By: NAREERAT WIRIYAPONG
Published: 19/02/2009 at 12:00 AM
Newspaper section: Business

Japan's economic recession is expected to have only a slight impact on Thai exports thanks to the privileges granted under the Japan-Thailand Economic Partnership Agreement (JTEPA) and the "Chinese factor", both the public and private sectors agreed yesterday.

Exports of Thai food are expected to contract by almost 10% each in the first two quarters of this year. But the Office of Industrial Economics insisted that shipments to Japan are likely to decline marginally as importers had shifted their orders from China to Thailand because of growing food-safety concerns in the aftermath of the melamine scandal.

Meanwhile, exports of chicken and seafood under the JTEPA have room to grow in the Japanese market, said Somchai Harnhirun, the office's deputy director-general.

Under the JTEPA, the two countries agreed to cut import tariffs for products from each other to facilitate trade and increase value.

Despite the recession, Japan cannot produce enough food for domestic consumption and has to import as much as 60% of the total consumption, mainly from China and Thailand, he said.

Yuthasak Supasorn, president of the National Food Institute, said foods destined to Japan were targeted to grow this year even though the sector's overall exports were forecast to decrease by 7% to 724 billion baht from last year's 770 billion baht.

Food exports may contract by as much as 12% and 17% in the second and third quarters respectively as the United States, Europe and Asean, which altogether dominate 60% of the industry's overseas shipments, are facing an economic slowdown, he noted.

The projection is made on the assumption that the world economy would expand by 0.5% this year, down from 1% in an earlier forecast, dragging down global trade to contract 2% compared to 4.8% growth in 2008.

But exports to Japan, which ranks close to the US as Thailand's top two foreign markets, are expected to grow from about 100 billion baht in 2008 to 120 billion baht this year, he added.

Exports of seafood, fruits and vegetables benefit the most from the JTEPA. The remaining non-tariff barriers faced by canned tuna and canned pineapples are expected to ease after the recent visit of Prime Minister Abhisit Vejjajiva to Japan, acknowledged Mr Yuthasak.

Virat Tandaechanurat, executive director of the Thailand Textile Institute, said Japanese textile importers had shifted 30% of their purchases from China to Asean to leverage risks and Thailand had emerged as the biggest beneficiary of the move.

Thailand has been assured that it would get 5% of all orders shifted from China to Asean, he said.

Tariffs on textile exports to Japan have been waived under the JTEPA, which took effect in late 2007. Overall textile exports are forecast to be flat this year, or around $7.28 billion seen in 2008.

China has dominated half of the total textile market valued at $500 billion, with Thailand commanding only a 3% share, according to Chen Namchaisiri, chairman of the Federation of Thai Textile Industries.

But now Chinese manufacturers are losing their competitive advantages due to rising production costs, the yuan appreciation and stricter labour laws and environmental regulations.

By Bangkok Post On 20 Feb 2009

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