Thailand's garment exports for the first eight months of 2014 rose by one per cent compared to the same period last year. However, Thai garment producers and exporters are unsure of growth in 2015 because of the economic uncertainty in China, United States, European Union and other large markets.
Weak recovery in the EU and US, a slowdown in Chinese growth, and the loss of EU import duty privileges for Thai garments because of the country’s coup d’état in May this year are some of the impediments to growth. The Thai Garment Manufacturers Association (TGMA) predicted a wider than usual range of 0 to 5 per cent growth for next year, and an expansion of two or three per cent in the industry as a whole.
Meanwhile exporters have increased shipments to the EU before the preferential trade status expires in the beginning of 2015. However, TGMA does not believe that the loss of this status will have much impact, as the EU waives just 2.4 per cent of its duty on Thai garments compared to the standard rate of 12 per cent.
Thai businesses have also compensated for the loss by raising their investment in other Southeast Asian countries, including Vietnam, Myanmar and Cambodia. These countries have a lower labour cost and have not lost their preferential trade status with the EU, providing companies a way around higher tariffs.
The Asean Economic Community is set to come into effect in December 2015 and will bring greater integration, flow of capital, and trade incentives for the ten member nations of Asean.