Businesses back trade pact

Thai-Japan deal will stimulate exports

PHUSADEE ARUNMAS

Thailand's powerful business groups have thrown their full support behind government plans to sign a free trade agreement with Japan, believing the deal will increase exports to Japan by more than US$1 billion in the first year alone. The three bodies _ the Board of Trade of Thailand, the Federation of Thai Industries and the Thai Bankers Association _ say that the trade pact will stimulate the economy and promote greater co-operation in areas such as technology and human resources development.

Thailand's exports to Japan in 2006 were $16.43 billion, or 13% of Thailand's total of $129.74 billion.

''We have forecast the value this year to rise by 6% and fetch at least $17.5 billion without the [trade agreement]. But an additional one billion dollars can be earned once the agreement goes into effect,'' said Pornsil Patchrintanakul, deputy secretary-general of the Board of Trade.

The JTEPA _ Japan-Thailand Economic Partnership Agreement _ is the formal name for the free trade accord.

The Board of Trade hopes the pact will boost farm and agro-industry exports to Japan by 20% after Tokyo reduces or eliminates tariffs on a wide range of goods.Under the agreement, Japan's import tax on shrimp will fall to zero from the current rate of 3-6%. Other products that will benefit are chicken, canned tuna, pineapples, vegetables and tapioca flour.

Farm and agro-industry products account for about one-third of exports to Japan. Last year, farm products accounted for $1.26 billion of exports to Japan, while $2.24 billion was generated from processed farm exports, based on an exchange rate of 37.9 baht against the US dollar.

Mr Pornsil, an executive of the Charoen Pokphand Group, the country's biggest agribusiness conglomerate, conceded that large farm and food companies would gain most from the pact _ especially those with existing relations with Japan.

However, small and medium-sized entrepreneurs may also benefit from the agreement through higher demand for Thai farm goods. Thailand currently has 12,036 food processing factories including 11,606 small plants, 324 medium size and 106 large operators.

Even without the trade agreement, strict sanitary standards in Japan remain a major obstacle for Thailand's agricultural export industries, said Mr Pornsil.

Representatives from the Federation of Thai Industries are confident that the pact will also benefit textile and garment industries due to lower taxes on capital goods imports from Japan.

But some industries will see little gain from the trade agreement. Makers of steel, automobiles and petrochemicals are not expected to profit from the pact, as they are already key industries in Japan.

Prime Minister Surayud Chulanont will be in Tokyo on Tuesday to sign the trade accord, which is scheduled to take effect in September or October.

Bangkok Post

Saturday March 31, 2007