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11 Aug 2005

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Reduction in Luxury Goods Imports: Denting Trade Deficit in H2/2005

Thailand's trade deficit this year is projected to reach some USD8-9 billion. This has prompted the Thai authorities to push for exports in earnest during H2-05 while being cautious about imports. Evidently, campaigns for reduced energy consumption have been launched to cut import bills for oil that have skyrocketed by 85 percent over H1-05. All Thais are also urged to refrain from purchasing imported luxury goods. These measures have been implemented to help slash imports, which will solve the problem of trade deficit in the future.

Additional import regulations should be imposed on targeted consumer goods, classified into four main categories, presented in the following:
  1. Health-hazardous products: Tobacco-based products and alcoholic beverages, i.e., wine, liquor, beer, etc. are among those products whose imports should be immediately slashed. During the first half of this year, although Thailand's imports of tobacco products fell by 6.9 percent, year-on-year, to USD47 million, imports of alcoholic beverages rose by 16 percent over the same period of last year to USD80 million.
  2. Goods under FTA accords: Reduction of import tariffs under FTA agreements should help make imported products from FTA trade partners with Thailand cheaper. As a result, Thailand is poised to import a greater volume of goods under FTA pacts. The Thai public sector and exporters should take advantage of these bilateral agreements to export more products to its trade partners to help offset higher imports from them.
  3. Goods that Thailand cannot produce itself: There are many items of products that Thailand has to rely solely on imports from, given no domestic production. Among them are crude oil, machinery, medical equipment, chemical products, weaving fibers, certain ores and ore products, fertilizers, etc. These products are thus imported for production into finished products for re-export and domestic consumption. Proper measures should be imposed on imports of these products to prevent hoarding for speculative purposes.
  4. Import goods that are similar to Thai goods: Though Thailand can produce consumer goods for the country, there are still imported goods that are similar to domestically-produced goods such as electrical equipment, ready-made clothes, leather shoes and bags, jewelry, home appliances and home decorative items, etc. Most of them are brand name items and luxury goods of other countries, so they are among those luxury goods where import must be limited significantly.

Kasikorn Research Center (KRC) views that the following measures will help slow the imports of some luxury goods:
  1. Promote Thai people to use Thai goods: Campaigning for Thais to use domestically-produced goods must be performed constantly by instilling in their consciousness to do so from their youth onward, to reduce the popularity of imported goods among Thai youths. This trend is deep-seeded in them and they have grown with such values. Examples of such goods are ready-made clothes and home electrical appliances. If Thais use more domestic goods, it should help to reduce imports.
  2. Support OTOP: The government has pushed OTOP products to success at a certain level, so it should also support them steadily in order to make OTOP products of many localities better known in both the domestic and overseas markets. Important objectives for OTOP products should be that these goods become popular with Thais, and they use them instead of imports.
  3. Produce quality goods to substitute for imports: The authorities should support Thai entrepreneurs in acquiring modern technology at moderate prices, searching for quality raw materials and innovations in designing beautiful and eye-catching products and helping to produce higher quality goods that have international standards of quality. Production must be developed for luxury goods and the quality of Thai goods must be upgraded to parity with imported goods. These guidelines should allow Thai people to feel more confident about Thai goods and use them more.
  4. Designate standards for import goods: The authorities should define the quality of imported goods clearly to protect Thai consumers, and prevent low quality goods from overseas from penetrating the domestic market. For example, they must check that the imported electrical appliances have attained designated standards, define that air conditioners and parts are goods that have compulsory energy-saving standards, cosmetics, fragrances and soaps must have certificates guaranteeing hygienic quality, etc


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