Since 1990, the
manufacturing sector has expanded annually at an average
of 13.3 percent. A survey of 1994 capacity utilization covering
40 types of manufacturing industry (representing about 39
percent of total manufacturing activity), indicates an upward
trend in capacity utilization from 76.1 percent to 78.7
percent of full capacity. The increase reflects production
expansion to meet the increase in domestic demand and exports.
Comparing the current situation with the
situation in 1990, when the rate of capacity utilization
reached 84 percent, and the cement industry operated at
100 percent capacity, this year's high level of capacity
utilization is not expected to exert significant pressure
on domestic prices, provided economic growth in 1995 does
not exceed the projected 8.5 percent. Consumer goods, steel
products, vehicles, plastic pellets and electrical appliances
still have excess capacity due to recent investment expansion.
Exports and Imports of Manufacturing Goods
Thailand has moved from being heavily
dependent upon the export of agricultural commodities (less
than 3 percent of exports being manufactured products) in
1960, to its current position, where over 80 percent of
its exports are manufactured goods, and the export sector
is the principal engine of growth for the Thai economy.
Thailand's exports have experienced double-digit
annual growth de to the dynamism of the sector itself, combined
with consistent government policies promoting free trade
and fair competition. These policies have paid off.
Thailand's present export structure reveals
a greater diversity (in terms of both products and markets)
than most of her competitors, including the East Asian dragons.
Thailand is the world's largest source of precision ball
bearings, for example, and will soon become Honda's largest
production base for worldwide export. In agricultural products,
Thailand is the world largest exporter of frozen shrimp,
canned seafood, tapioca and canned pineapple. The top twenty
export items include a growing number of industrial products
and new entrants are seen every year.
Throughout the late 1980s and early 1990s,
Thailand's exports have increasingly included electrical
products, integrated circuits, and computers and their components.
In 1990, electrical consumer goods registered growth of
over 54 percent, while computers and components grew by
more than 44 percent.
In 1993, manufactured exports (which accounted
for over 80 percent of total export value) expanded at a
17.7 percent to 747 billion baht, an increase of 17.7 percent
from the previous year.
In 1994, exports grew faster than anticipated,
with export earnings exceeding 1.000 billion baht, claiming
a market share of more than 1 percent of the world's exports
for the first time. The growth rate of around 19 percent
was observed in all categories. Manufacturing and fishery
exports, in particular, grew by 20 percent and the continued
development of the production efficiency for new manufactured
items was evidenced by an exceptional increase in exports
of products requiring high technology, such as vehicles
and parts, electrical appliances and computers and computer
The United States continued to be Thailand's
largest market, with overall exports growing more than 9
percent. More than 80 percent of exports to the United States
were manufactured products, and major items which recorded
significant increase were textiles, computer parts and components,
electrical circuit breakers, integrated circuits and parts.
The second most important export market was Japan. Over
60 percent of exports to Japan were manufactured products,
with major exports being electrical appliances, furniture
and parts, electrical circuit breakers and integrated circuits.
Export to ASEAN countries expanded at more than 30 percent
On the import side, the rapid growth of
the manufacturing sector has created a large demand for
a growing range of intermediate goods. Thailand currently
imports large quantities of capital goods, raw materials,
and intermediate goods each year. From 1988, when total
imports reached about 501.4 billion baht, (a record increase
of 46.6 percent), imports have seen consistent growth reaching
1,337 billion baht in 1994.
The value of imported capital goods increased
substantially throughout the late 1980s. The import values
of raw materials and intermediate goods increased by 50.1
percent, with prices rising by 24 percent and volume increasing
by 21 percent. Import values of basic metals grew by 75
percent, with imports of iron and steel rising by 72 percent.
Imports of raw materials used in the production of consumer
goods also increased significantly. Import values of chemicals
grew by 34.5 percent and precious stone imports jumped by
In 1992, the value of exports registered
substantial growth to approximately 824 billion baht, and
the value of imports also rose considerably to about 1,033
billion baht. In line with the buoyant expansion in economic
activities, imports in 1994 rose by 17 percent, with a volume
growth of 15.6 percent.
Reflecting the acceleration in domestic
expenditure, the imports of capital goods and consumer goods
increased markedly, while the import of raw materials and
semifinished products grew in line with the expansion of
manufactured exports. Other imports, particularly fully-assembled
automobiles and parts, moderated after rapid growth in 1993.
Due to the rapid growth of exports relative
to imports, the trade deficit rose slightly to 240.5 billion
baht but declined as a proportion of GDP for the fourth
consecutive year to 6.7 percent; Thailand's trade deficit
is due primarily to the import of capital goods and raw
materials used for investment and increasing the country's
production capacity in the future. However, recognizing
this dependence on foreign supplies, the government encourages
investment in capital goods and intermediate products which
add value to the basic raw materials that are exported.
Throughout the 1990s, export-oriented business will continue
to display strong performance and increasing sophistication.