Korean tensions, baht rise could impact Thai trade

By Petchanet Pratruangkrai | Source: ANN
Thailand is preparing for a rise in external and internal influences, including the growing tension on the Korean peninsula and the strengthening baht, which could affect its trading targets this year.

Nevertheless, exporters foresee more investment from South Korea could come to Thailand and other Asean countries despite the Korean threat.

Srirat Rastapana, director-general at the International Trade Promotion Department (ITPD), admitted that the baht’s appreciation is one of the most disturbing factors for Thai shipments this year.

“Conflict in the Korean peninsula and the Euro crunch are other major concerns as they could slow down Thai shipments to major target markets. However, the ministry does not expect the siutation to be critical enough to seriously affect global trading,” said Srirat.

The ITPD will closely monitor the situation. A meeting of 66 Thai trade counsellors in foreign markets will be held next month to estimate the export situation this year. So far, the ministry is maintaining the export target of 8-9 per cent growth for the whole year.

Thai shipments in the first two months eased by 4.09 per cent to US$36.19 billion. Shipments in February alone dropped 5.83 per cent to $17.92 billion.

Srirat said that the bilateral trade should not be affected too seriously in the event of a conflict. Thailand is still confident that the volume could be doubled to $30 billion by 2016. Only the weakening Korean won, which could make Thai products more expensive, is a potential worry for Thai exporters.

To boost exports this year, the department will progressively promote more Thai small and medium-sized enterprises to become exporters. The department will allocate a budget of 100 million baht (US$3.3 million) to promote 500 SMEs each year under its three-year project, the so-called ‘SMEs Proactive’.

Moreover, it will set up more in-depth trade promotion activities and business-matching in target and emerging markets.

Isara Vongkusolkij, chairman to the Board of Trade of Thailand, said the Korean tension was terrible, but nobody could estimate how the situation would turn out.

“As traders, we should not be careless about this conflict as it could affect global trade and [have widespread] impacts around the world.”

However, the Korean situation could also stimulate Thailand and other ASEAN countries to seek out more investment elsewhere, said Isara.

He explained that instability on the Korean peninsula may encourage Korean and other investors to look to or invest in countries outside their region and nearby areas.

Thailand and ASEAN – as emerging countries with high attractiveness to foreign investors – could draw more investment from this unsettled situation.

Thai Samsung Electronics Co Ltd said there had not been a change in policy from from the Samsung headquarters based in South Korea. Ratchata Sutthaphatthanon said Samsung plants in South Korea had produced premium products, which had not affected Thai consumers’ market.

LG Electronics Thailand Co Ltd said the situation had not been worrying to LG’s business and not affected Thai consumers, as current production outputs were sufficient to serve its global market.

*US$1=29.4 baht