12 Thai industries need to improve ahead of Asean Community

[webfact]

12 Thai industries need to improve ahead of Asean Community
By Digital Content



BANGKOK, Aug 4 -- As the ASEAN Community (AC) is due to be implemented at the end of 2015, the Thai Chamber of Commerce (TCC) says that 12 Thai industries need to further improve before ASEAN fellow members snatch away their customers.

Chatchai Boonrat, vice chairman of TCC, said several obstacles persist in the 12 Thai industries, the most serious problem being a shortage of skilled workers in these fields.

Other problems include high production costs and dependency on imported raw materials, he said.

For example, automobile production industry in which Thailand ranks first among the 10 members of ASEAN, said Mr Chatchai. Manufacturers in the kingdom must maintain quality while the producers must simultaneously set up production in other ASEAN member countries.

According to Mr Chatchai, other Thai industries which need to be further improved are electrical appliances, electronics, iron and steel, jewellery and ornamental products, textiles, plastic resins, plastic products, rubber products, cosmetics, and food.

ASEAN members are Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand and Vietnam. (MCOT online news)

[tna]2014-08-04[/tna]

[Bulldozer Dawn]

Probably have been quicker to list the industries that DONT need improving.

[Just1Voice]

Probably have been quicker to list the industries that DONT need improving.

 

+1 So true.

[andid]

Ummm - this doesnt make sense. It could be the reporter (again - since there are many examples of mis-information about the AEC)...

 

"The Thai Chamber of Commerce (TCC) says that 12 Thai industries need to further improve before ASEAN fellow members snatch away their customers. ...
..the most serious problem being a shortage of skilled workers in these fields...
..Other problems include high production costs and dependency on imported raw materials, he said...
For example, automobile production industry in which Thailand ranks first among the 10 members of ASEAN, said Mr Chatchai. Manufacturers in the kingdom must maintain quality while the producers must simultaneously set up production in other ASEAN member countries."

First, the aim of the AEC in terms of Goods, is that they can be shipped with low (or 0) duties within ASEAN so long as they are manufactured in one of the ASEAN countries.....why would Thai manufacturers need to simultaneously set up production in other ASEAN member countries"? The whole logic is that they don't need to do this now. Each country can make what they make best and for the lowest prices, and all (ASEAN) consumers will benefit by access to better quality goods at lower prices.

 

Second, there is no logic presented about why Thai industry needs to improve in the industries mentioned. There is a reference to not enough skilled workers, but all this means is that the structure of the Thai economy (including immigration and labour policies) does not match the demographics. The only thing Thai companies can do about this would be to invest in technology (IT and Automation) to replace the need for the skilled labour. They can do this today if they wish. If they do not do this, then they choose not to be competitive with others in other parts of ASEAN, and this means that the consumer in Thailand is paying more or getting lower quality than they should be. This is surely the same issue in other ASEAN countries, and has existed as a problem for a number of years, and is not being caused by the AEC Implementation. The other solution is easy, but it is a government issue, not that of Industry - allow additional foreign workers entry to Thailand now.  

 

Thirdly, "snatching away their customers" is a clear scare campaign aimed at making many Thai business operators fear competition. There is nothing in this article that says that other ASEAN companies in the listed industries are actually better than Thailand and will immediately cause consumers to switch their allegiances en masse. How do I know this? The actual "Free Movement of Goods" part of the AEC to which this article refers has already been implemented in most of the 10 countries. Goods made in other ASEAN countries already benefit from the lower import duties....and there is no evidence that Thai manufacturers are losing out in these industries (and certainly none presented in the article). There also remain a number of Non-Tariff Barriers in relation to some of the industries listed, and there are no short term plans for these NTB's to be dropped. This is part of the unresolved and ongoing AEC discussions between the governments. 

 

The headline and article is yet another attempt to scare the average Thai citizen into thinking that overall the AEC implementation will be bad for Thailand, when actually the opposite should be the case. Protectionist economies get short term gains, but rarely prove to be the best in the long run. Open economies drive higher wages and lower costs for goods and services over time (in relation to living costs and wages), and the AEC will benefit Thailand more than it will damage it.

 

I really wish reporters would do their homework on this issue.
 

[Chang_paarp]

The original article failed to mention anything about competent journalism. That is an industry that could do with a bit of competition.

[chainarong]

Without being facetious Thailand needs to improve per say, when up against the likes of Singapore, Thailand is really punching outside of it's class, one wounders how long this Asean will go before Thailand spits out the dummy and go's home, one thing Thailand does well, it can't co-operate unless they have the say and don't take kindly to advice. 

[biggles45]

"The other solution is easy, but it is a government issue, not that of Industry - allow additional foreign workers entry to Thailand now."

This won't happen, the Thai Gov't announced some time ago that under ASEAN employment for other member countries will be restricted to 8 professional categories. Not sure that this is in the spirit of ASEAN.

[laocowboy2]

"The other solution is easy, but it is a government issue, not that of Industry - allow additional foreign workers entry to Thailand now."

This won't happen, the Thai Gov't announced some time ago that under ASEAN employment for other member countries will be restricted to 8 professional categories. Not sure that this is in the spirit of ASEAN.

 

It is going to come down to a fairly start choice - let in the people whose skills you need or watch as both foreign and Thai businesses relocate production etc. elsewhere. And it is not just factories. With Singapore becoming so expensive, Thailand should have an opportunity to position itself as a potential site for ASEAN-region head offices for MNCs (and perhaps some regional companies as well), thereby creating lots of well paying white collar jobs for Thai graduates. Cost - tick. Golf course - tick. International schools - half a tick. Flights and internet and 'phone communications - half a tick. Ease of visas and other regulations for international staff? And English language proficiency? Errrrr... Oh well, back to Singapore it is then.

[Gutterboy]

"The other solution is easy, but it is a government issue, not that of Industry - allow additional foreign workers entry to Thailand now."

This won't happen, the Thai Gov't announced some time ago that under ASEAN employment for other member countries will be restricted to 8 professional categories. Not sure that this is in the spirit of ASEAN.

 
It is going to come down to a fairly start choice - let in the people whose skills you need or watch as both foreign and Thai businesses relocate production etc. elsewhere. And it is not just factories. With Singapore becoming so expensive, Thailand should have an opportunity to position itself as a potential site for ASEAN-region head offices for MNCs (and perhaps some regional companies as well), thereby creating lots of well paying white collar jobs for Thai graduates. Cost - tick. Golf course - tick. International schools - half a tick. Flights and internet and 'phone communications - half a tick. Ease of visas and other regulations for international staff? And English language proficiency? Errrrr... Oh well, back to Singapore it is then.

Hahahaha! Spot on.

[trainman34014]

Apart from the quality of Totty in Thailand can somebody please explain what DOESN'T need improving ahead of the Asean community ?

[Lupatria]

12 Thai industries need to further improve

Why 12? I think the sky is the limit...

[taony]

"The other solution is easy, but it is a government issue, not that of Industry - allow additional foreign workers entry to Thailand now."

This won't happen, the Thai Gov't announced some time ago that under ASEAN employment for other member countries will be restricted to 8 professional categories. Not sure that this is in the spirit of ASEAN.

 
It is going to come down to a fairly start choice - let in the people whose skills you need or watch as both foreign and Thai businesses relocate production etc. elsewhere. And it is not just factories. With Singapore becoming so expensive, Thailand should have an opportunity to position itself as a potential site for ASEAN-region head offices for MNCs (and perhaps some regional companies as well), thereby creating lots of well paying white collar jobs for Thai graduates. Cost - tick. Golf course - tick. International schools - half a tick. Flights and internet and 'phone communications - half a tick. Ease of visas and other regulations for international staff? And English language proficiency? Errrrr... Oh well, back to Singapore it is then.

You forgot, two hours for a short to the supermarket stuck in a u-turn lane - tick!

-*I typed this myself*-

[joecoolfrog]

Should these concerns have been addressed 5 years ago ?

[h90]

Probably have been quicker to list the industries that DONT need improving.

 

The "entertainment" industry

[atsiii]

Thailand's tools and consumer products are a joke.  They can only be as they are by design.  They can only be designed to be so cheap and unusable--typically breaking after one use--because there are no consumer protection laws and warranties in Thailand.  Quality must improve from the top down.  Only once government requires quality by implementing consumer protection laws which say, among other things, that if a product breaks within 90-days or one year, purchasers may return it for their money back or an exchange; will the wealthy and elite owned Thai companies start making quality products.  Quality, just like ethics and customer service begin at the top.

 

My guess: Thailand will find a "reason" not to fully join/implement ASEAN in 2015.

[richard10365]

Hi Andid......since you brought it up I would like to clarify a few points you made. 

 

There are four characteristics of the ASEAN Economic Community (AEC):  (1) a single market and production base, (2) a highly competitive economic region, (3) a region of equitable economic development, (4) a region fully integrated into the global economy.

 

The first characteristic, a single market and production base, has five core elements: (1) free flow of goods, (2) free flow of services, (3) free flow of investment, (4) freer flow of capital, (5) free flow of skilled labor.

 

You asked, “Why would Thai manufacturers need to simultaneously set up production in other ASEAN member countries?” The reason is because they can make more money. Thai manufactures have great access to the Thai markets because they are in Thailand. If they were in other ASEAN countries, they would have greater access to those market’s factors of production.

 

The factors of production are land, labor, capital and entrepreneurship. They could set up a factory close to large cities and employ the people there at a lower cost than in Thailand. They also have access to their raw materials in that country which also can be at a lower cost than here in Thailand. The capital markets in these ASEAN countries could supply long term financing in the form of financial securities and local entrepreneurs could supply low cost secondary services that could prove more efficient than those at the Thai factory.

 

Of the five core elements, (2) free flow of services, could provide the Thai management team to oversee their foreign ASEAN operations. Free flow of services also dictate the equity mix allowed in foreign operations. Now Thailand allows up to 70% equity ASEAN ownership of business in Thailand for select industries. Other ASEAN countries have agreed to similar arrangements.

 

The ASEAN Comprehensive Investment Agreement (ACIA) lets the Thai company return profits to Thailand with little or no penalties.  

 

The skilled workers comment could refer to industries that are considered a service such as tourism or medical professions. In 2015, managed skilled labor mobility will be allowed in Thailand and employers may hire labor from abroad to reduce their costs. The second sentence in the story does say one of the problem is high production costs and labor is cheaper in other ASEAN countries.

 

About your third point, not all products have been reduced to zero or five percent. Some products, like coffee, are on the sensitive list and their reduction to zero is happening slower than others. In fact, coffee has a non-tariff barrier on it now. Only importers with a license can import coffee at the 5% rate. Once a set volume of coffee has been imported, a quota rule kicks in and tariffs go up to 40%. If the coffee industry is to survive in Thailand, they will have to be able to compete with ASEAN coffee power houses Indonesia and Vietnam. With Vietnam being so close to Thailand, Thai coffee growers should be seriously concerned. Coffee is not the only industry that should be concerned.

 

It all boils down to greed. People are greedy and if they can save money by hiring non-Thai employees or lower cost ASEAN imports, then they can buy that nice car or house and later take a vacation at the end of the year. The new 70% owners’ equity rule in the horizontal schedule of commitments in the 8^th round of the services negotiation should scare Thai people. However, most Thai people are not afraid because they are totally unaware of this rule. Once an ASEAN citizen owns 70% of a business, they can import many of their staff to run it. If you would like to download this particular rule for yourself click here.

 

There is plenty of evidence that Thailand is not the market leader in ASEAN. If you’re not leading, then you are losing market share to another company. 

[attachment=277924:AEC Chartbook 2013.pdf]  [attachment=277926:ASEAN Facts.pdf]

 

It doesn’t matter if you don’t believe ASEAN 2015 won’t impact Thailand. It also doesn’t matter if you don’t believe jumping from the roof of a 25 story building will kill you. The AEC could benefit Thailand if more were aware of its benefits but the opposite is true. Thai people should be concerned. 

[GAZZPA]

 

"The other solution is easy, but it is a government issue, not that of Industry - allow additional foreign workers entry to Thailand now."

This won't happen, the Thai Gov't announced some time ago that under ASEAN employment for other member countries will be restricted to 8 professional categories. Not sure that this is in the spirit of ASEAN.

 

It is going to come down to a fairly start choice - let in the people whose skills you need or watch as both foreign and Thai businesses relocate production etc. elsewhere. And it is not just factories. With Singapore becoming so expensive, Thailand should have an opportunity to position itself as a potential site for ASEAN-region head offices for MNCs (and perhaps some regional companies as well), thereby creating lots of well paying white collar jobs for Thai graduates. Cost - tick. Golf course - tick. International schools - half a tick. Flights and internet and 'phone communications - half a tick. Ease of visas and other regulations for international staff? And English language proficiency? Errrrr... Oh well, back to Singapore it is then.

 

There's no way Thailand can compete with Singapore for white collar workers, and I am not so sure they would let it happen.

 

I posted previously with GSP and FTA being withdrawn at some stage Thailand is going to have a tough time next year and onwards. I would love to see some really positive stuff coming out from the current ruling military about how they are going to position Thailand and a clear action plan but as yet I have seen sod all.

 

I think Laos maybe an attractive alternative. It is showing rapid growth, it has challenges but so does Thailand,, the world bank now actually rate Laos slightly higher then Thailand on the rank of "ease of starting a business".

 

Things can change very quickly when a country falls behind its neighbours,, lets wait and see I suppose.

[GAZZPA]

 

Hi Andid......since you brought it up I would like to clarify a few points you made. 

 

 

There are four characteristics of the ASEAN Economic Community (AEC):  (1) a single market and production base, (2) a highly competitive economic region, (3) a region of equitable economic development, (4) a region fully integrated into the global economy.

 

 

The first characteristic, a single market and production base, has five core elements: (1) free flow of goods, (2) free flow of services, (3) free flow of investment, (4) freer flow of capital, (5) free flow of skilled labor.

 

 

You asked, “Why would Thai manufacturers need to simultaneously set up production in other ASEAN member countries?” The reason is because they can make more money. Thai manufactures have great access to the Thai markets because they are in Thailand. If they were in other ASEAN countries, they would have greater access to those market’s factors of production.

 

 

The factors of production are land, labor, capital and entrepreneurship. They could set up a factory close to large cities and employ the people there at a lower cost than in Thailand. They also have access to their raw materials in that country which also can be at a lower cost than here in Thailand. The capital markets in these ASEAN countries could supply long term financing in the form of financial securities and local entrepreneurs could supply low cost secondary services that could prove more efficient than those at the Thai factory.

 

 

Of the five core elements, (2) free flow of services, could provide the Thai management team to oversee their foreign ASEAN operations. Free flow of services also dictate the equity mix allowed in foreign operations. Now Thailand allows up to 70% equity ASEAN ownership of business in Thailand for select industries. Other ASEAN countries have agreed to similar arrangements.

 

 

The ASEAN Comprehensive Investment Agreement (ACIA) lets the Thai company return profits to Thailand with little or no penalties.  

 

 

The skilled workers comment could refer to industries that are considered a service such as tourism or medical professions. In 2015, managed skilled labor mobility will be allowed in Thailand and employers may hire labor from abroad to reduce their costs. The second sentence in the story does say one of the problem is high production costs and labor is cheaper in other ASEAN countries.

 

 

About your third point, not all products have been reduced to zero or five percent. Some products, like coffee, are on the sensitive list and their reduction to zero is happening slower than others. In fact, coffee has a non-tariff barrier on it now. Only importers with a license can import coffee at the 5% rate. Once a set volume of coffee has been imported, a quota rule kicks in and tariffs go up to 40%. If the coffee industry is to survive in Thailand, they will have to be able to compete with ASEAN coffee power houses Indonesia and Vietnam. With Vietnam being so close to Thailand, Thai coffee growers should be seriously concerned. Coffee is not the only industry that should be concerned.

 

 

It all boils down to greed. People are greedy and if they can save money by hiring non-Thai employees or lower cost ASEAN imports, then they can buy that nice car or house and later take a vacation at the end of the year. The new 70% owners’ equity rule in the horizontal schedule of commitments in the 8^th round of the services negotiation should scare Thai people. However, most Thai people are not afraid because they are totally unaware of this rule. Once an ASEAN citizen owns 70% of a business, they can import many of their staff to run it. If you would like to download this particular rule for yourself click here.

 

 

There is plenty of evidence that Thailand is not the market leader in ASEAN. If you’re not leading, then you are losing market share to another company. 

 

AEC Chartbook 2013.pdf  ASEAN Facts.pdf

 

It doesn’t matter if you don’t believe ASEAN 2015 won’t impact Thailand. It also doesn’t matter if you don’t believe jumping from the roof of a 25 story building will kill you. The AEC could benefit Thailand if more were aware of its benefits but the opposite is true. Thai people should be concerned. 

 

Not sure that Thailand is worried. I can see it getting very bad before they actually bite the bullet and do that "un Thai" thing of admitting they have underestimated the threat and got it wrong.. Of course by that time you are on the back foot and the fight is so much harder when you are running to catch up.

[tonbridgebrit]

Hold on. Any club that involves Burma, Laos, Cambodia and Vietnam, any club that involves these countries has got to have Thailand in it. This is because Thailand is the geographic centre of those countries. They need Thailand for all that transporting of goods from the left hand bit and the right hand bit.

And an ASEAN without Thailand's neighbours would be crippled. Basically, Thailand might refuse to play ball if Thailand doesn't get things it's own way. And once Thailand pulls out (or if it refuses to co-operate), well, ASEAN will be hampered.

Yes, ASEAN, don't aggravate Thailand, you might need Thailand more than Thailand needs you. Give Thailand a few concessions if Thailand wants a few concessions. Allow Thailand to have a few clauses in it's contract if it wants those clauses inserted.

 

[Emster23]

12 Thai industries need to further improve

Why 12? I think the sky is the limit...

 

Can only count up to 12 on fingers? Did notice they left off "tourism"....