could just take a little time, remember this is a discussion not a debate, and walk us through why you think the sky is falling. If you say 2.4% GDP will be lost, explain how you came up with this. Try and factor in upcoming government spending.

Sent from my iPad using Thaivisa Connect Thailand Edited August 5, 2014 by Old Man River

[GAZZPA]

 

This is much more serious then people realise. It is absolutely not just 2.4% as some people think.

The reality is that GSP (General system of preference) being taken away from Thailand is an indication that it is no longer considered a "poorer" country. The EU have made the first initial decision but the US is and will be following and so will India (India has already announced some "significant" changes will be made)

For the Asean region that is different because it will be free trade. The other thing to consider is the 0% duty into China for many products, it is possible that this could follow as well. What generally happens is once the import privileges start to fall they all fall.

The real problem I see is that I am not sure that Thailand is able to compete without GSP. I work for a Thai manufacturer and although there have been huge improvements over the last few years they are still behind the Chinese factories in terms of expertise and cost management.

When China lost its privileges it was already dominant in manufacturing at low cost for global exports. Thailand is not in that place.

The nett result of this will be that companies will move, simple as that. It won't just be Thai manufacturers that move either, foreign companies will start to weigh up the odds on why they should continue in Thailand when its cheaper next door, and they have better language skill..

in summary
difficult visa requirements
difficult to invest
No duty benefits anymore
higher salaries then neighbouring Asean countries (also with GSP)
Political instability
Tourism visa clamp down
loss of English teachers coming

All looking very challenging, it's going to get very difficult for the Thai economy next year.
 

GAZZA, your responses are all over the place and like Noitom, prone to take shots at the coup. Anyone who takes the time to read your second post, can easily see that while you made some valid points, 3 of your 7 summary points are almost identical and were hardly discussed.

It would be easier for all concerned if you could just take a little time, remember this is a discussion not a debate, and walk us through why you think the sky is falling. If you say 2.4% GDP will be lost, explain how you came up with this. Try and factor in upcoming government spending.

Sent from my iPad using Thaivisa Connect Thailand

 

No shots at the coup, just stating how i see it. I currently work for Thai manufacturer, I have been working in imports and exports across Asia for the best part of 20 years.

 

I do not think the sky is falling but I do think that Thailand is going to have a very tough time dealing with the loss of GSP and FTA. I have a lot of experience dealing with investors in the industry and the feeling from them is simply this,,, "it is difficult to invest in Thailand, whilst there was an incentive to do so with the duty savings that is now no longer going to be the case and therefore they are looking at alternatives". This is very real and very serious..

 

I work here for a manufacturer so I have no desire to see things go belly up but to not recognise that Thailand is going to have a tough time is frankly burying your head in the sand. 

 

Not too log ago we lost a huge account in the US because GSP for the product category I work in was suspended. The factory has not fully recovered from the loss of that business so I have seen how customers react to the increase of their import duty.

 

Most of my time right now is working on how we will maintain exports to India and the EU when the tax incentives are withdrawn, we are even looking at continuing to offer the incentive as a product discount to existing customers (in some cases) and running around trying to find ways of reducing the exposure.

 

I have also had meetings with Indian officials who visited our facility recently to talk about how we can continue to try and work with Indian customers offering a quality product at a competitive price.

 

As for the 2.4% that is a misunderstanding a result of me skimming when reading. I do not know how much GDP will be lost, I guess no one will really understand this until it actually happens. I hope it is zero and a solution is found.

 

So, in summary, I am in the thick of it and I feel I am qualified enough to at least voice my opinion based upon my first hand experience, my thoughts on this are certainly no all over the place as you state, I live in the detail of this issue every day. So, this issue coupled with the fall in tourism, the clampdown on visas and the perceived political instability is not going to help the economy. It all points to a bumpy road ahead and in my view the quicker people see this and spring into action the better.