Thailand - Industry

Thailand Industry 1592
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Seven government agencies supervise the Thai industrial sector: the Ministries of Finance, Commerce, and Industry, the Board of Investment, the Industrial Finance Corporation, the Bank of Thailand, and the National Economic and Social Development Board, (NESDB) in charge of formulating five year development plans. In 1982, an eighth agency, the Industrial Restructuring Committee, was created to coordinate the other seven and to formulate policy proposals in line with economic development plans. The main protective measures Thailand has used are import tariffs and price controls. Tariffs, low in the 1960s, were increased in the 1970s, some to above 90%, and price controls were pervasive. As part of the fifth economic development plan, 1982–1986, the government began to lower tariffs and relax price controls. In the economic boom of the early 1990s trade liberation was continued particularly as the protection of infant industries became less important for Thailand's industrial growth than reducing the cost of imported capital goods and spare parts for rapidly expanding sectors like the automotive industry and electronics.

Manufacturing grew at an average rate of 12% annually in the 1960s and 10% in the 1970s. However, in the wake of the second oil shock in 1978–1979, rising interest rates, reduced global demand and falling commodity prices adversely affected manufacturing growth. In the period 1971 to 1985 Thailand continued to import most its manufactures, although there was impressive growth in some sectors. The production of food products nearly tripled, textiles grew by over 500% and transportation equipment showed even greater growth.

With the collapse of oil prices in 1986, Thailand was propelled into a decade-long boom led by its industrial sector in which the economy more than tripled, ending in the collapse of the baht in early July, 1997. Automobile production increased 750% 1986 to 1996, from 74,162 vehicles to a peak of 559,428. Annual growth for automobile production averaged 42.6% 1986 to 1990, and, after a 7% decline in the global recession of 1991, 15% 1992 to 1996. It was the world's fastest expanding automotive industry and Thailand also became the world's second-largest producer of motorcycles and pick-up trucks. Thai automobile producers invested in capacity expansion on the expectation that demand would grow to about one million cars a year, but the onset of the Asian financial crisis meant that these expectations were unmet. Production fell 35.6% to 360,303 units in 1997 and then another 56.1% to 158,130 units in 1998. Recovery began in 1999, with a106.9% increase to 327,101 units, and 2000, with a further 25.9% increase to 411,721 units. By 2002, Thailand was on track to match the pre-crisis peak, with a projected production of 560,000 (56% of capacity). Similarly, motorcycle production by 2001 and 2002 had recovered to match the one-million-plus record set in 1997. Thailand's automobile sector consists of seventeen companies, the four largest being Auto Alliance Thailand (only pickup trucks in 2000), Toyota Motor Thailand, MMC Sittiphol, and Isuzu Motor Thailand, which together account for over 70% of production capacity.

By contrast, the cement industry, dependent more on the recovery of domestic demand, has not achieved pre-crisis production levels. Construction, one of the three leading growth sectors in the boom (with manufacturing and financial services), was the most severely impacted by the financial crisis. While the overall economy decreased 1.4% in 1997 and 10.5% in 1998, construction fell about 25% in 1997 and then over 38% in 1999, as landscapes that had been dominated by construction cranes were transformed into ones dominated by "For Sale" signs and unfinished buildings. Growth did not return to construction until 2002. Annual cement production, which grew from 18,834 tons in 1990 to a peak of 36,943 tons in 1997, was at 28,611 tons in 2002.

Textiles and garments remain Thailand's largest industry and second-largest source of exports (after electronics). This includes synthetic fibers production, which in 1995 was growing at a 25% annual rate, one of the fastest in the economy. About two-thirds of the output are ready-to-wear garments destined for markets in the United States and Western Europe. In 2000, there were an estimated 2,500 textile firms employing more that one million workers. By 2002 pre-crisis production levels had been achieved and slightly bettered, but with a significant proportion of capacity unutilized.

Since 1985, electronics has been Thailand's leading manufacturing export sector, employing about 300,000 workers. Annual growth in electronics production has averaged over 20% over the past decade, with about 80% of the output exported. In 2000, electronics constituted one-third of all exports. Unlike most other manufacturing sectors, electronics production continued to grow during the financial crisis: the devaluation of the baht only made Thai electronic exports more competitive. Leading products include fully assembled computers, computer accessories, and integrated circuits in addition to a wide range of consumer electronics products.

Among the ASEAN nations during the decade of boom, Thailand became the largest producer of petrochemicals as well as cement, and textiles. Unlike most other industries, the refineries continued running near capacity during the crisis years 1997 to 1999. Refinery outputs reached 777,000 barrels per day in 1997, up 225% from 1990, then fell 4.6% in 1998 before recovering to a new high of 809,000 barrels per day (up 9.2%) in 1999. As of 2002, Thailand has seven oil refineries and a total refining capacity of 860,000 barrels per day. The four largest refineries are run by Shell Company of Thailand Ltd. at Rayong (275,000 barrels per day capacity), Thai Oil Company Ltd. at Sriracha (185,000 barrels per day), Esso Standard Thailand Ltd., at Sriracha (160,000 barrels per day) and Star Petroleum Refining Company at Rayong (130,000 barrels per day), respectively, accounting for over 87% of total refining capacity. Over a third of refined production is distillate fuel oil, production of which increased 350% 1990 to 1999. Motor gasoline and residual fuel oil each account for about 18% of refined outputs, which grew in triple digits, 186% and 126%, respectively, during the 1990s. Other important refinery outputs include jet fuel (about 9% of the total), and liquefied petroleum gases (about 10%).

One industry that showed uninterrupted annual increases during the crisis was the production of beer, the output of which grew 6.7% 1997 to 1998, and another 6.2% 1998 to 1999. Across the 1990s beer production increased 370%.

Overall industrial capacity utilization was 65% in 1997, and fell to 50% in 1998. By May 2002, utilization levels had reached 59.1%. The Bank of Thailand's manufacturing production index using 1995 as the base year was 107 in 1997 and had reached 122.9 in May 2002.

Also read article about Thailand from Wikipedia

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Arjay Policarpio
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Mar 3, 2008 @ 1:13 pm
Hi guy's, Me and my friend's are learning about this country. It's a Social Studies activity. Thailand seem's like it's a very good country. It sound's beautiful! And I would like to say hi to the people who read's this! (: Arjay Policarpio
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Apr 20, 2010 @ 5:17 pm
Hey people! Me and other people are learning about this country too. It counts for a Social studies grade, a reading grade, and a writing grade. I wish I lived in Thailand.I hope that if anyone is learning about Thailand uses this site.
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Jul 23, 2011 @ 2:02 am

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