BANGKOK, Oct 24 – Thailand’s garment exports are expected to grow by 0-5 per cent next year and around 2-3 per cent this year to almost US$3 billion. The projection is based on the loss of tax privilege for garment export to the European Union (EU) early next year coupled with deflation in its member countries, while recovery in the United States (US) remained a concern.

However, the loss of tax waiver is not expected to create a huge impact on Thai garment as the EU only waived 2.4 percentage points of the tariff from the normal tariff rate of 12 per cent. On the positive side, the exporters were expected to benefit from the Asean integration and rising demand for Thai products in Japan under its policy to rely less on import goods from China and waiver on import tariff under the Japan-Thailand Economic Partnership Agreement.

Thavorn Kanokvaleewong, president of the Thai Garment Manufacturers Association (TGMA), said although the unclear global economic recovery was negative for the sector, demand for shipment to Japan and Asean should continue to increase. In the first eight months of the year, clothing export from Thailand increased 0.86 per cent to US$1.95 billion, with rising shipment to Japan, the EU and Hong Kong, but shipment to the US declined slightly.

Meanwhile, Thailand’s garment manufacturers are expanding to neighbouring countries such as Vietnam and Cambodia, which still have the tax advantage and have lower labour cost. Vallop Vitanakorn, the association’s adviser, said more than 30 Thai garment manufacturers had already set up their second plants in neighbouring countries.

Another 30-50 Thai medium- and large-sized apparel manufacturers planned to expand their plants in neighbouring countries and other countries in Asean in the next few years, according to the association’s survey.

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