The Thai electrical appliances and electronics industry has suffered decelerating exports since 2007. Their export growth last year stood at 13.8 percent, versus the country's overall exports, which rose by 17.5 percent. In 1Q08, exports of these products grew only 8 percent, against the growth of 15.3 percent in the same period of last year. This slowdown could be attributed mainly to the global economic downturn, especially in the US. Worse, the strengthening Baht has bitten into business income. Notably, exports of integrated circuits have experienced a marked decrease in 1Q08. Among the key factors in Thailand's exports of electrical appliances and electronics during the remainder of this year will be the global electronics market and the Baht. KASIKORN RESEARCH CENTER (KResearch) projects that Thai exports of these products may grow about 10-12 percent to total USD52-53 billion in 2008.
Over the short-term, bright prospects seem to lie ahead for certain product categories. Over the long-term, however, the local electrical appliances and electronics industry will remain challenged by a variety of risks that will affect our competitiveness in the global market. They are:
(1) The limited role and development of indigenous firms
(2) Lack of upstream and supporting industries
(3) Over-concentration in production types and exports
(4) Competing market shares with rivals
(5) Intensifying competition in the domestic market
(6) The risk of foreign manufacturing bases being relocated elsewhere
To achieve our goal of becoming the regional hub for electrical appliances and electronics production, focus should be on drawing in foreign investment and strengthening domestic manufacturers including their supporting industries as keys to this industrial development. KResearch would like to provide some recommendations as guidelines for this development:
(1) Increase innovation in products and technology.
(2) Expand production of electronic devices. Among the potential products, in KResearch's view, are Radio Frequency Identification (RFID) chips, solar cells and automotive electronic products.
(3) Build the more comprehensive industrial supply chains through the development of upstream and supporting industries.