China’s return to normal life after “covid” frenzy is of great concern for Thai producers, fearing that the influx of cheap Chinese goods will push from market more expensive goods of local production, albeit of better quality. True, China thawing will bring to Thailand many tourists, to support ailing Thai tourism industry, badly damaged by “pandemic”, but except industry itself, not many people around are happy about Chinese tourists reconquista.
Trade ties with Russia are on one hand, disrupted or compromised, but on the other hand, Thailand is trying to use every opportunity to keep trade afloat, on condition it wouldn’t stir too strong international negative response. There are quite a number of opportunities for SME shipowners in South East Asia, originating from Russia’s imperative need to find other supply sources and logistics, to avoid sanctions and still get the goods Russia needs most, especially dual-use ones. There was, and it seems, still is, big demand for ro-ro ships to meet growing demand in Russia for second-hand Japanese cars, for example. Such endeavors are up to each and every shipowner or entrepreneur, who will dare to play Russian roulette game with sanctions and possible consequences, be he caught red-handed. But again, the reward might be very substantial, so long as Russian side, be it private entrepreneur or State-owned company, doesn’t have much leverage in costs negotiations.
Ukraine war blows huge hole in Thai exports to Russia
February 21, 2023
Thai exports to Russia fell 43.3% to $585.44 million in 2022 following Russia’s invasion of Ukraine a year ago. Hardest hit were exports of heavy vehicles, which dropped by 74.01%, according to the Department of International Trade (DITP).
It said the fall in exports is likely to continue in 2023.
The top 10 Thai exports to Russia were vehicles, tyres, machinery and mechanical parts, canned and processed fruits, machinery and mechanical components, refined oil, canned seafood, processed rubber, rice, and food seasoning.
“Cars, equipment, and components, which are high-value products and have always been Thailand’s No 1 export product in the Russian market, account for 30% of all Thai exports to Russia,” said Phusit Ratanakul Sereroengrit, director-general of the Department of International Trade Promotion.
However, following the invasion of Ukraine, the value of Thai auto exports to Russia has plummeted by 74.01% from 10.234.45 billion baht in 2021 to 2.659.96 billion baht in 2022.
Other Thai exports to Russia climbed significantly in 2022, however. Rice exports rose by 372.94%, refined oil exports by 62.77%, canned and processed seafood exports by 61.14%, and food seasoning exports by 41.33%.
The costs of international transportation to Russia by both air and sea has increased threefold since the start of the war.
Exporters to Russia have adjusted by switching shipments to the Russian port of Vladivostok, which lies to the northeast of Thailand.
After Russia was banned by Western sanctions from using the international money transfer system (Swift), exporters were unable to receive payment from Russian importers. Many Russian importers have since adjusted, some even opening accounts with foreign banks to transfer money internationally.
Meanwhile, since many Western brands are no longer available in Russia, the potential of Thai exports is growing, the DITP said.
Exports of automobile equipment and accessories are expected to rebound in 2023, particularly auto parts, which are in high demand in Russia.
However, with no end in sight for the war, the value of Thai exports to Russia will continue to fluctuate greatly, it added.
Thai exports to Russia whose value rose in 2022 – such as refined oil, canned and processed seafood and food seasoning – should continue on their positive trend, the DITP said.
FTI frets over China
Influx of Chinese goods a key concern
21 Feb 2023
The Federation of Thai Industries (FTI) is gripped with a fresh worry over the influx of inexpensive Chinese goods following China’s reopening, though Beijing’s policy is good for the tourism sector.
Thailand will barely compete in the international trade arena because enterpreneurs currently cannot control production costs due to higher energy bills and wages than those in China, said Kriengkrai Thiennukul, chairman of the FTI.
“The Chinese are seeking markets for their products. The country will increase exports after its reopening in order to boost the economy,” said Mr Kriengkrai.
With the global economy likely to enter a recession this year, many countries need to seek new markets for their exports.
The export of Chinese products to Asean countries including Thailand will affect the Thai export sector. This situation must be kept under close watch, said the federation.
The export sector is facing many challenges, including the impact of geopolitical conflicts, high energy costs and the fluctuation of foreign exchange rates.
The FTI said the value of the baht against the US dollar should stand at appropriate levels. If the baht gets considerably stronger, Thai exporters will bear a heavy brunt.
The baht’s value should stand at 34 per US dollar, but its value has fluctuated greatly from 38.08 in October last year to 32.88 this month, according to Suchart Chantaranakaracha, vice-chairman of the FTI, who talked about the currency issue when the federation announced last week the Thailand Industry Sentiment Index (TISI) for January.
The Joint Standing Committee on Commerce, Industry and Banking expects the export sector to grow by 1-2% in 2023. GDP growth is projected to be between 3-3.5%, with inflation standing at 2.7-3.2%.
According to the FTI, the January TISI is based on a survey of 1,321 enterprises across 45 industry clubs under the federation.
The respondents selected global economic conditions (73%) as their leading concern, followed by oil prices (58.5%), loan interest rates (50.2%) and foreign exchange rates (48.6%).
The global economy is likely to weaken because of sluggish economies in the US and European markets.
The FTI is also worried about a drop in foreign direct investment to 15% of GDP, down from 30-35%, as this would hit growth. The government needs to find ways to increase the country’s competitiveness in order to attract more foreign investors.