Thai govt to review ASEAN-China FTA amid business concerns
The Trade Negotiations Department and Team Thailand, a government body focused on bolstering economic growth, have been directed by the Commerce Ministry to undertake a comprehensive study of products under the ASEAN–China Free Trade Agreement (ACFTA). This comes in response to concerns over the surge of low-cost Chinese goods in the domestic market.
Commerce Minister Phumtham Wechayachai announced the ministry’s readiness to entertain entrepreneurs’ suggestions following the Federation of Thai SMEs’ plea for measures to counteract the impact of the influx of Chinese goods, which has negatively impacted local businesses.
The Federation of Thai SMEs (small and medium-sized enterprises) appealed to the government to scrutinise the list of imported goods under ACFTA to ensure a fair and mutually beneficial outcome. The federation acknowledged the inability to manufacture some products locally, Phumtham said.
“The Trade Negotiations Department and Team Thailand have been tasked with collecting the details of which products are being affected, and what are the losses and benefits.
“Regarding the suggestion of entrepreneurs that the government implement measures to promote the use of domestically produced goods, it already has that goal, aiming to stimulate local SMEs to encourage greater consumption of Thai products.”
The minister underscored the significance of SMEs as a focal point for state aid measures. He drew attention to the fact that, in developed nations, SMEs are seen as vital for national development, contributing up to 60% of income, reported Bangkok Post.
Apart from the Chinese goods flooding the market, Phumtham highlighted that SMEs face numerous other challenges.
He noted the lack of centralised oversight for the sector, with various agencies involved but none taking direct responsibility for SMEs. He revealed that the Office of SMEs Promotion intends to invite SME-related organisations for talks to collaboratively address multiple issues and seek solutions.
Local manufacturers
The Federation of Thai Industries (FTI) recently reported that the import of Chinese goods led some local manufacturers, particularly SMEs, to cut production by 50%.
As per the FTI, manufacturers across 20 sectors, including steel, aluminium, plastics, ceramics, petrochemicals and medicine, are feeling the heat from the influx of cheap Chinese goods.
The federation warned that imports from mainland China will carry on increasing if the government does not enhance its product certification process.
Commerce Ministry data from last year shows that Thailand imported goods worth US$70.8 billion from China, marking a 0.05% increase from the previous year. Key imports included electrical appliances worth $8.75 billion, machinery and parts, chemicals and electrical appliances valued at US$6.56 billion, US$6.02 billion and US$5.80 billion respectively.
SMEs make up 99.5% of all Thai businesses and employ 70% of the country’s workforce. In 2022, SMEs contributed an economic value of 6.1 trillion baht, accounting for 35.2% of Thailand’s GDP.
In related news, Thailand’s Commerce Ministry initiates a crackdown on low-priced imports, aiming to rescue the struggling manufacturing sector from market saturation. Efforts focused on stringent control and safety standards implementation.
