The Thai textile industry is pursuing
a high quality, value-added strategy to succeed in the quota-free,
to advance the Thai textile and garment industry beyond OEM-based
production to higher value-added design and brand development
work are preparing the industry to compete in the post-Multifiber
Agreement (MFA) environment.
Thai textile and garment exports
grew by 7% in the first four months after the January 2005 expiration
of the MFA, compared to the same period in 2004. The industry
is expected to continue its expansion and development due to significant
private sector technology investments and government policies
to improve textile production, garment designing skills and supply
Mr. Virat Tandaechanurat, executive
director of the Thai Textile Institute (THTI) believes that the
textile and garment industry will grow and develop in the quota-free
market due to the technology upgrades and value-adding enhancements
the industry has made over the past five years. According to Mr.
Virat, the textile and garment industry has invested more than
US$45 million in imported machinery over four years for fiber
manufacturing, spinning, weaving, dyeing, printing and finishing.
A major spinning company just invested US$20 million for equipment
to produce high quality yarn, he said.
“We will now be able to increase
sales without being restricted by quotas. This is a great chance
for us. If we continue to upgrade our quality and technology,
we can profit from this situation,” he said.
Thai Textile Manufacturing Association
President Phongsak Assakul agrees that quality and value-adding
improvements are crucial for the industry’s success. “Each industry
sub-sector must improve their products and increase value added
in all stages including yarn, fibers and fabric. If we make higher
quality products, we will face less competition,” he said.
According to Mr. Virat, progress
has been made in advancing quality levels, but there are still
areas for improvement and opportunities for foreign investors
to contribute to the industry’s development. (See sidebar for
investment opportunities and incentives.)
Most Thai textile entrepreneurs
expect business to remain stable, according to the Office of Industrial
Economics, while THTI anticipates 2005 export growth to be only
slightly below last year’s 17% increase.
In 2004, textile and garment exports
generated US$ 6.4 billion, according to the Thai Customs Department,
representing approximately 4% of GDP. Major export markets are
the U.S., the EU, ASEAN, Japan and China.
Mr. Virat outlined several strategies
that have been undertaken by the Thai government and THTI over
the past five years to improve the competitiveness of the textile
and garment industry, such as the Bangkok Fashion City project,
the creation of a Thai textile brand, a program to boost SME textile
quality, and cluster development initiatives.
The Bangkok Fashion City project
was launched in 2000 with a US$ 46 million budget for an international
fashion school, textile and garment industry development programs
and fashion roadshows. (For more information about this project,
see the February 2005 issue of the Investment Review available
at www.boi.go.th under the publications section.)