Thailand and the CLMV
As a result of the ASEAN integration, many changes can be seen in various sectors, including the agricultural and processed agricultural products. With the AEC industry entering its second year, Thailand is further losing its market share to CLMV countries (Cambodia, Laos, Myanmar, and Vietnam) in the agricultural industry.
According to Aat Pisanwanich, director of the Center for International Trade Studies at the University of the Thai Chamber of Commerce, Thailand will be losing up to 10 percent of its market share in the industry to CLMV. This was already evident in 2016 where its growth rate in the agricultural AEC industry dropped from an average of 10.5 percent for 2010-2015, despite the local export sector attaining 321.5 billion baht from ASEAN, which is an increase of 10.4% from 2015.
One reason for this is due to various international companies’ decision in setting CLMV countries as its new production base for production, instead of Thailand. With these countries being in close proximity to China, they are able to easily import and re-export Thai products to China. Another reason is due to the high economic growth rate, among other countries in the ASEAN integration region, with the CLMV AEC industry region’s growth rate at 7 to 8 percent per year and the prospects of strong growth in the region over the next five years.
Agricultural AEC Industry
Even before the implementation of the ASEAN Integration community, ASEAN’s agricultural and processed agricultural products industry was already large, with rapid growth already evident since before. In 2015, this AEC Industry market was valued at 3 trillion baht. This increased in 2016 with its market valued at 3.7 trillion baht, and is expected to further increase in 2017 to 4 trillion baht.
A year after the launch of ASEAN Integration community, Malaysia, Vietnam and Indonesia was ranked top 3 as ASEAN’s biggest export and import market in the agricultural AEC industry. In 2016, Malaysia had the highest market share of agricultural and processed agricultural product exports to ASEAN at 17.4 percent. This was followed by Vietnam and Indonesia at 17.3 and 16.5 percent respectively.
Conversely, Vietnam was the biggest import market for agricultural products at 503.6 billion baht worth of imports. This was followed by Malaysia and Indonesia at 381.5 and 344.8 billion baht worth of imports respectively. All three countries had seen an increase in their imports from before the implementation of AEC with Vietnam, Malaysia, and Indonesia having its imports increase from 365.6, 381.5, and 344.8 billion baht respectively.
However, as a result of AEC, there were products whose exports changed. Products that saw a decline in exports included rice, rubber, tapioca, coconuts, coffee, and mango. Consequently, products that saw a rise in exports included bananas, soybeans, processed seafood, and processed meat.
Implications for Thailand agricultural industry
With these changes, Mr. Aat recommends Thai manufacturers to move its production processing base to CLMV countries, especially products with declining exports. He also urges the government and other agencies to promote and support the improvement of product quality and competitiveness of Thai exports within the AEC Industry.