Bangkok--30 Jun--Hill & Knowlton DHL, the world’s leading express and logistics company, today revealed the results of its annual Thailand Export Outlook survey, projecting confidence in Thai exports and imports for 2008 and 2009. A majority of businesses survey believe the growth of Thai exports and imports will grow especially in new markets1 although global economic slow down. More than 80 percent of respondents to DHL’s survey, ranging from import and export managers, government agencies and other related industries, have confidence in Thailand’s economy over the next two years and expect it to match its 2007 performance. The survey was conducted for the third consecutive year. As a facilitator of trade, with customers across key businesses in the automotive, technology, industrial, consumer products and services and healthcare industries, DHL’s survey is designed to share information with customers and partners to provide a perspective on their business outlook.Export and Import Growth Based on the survey, most businesses expect a soft decline in Thai exports during 2008, but are confident that the situation will improve in 2009 and expect overall export growth to match or be higher than that experienced during 2007. Thai exporters believe that Thai agricultural exports will continue to have a promising future over the next two years despite an increase in production costs. The key products here are Thai rice and energy crops (used for biofuel). The Thai electronics and automotive industries are also expected to enjoy healthy growth since many of them are subsidiaries of multi-national corporations that have secured places in multiple foreign markets. For imports to Thailand, half of all respondents expect import growth to improve in 2008 and 2009, with surging domestic demand across all industries expected to give the slow pace of Thailand’s economy a much needed boost. Furthermore, the government’s ‘Thailand Investment Years 2008-2009’ campaign is expected to stimulate local and foreign investments in Thailand and secure a more solid economic growth for the country.Export Prospects in New Markets The Department of Export Promotions (DEP) predicts that exports to new markets this year will rise by 15.3 — 18.7% or about 49% of total exports compared to last year. Nonetheless much of this growth will rely on greater export expansion into new markets and the forecast suggests that Thai exporters should explore primary markets such as the US, Europe and Japan, where steady demand is likely to continue over the next couple of years. Thanks to a sharp increase in exports to China, India and the Middle East. The DEP expects India in particular to be the most lucrative export market and has predicted a significant export growth there of 40% majority from Thai-India Free Trade Agreement. However, 15% of survey respondents consider China to offer the greatest potential for export growth and view it as a new market. Yet interestingly, 40% of respondents in the automotive, electronics, gems, machinery and textiles industries also regard China as a major export competitor. Consequently, Thai exporters need to diversify their markets, continuously improve their production and hedge against currency risks in order to remain competitive.Free Trade Agreements (FTAs) While Thailand has seven Free Trade Agreements, most respondents highlighted Thailand’s four main FTAs which they felt delivered the most benefit to their businesses. Top on the list is the FTA with China (ACFTA) which enables cheap imported parts and raw materials from China help lower production costs. Nonetheless, the survey also revealed that the FTA raises a pose challenge to local manufacturers of similar items. The Japan-Thailand Economic Partnership Agreement (JTEPA) came in at second-place, with the top exports to Japan in 2007 including electronic integrated circuits, computer accessories and parts. JTEPA is also allowing for lower prices of imported high quality Japanese products, such as machinery and parts, iron, steel and electronic integrated circuits. The survey also highlighted the growing importance of the Australian market, with the Thai-Australian Free Trade Agreement (TAFTA) coming in third as having the most effect on Thai exports, closely followed by the India-Thailand Free Trade Area (ITFTA) which ranked fourth. Yet despite this, only about 25% of general Thai exporters have gained benefits from the FTAs, which indicates that more can be done to apply for tax incentives. At the same time, the survey revealed that Vietnam was percieved as the country with the highest investment potential for Thai investor (27%) followed by China (22%).Potential Investments for SMEs In the last year, small and medium-sized enterprises (SMES) and micro enterprises (OTOPS) accounted for 31% and 36% of Thailand’s total exports and imports, respectively. The respondents were asked to rank industries with highest growth potential for these business sectors. The food processing industry, followed by handicrafts and agro-industry emerged as the top three industries.Factors Affecting International Trade Findings from the survey also revealed that in addition to the ongoing rise in production costs, persistently high oil prices, a strong Thai baht and insufficient infrastructure and logistics are the main factors negatively impacting respondents’ businesses across all industries. Note1 New market: Indochina, Middle East, Africa, Latin America, Eastern Europe, South Asia, India, China For more information please contact: Hill & Knowlton Thailand Ms. Orawan Chuenwiratsakul Ms. Visa Cheawsamut Tel: 0-2627-3501 ext 212 or 107 Fax: 0-2627-3510 Email: [email protected] , [email protected] DHL Thailand Ms. Piyalak Chuenchompoonut Ms. Siranee Atnaseo Tel: 0-2345-5602 Fax: 0-2285-5732 Email: piyalak.chuenchompoonut @dhl.com, [email protected]