Monday, September 17, 2007

Thai firms urged to try 'cheap' Vietnam

A study by the Industrial Economics Office shows that operators in the textile and clothing industries should shift to invest in Vietnam, China and India, to reduce their production costs and boost their competitiveness in international markets.

It studied Thailand's competitiveness with Vietnam, China, Malaysia, Indonesia, India, Pakistan and the Philippines.

Industrial Economics Information Centre director Somchai Harnhirun said production costs in Vietnam were 19.48-per-cent lower than those in Thailand, because of import-duty exemptions for raw materials, cheaper labour and lower energy costs.

Thai workers in all sectors earn average wages of US$14 (Bt479) per day, the highest rate among studied countries. Workers in Vietnam and Pakistan earn the least: $3.68 a day.

Besides investing in Vietnam, the study said Thai operators could reduce their production costs 10.65 per cent if they made their products in China and 5.06 per cent in India.

China and India, despite having higher production costs and fewer tax privileges than Vietnam, are more attractive in terms of larger-sized markets and infrastructure.

Moreover, gross domestic product (GDP) in these three countries has increased considerably. From 2004-06, Vietnam's GDP expanded 8.06 per cent, India's 8.88 per cent and China's 10.16 per cent.

Somchai said encouraging operators to expand their businesses abroad would also improve Thai industries in terms of technology know-how and commercial strategies.

Meanwhile, Industry Ministry permanent secretary Chakramon Phasukavanich said at the closing ceremony of the Bangkok Fashion City project at the Swissotel Nai Lert Park yesterday that the project had been 80-per-cent successful in his opinion.

Although the project has now ended, the Industrial Promotion Department has cooperated with other agencies, such as the Thailand Textile Institute, the Export Promotion Department and universities, to continue some parts. For example, the private sector has donated Bt31 million to support young designers studying at universities.

Chakramon said Bangkok Fashion City II might be proposed to the new government for budget approval in fiscal 2009. However, he believes the project should become more integrated between the public sector and the private sector.

If the second phase is held in the future, it will use less money than the first phase, which spent Bt1.386 billion in four years, he added.

Industrial Promotion Department director-general Pramode Vidtayasuk said the department planned to launch a new project to help textile manufacturers by collaborating with the Export Promotion Department.

The project will focus on urging operators to improve their products to match demand both domestically and abroad.

It plans to attract about 200 manufacturers, and details should be finalised this year, a Commerce Ministry source said.

"If it works, we'll expand into other industries in the future, such as leather and jewellery," he said.

Chalida Ekvitthayavechnukul

The Nation