Manufacturing industry in thailand
This presentation is the property of its rightful owner.
Sponsored Links
1 / 46

Manufacturing Industry in Thailand PowerPoint PPT Presentation


  • 60 Views
  • Uploaded on
  • Presentation posted in: General

Manufacturing Industry in Thailand. Manufacturing Industry in Thailand. References: Peter Warr (ed.) 1993 , Ch.2 “Manufacturing” by Somsak Tambunlertchai

Download Presentation

Manufacturing Industry in Thailand

An Image/Link below is provided (as is) to download presentation

Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author.While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server.


- - - - - - - - - - - - - - - - - - - - - - - - - - E N D - - - - - - - - - - - - - - - - - - - - - - - - - -

Presentation Transcript


Manufacturing industry in thailand

Manufacturing Industry in Thailand


Manufacturing industry in thailand1

Manufacturing Industry in Thailand

References:

  • Peter Warr (ed.) 1993, Ch.2 “Manufacturing” by Somsak Tambunlertchai

  • Medhi Krongkaew (ed.), Ch.1 “Thai Industrialization: An Overview” by Malcolm Falkus, and Ch. 3 “Export-Led Industrialization” by Suphat Suphachalasai


I industrial growth and structural changes

I. Industrial Growth and Structural Changes

  • High and sustained growth since 1960s:

    • 10% growth since 1960s

    • From 16% to 39% of total economy in the past 30 years; now the largest sector

    • Hit hard and declined sharply during the 1997 crisis, but continued to grow since then

    • Declined again during the hamburger crisis in 2008-09


Manufacturing industry in thailand

5


I industrial growth and structural changes1

I. Industrial Growth and Structural Changes

  • From “import-substituting” during 1950s – late 1970s to “export-oriented” since 1980s

  • Manufactured exports exceeded agricultural exports since 1985; now accounted for over 80% of total


Exports by sector

Exports by Sector(%)


I industrial growth and structural changes2

I. Industrial Growth and Structural Changes

  • Top ten export items (1998 – 2007):

    • Computer parts, integrated circuits, garments, motor vehicles, processed seafood, jewellry, rice, television sets, plastic pellets, rubber, iron/steel products, chemicals, oil products


I industrial growth and structural changes3

I. Industrial Growth and Structural Changes

  • Shifted away from “food & beverages” (agro-based) towards labor-intensive industries (textiles, leather, shoes, toys, jewelry)

  • Later shifted from labor-intensive to higher technology, engineering-based (electronics, computers, transport equipment)


I industrial growth and structural changes4

I. Industrial Growth and Structural Changes

  • Always import-dependent

    • Producing finished products using imported machine, components, raw materials

    • Machine and raw materials always among top import items


I industrial growth and structural changes5

I. Industrial Growth and Structural Changes

Top ten import items (1998 – 2007):

Electrical machinery, Industrial machinery, integrated circuits, crude oil, chemicals, computer parts, iron & steel, metal products, precious stones, metallic ores, vehicle parts


I industrial growth and structural changes6

I. Industrial Growth and Structural Changes

  • Assembly, low linkages, low-tech base

  • Low labor absorption: below 15% of labor force


I industrial growth and structural changes7

I. Industrial Growth and Structural Changes

  • The number is dominated by small factories: 90% of factories have less than 15 workers, most in the Northeast and North (mostly household manufacturing)


I industrial growth and structural changes8

I. Industrial Growth and Structural Changes

  • But employment is concentrated in large firms in Bangkok vicinity and Central region


I industrial growth and structural changes9

I. Industrial Growth and Structural Changes

  • More than 80% of manufacturing value added is from large firms in Bangkok, vicinity and Central region


I industrial growth and structural changes10

I. Industrial Growth and Structural Changes

  • Heavy concentration in and around Bangkok: 50% of industrial jobs are located in Bangkok, producing half of total manufacturing value added

  • Moving toward the Eastern Seaboard since 1980’s with new industrial estates, ports and gas-related industries

  • Many factories moved from Bangkok to Central since 2001


I industrial growth and structural changes11

I. Industrial Growth and Structural Changes

  • Important role of foreign direct investment (FDI)

    • One-third of FDI flows into manufacturing, esp. textiles, electronic, transport equipment and machinery

    • Important sources: Japan, 4 NICs, U.S., E.U.

    • 5% of total investment in manufacturing: small but significant in technology


Ii factors affecting manufacturing changes

II. Factors Affecting Manufacturing Changes

  • High growth and investment

  • Macroeconomic stability (but political uncertainty)

    • conservative macroeconomic policies (except pre-crisis period)

    • market-oriented economy with minimal government intervention


Ii factors affecting manufacturing changes1

II. Factors Affecting Manufacturing Changes

  • Abundant natural resources, e.g. marine products, fruits & vegetables, rubber

     raw materials for industries

  • Large supply of unskilled labor up to 1980s, but labor became more scarce and expensive, attracting workers from neighbors


Ii factors affecting manufacturing changes2

II. Factors Affecting Manufacturing Changes

  • Active local entrepreneurs (traders-turned-industrialists), Chinese connection and bank financing

  • Favorable world

    • industrial markets

    • technology transfer of labor-intensive industries

    • industrial relocation from Japan and NICs

    • economic integration, e.g. AFTA, attracting new industries


Ii factors affecting manufacturing changes3

II. Factors Affecting Manufacturing Changes

  • Constraints on economic and social infrastructure (roads, ports, electricity, water) and environment; serious in 1990s

  • Shortages of skilled labor (engineers, technicians); very serious in 1990s

  • Shortages of semi-skilled workers in recent years, after the crises


Iii policy measures

III. Policy Measures

  • Government direct involvement through state enterprises in production, as in 1950s  failure

  • Infrastructure provision by government since 1960s

    • Development plans

    • Transport (roads, rail, rivers, ports, airports)

    • Communication (telephone, postal services)

    • Power and water

    • Industrial estates


Iii policy measures1

III. Policy Measures

  • Border Measures

    • Tariff protection in 1960s and 1970s

      • High for consumer goods, import-competing industries, and low for intermediate goods and capital goods

      • Lower tariffs in late 1980s

      • Import surcharge and anti-dumping measures

    • Import quota not significant


Iii policy measures2

III. Policy Measures

  • Export promotion

    • Tariff reductions

    • Tax rebates for imported raw materials used in production for export

    • Marketing: trade fairs, road shows

  • ASEAN economic integration and other free trade areas


Iii policy measures3

III. Policy Measures

  • Investment promotion through Board of Investment (BOI)

  • “Promotional privileges”: 3-8 year period of exemption from profit tax, import taxes on machine and raw materials; land ownership by foreign investors; employment of foreign experts


Iii policy measures4

III. Policy Measures

  • Regional dispersion

    • 3 BOI Zones

      1. Bangkok + surrounded

      2. Zone 1- bordering provinces

      3. Country areas  Maximum Benefit

      + special zone for 3 southern provinces


Iii policy measures5

III. Policy Measures

  • Integrated planning

    • Eastern Seaboard: Industry, Community planning + Social + Econ infrastructure (Port, Rail, Estates, Schools, Hospital etc.)  Gas related + Heavy industries

    • Southern seaboard + Western seaboard


Iii policy measures6

III. Policy Measures

  • Financial assistance through some financial institutions:

    • Industrial Finance Corporation of Thailand (IFCT) : abolished in 2004

    • Export-Import Bank

    • SME Bank


Iii policy measures7

III. Policy Measures

  • Exchange Rate

    • Stable and overvalued in 1960 – 1980

    • Baht devaluation in 1984 basket peg

    • More flexibility after July 1997: managed float


Iii policy measures8

III. Policy Measures

  • Others:

    • Labor training

      • Tax incentive for training by firms

      • Training institutes by government


Iii policy measures9

III. Policy Measures

  • Industrial institutes

    • Federation of Thai Industries; institutes on textile, food, iron & steel, motor vehicles

  • Environment protection : Air, Water , Noise, Toxic, Solid Waste

  • Environment as a constraint on industrial growth?


Iv future directions

IV. Future Directions

  • Abrupt slowdown of exports in 1996

     declining competitiveness, and industrial slowdown

  • Higher labor cost, no more labor surplus cf. China, India, VN, Indonesia

  • Recent labor shortage when factories reopen after the hamburger crisis


Iv future directions1

IV. Future Directions

  • Competition from low-cost countries

  • More protected foreign markets, despite Uruguay trade agreement

    • Trading blocs, less Generalized System of Preferences (GSP), voluntary export restraint (VER)

    • More trade opportunities with the Doha Round Agreement (when?, 2010?)


Iv future directions2

IV. Future Directions

Exporting industries declined during the hamburger crisis (2008-09)

Are we relying too much on the world market? (exports being 70% of GDP)

45


Iv future directions3

IV. Future Directions

  • Deteriorated natural resources

  • Unsatisfactory technology transfer from foreign investors, and limited R&D

  • Limited infrastructure

  • How to upgrade industries?


  • Login