Linking Thailand’s Industrial Supply Chain with ASEAN

Linking Thailand’s Industrial Supply Chain with ASEAN

Thailand has conducted a study to link its industrial supply chain with other ASEAN countries for the possibility of expanding its production base to the ASEAN market.

The Director-General of the Office of Industrial Economics, Mr. Somchai Harnhirun, said that the study involved the establishment of a model to be used as a tool to look into opportunities, obstacles, and readiness, so that ASEAN would be able to share production factors in order to save costs.

Mr. Somchai said that, with the coming of the ASEAN Economic Community in 2015, ASEAN would become a single market and that movement of various production factors within the region would increase and become easier. This would lead to production linkages of various industries in the ASEAN market. 

He said that production linkages would enable ASEAN to benefit from diverse sources of raw materials and low-cost labor, which would enhance its industrial competitiveness in the world market. Since ASEAN countries have different quantities and qualities of production factors and their technological management also differs, the Office of Industrial Economics has, therefore, undertaken the study on the model to analyze the linking of Thailand’s industrial supply chain in the ASEAN market.

Mr. Somchai said that the project would provide Thailand’s industrial sector with information about its dependence on raw materials and products from other ASEAN countries. It would also enable the industrial sector to analyze the changing economic factors, such as domestic consumption, investment, and effects of government policies on industrial production. Moreover, it would prepare Thai entrepreneurs to join their ASEAN partners in strengthening the ASEAN industry.

He explained that the model as a result of the study would offer an effective tool for the public and private sectors in Thailand to work out policy and planning in order to cope with changes brought by ASEAN integration. He cited Indonesia, Myanmar, and Vietnam as the countries in which Thailand has great potential to expand its production base.

According to Mr. Somchai, ASEAN now becomes Thailand’s largest market. In 2012, Thai exports to ASEAN amounted to about 1.76 trillion baht, accounting for 24.7 percent of Thailand’s total exports. ASEAN is also Thailand’s second largest import market, after Japan. In the same year, Thailand imported 1.26 trillion baht worth of goods from ASEAN, accounting for 16.3 percent of its total imports.

Meanwhile, the Chairman of the Industrial Estate Authority of Thailand Board, Mr. Witoon Simachokedee, said that the Authority is planning to develop industrial estates in preparation for the ASEAN Economic Community. The objective is to encourage ASEAN countries to share production bases, increase their bargaining power, and strengthen the region. The development project will also prepare Thailand’s facilities and logistics system to cope with industrial expansion in the region.

Today, the Industrial Estate Authority of Thailand operates 48 industrial estates in 15 provinces, with a total investment of more than 2.7 trillion baht. Together, the industrial estates have generated employment for 530,601 people, with 4,082 entrepreneurs.