Display mode (Doesn't show in master page preview)

12 Apr 2005


Electronics, 2005: Slowing with the Global Economy

The electronics component industry is vital to the country's exports. The export value of this industry ranks first and accounts for around 20 percent of the country's total exports. In 2004, Thailand's exports of electronic components topped USD19.689 billion, equivalent to Bt790.175 billion, rising by 11.3 percent over 2003. This value represents some 15.8 percent of the GDP. Among key export items in this category are hard disk drives (HDDs), computer accessories and electronic integrated circuits. Currently, Thailand is the world's second largest production base for HDDs, whose exports account for 67 percent of the total exports in the world market. Normally, growth in electronic products follows global economic trends. This means that if the world economy this year slows as a result of surging oil prices, exports of Thai electronic products will decelerate in tandem. In 2004, Thailand's exports grew considerably. In 2005, exports of electronic products from Thailand are expected to expand steadily, albeit at a slower pace than the year before. This slowdown can be attributed to the following risk factors:
  • The World Economic Slowdown should be the key culprit in sluggishness in Thailand's electronic exports, as the country relies on these exports. In 2005, global economic growth is likely to be slower ? at around 4.3 percent ? from the 4.6 percent of last year.
  • Decelerating Exports ? Taking into account exports of electronic products over the first two months of this year, it was found that the export value had dropped 1.8 percent, year-on-year. Kasikorn Research Center (KRC) estimates that, in 2005, Thailand's exports of electronic products will total some USD20.67 billion, a year-on-year increase of 5 percent, approximately. Exports of computers and accessories should grow markedly, while semiconductors are poised to expand modestly due to low demand in the world market. So far, there has yet to be any sign of high growth as seen last year, which was supported by environmental factors, namely, changes in technology.

The Thai electronic components industry in 2005 will tend to slow from 2004 as a result of the slowdown in the world economy and uncertainty in the market that has changed due to various negative factors, including volatile oil prices that are hovering at a high level, demand for IT goods that has dropped in larger markets like the US, and changes in production technologies that depend more on electronic devices. Meanwhile, for the medium- and long-term trend in the electronics industry, Thailand still faces many risk factors such as volatility in currency values, changes in production technology, self-adjustments of domestic entrepreneurs, and competition from overseas, all of these causing Thailand to have to urgently adapt to withstand these risks.

As the electronics industry is quite important to the country's economy, particularly as an important employer, it is necessary that the state sector expedite solutions to obstacles that could impact this industry in the long run. At present, although the electronic component manufacturing industry in Thailand has developed for a long time, it hasn't grown as it should have. The state sector should support linkages in fully integrated production circles, from upstream to downstream, provide support to research and development, improve tariff structures, develop basic infrastructure (that is still an obstacle to competitiveness), develop Thai manufacturers, and help make them superior to manufacturers overseas. Moreover, knowledge and skills in the workforce should be developed ? particularly those who work in the field of electronic circuit design ? for sustainable growth in the Thai electronics industry in the future.