thegreglowe.com

By GREG LOWE
IN BANGKOK

THAILAND’S electrical and electronics industry – the country’s biggest exporter – will suffer a big drop in export sales this year, costing up to 100,000 jobs, analysts say.

Total electrical and electronics exports will drop 10 per cent to about US$45 billion, according to Sasipen Bhurapanich, an analyst at Kasikorn Research Centre.

Exports of electronic and electrical goods will be hit hardest, falling 15-20 per cent in the first half of 2009 and contracting 5-15 per cent over the year, Ms Sasipen believes.

‘Electrical and electronics export growth in dollar terms was -11.6 per cent in 2001,’ she said. ‘This year may be worse than 2001 because of the slowdown in our major trading partners, high competition between exporting countries and downward price pressure.’

The Federation of Thai Industry would not comment on the negative market conditions but confirmed its previous forecast that plunging electronics exports could cost up to 100,000 jobs in 2009.

Standard Chartered Bank (Thai) senior economist Usara Wilaipich said the government should focus on absorbing unemployment because it can do nothing about the synchronised global slowdown in demand.

‘The industry has little room for manoeuvre due to the high fixed-asset costs of its manufacturing plants and production technologies, so labour costs will have to be cut,’ she said. ‘Combined with related industries and the supply chain, about 530,000 people are employed in the sector, many of whom will inevitably be laid off.’

The sector represents 17 per cent of Thailand’s exports, contributing 10-12 per cent of GDP. The main export markets are China, the United States, Europe and Japan.

Singapore, a major re-exporter, is the fifth biggest market, accounting for 6.9 per cent of sector exports last year, according to Thailand’s Customs Department. Electronics shipments to Singapore contracted 8.2 per cent to 111 billion baht ($4.8 billion) in 2008.

Thailand consumes only 10-20 per cent of the industry’s products, Ms Usara said. The rest are exported. She believes manufacturers will delay or shelve product launches and focus on cutting inventory, as capacity utilisation has fallen to 40-50 per cent from 70-80 per cent over the past few years.

According to Sirima Dissara, electronics analyst at KGI Securities (Thailand), the decline will continue into 2010 and manufacturers will start to focus more on regional markets because Asia is expected to recover before the US or Europe.

Economists and analysts say the weakening baht will provide some support to electronics exports but will do little to reverse the negative trend.

Ms Usara said job losses this year could be more severe than during the 1997 Asian financial crisis, which in Thailand was mainly limited to the construction and property sectors. Back then, an additional one million people joined the job queues.

Unemployment rose 67,000 in January from a year earlier, according to Ministry of Labour figures. Most lay-offs were in the electronic and electrical parts, automotive, household appliance, textile and machinery industries.

Published February 19, 2009
© The Business Times