Gift and lifestyle products manufacturers are planning to relocate their production to other Asean countries to enjoy cheaper labour and raw material costs under the expanded Asean Free Trade Area (Afta).
Thailand, meanwhile, aims to develop itself into a trading hub for lifestyle products in Asean by focusing on product design and marketing, according to the Lifestyle Products Federation.
As Afta has eliminated import tariffs on 92% of all products traded within Asean, Thai lifestyle product makers have worked with their counterparts in Singapore, Malaysia and Vietnam to pool resources, said the federation's secretary-general, Jirabool Vittayasing.
Vietnam is currently considered the most attractive manufacturing location in Asean in terms of wages and raw materials, while finished products can be exported through Danang port, he added.
"We are going to use the benefits of Afta to seek cheaper labour in Vietnam. Burma will be the next target once it opens more to investment from abroad," said Mr Jirabool, who is also the president of the Thai Gifts, Premiums and Decorative Association.
Manufacturing gifts and lifestyle products - which include housewares, toys and stationery - can be labour-intensive. About 1 million people are involved in the entire supply chain, said Mr Jirabool.
Relocating manufacturing to neighbouring countries will definitely cause some job losses, he said. "But Thai workers will be upgrading their skills to focus on product design, marketing, and high-quality production processes. Thailand aims to establish itself as trading hub in Asean."
The federation has 1,200 corporate members, most of them small and medium-sized enterprises (SMEs) that can relocate more easily than big companies.
Mr Jirabool said the federation had been talking to Amata Corp, a Thai industrial estate developer that operates a site in Vietnam, about facilitating a move by constructing small factories for Thai companies to rent.
The federation is also consulting with the Commerce Ministry and the Board of Investment (BoI) about support for investment overseas.
"The BoI, for example, could help us in terms of tax incentives for making investments abroad," he said.
Asean accounts for 10% of exports of lifestyle products from Thailand, valued at 62 billion baht in 2009. The association hopes to increase exports by 3% to 5% this year as some markets including the United States have recovered from the recession.
The industry's exports grew by 8% to 10% annually on average before the economic crisis emerged in 2008.
The US is the biggest export market, accounting for 34% of shipments, followed by Europe (18%) and Japan (14%).
Source: Bangkok Post