shift to functional and green textiles, and lower logistics costs, Thai textiles could become the ASEAN champion. Purchase orders have almost stabilized while the ASEAN-China Free Trade Agreement enables access to diverse low-cost raw materials.
 
Citing higher purchasing power and China's rising production costs, United Textile Mills' Pichai Uttamapinant projects 5% growth in local textile production. Capitalizing on unique strengths and continuous adjustment, Thai textiles can survive and thrive in the vast and free textile market. Enterprises that managed to compete with China can use cheaper inputs to upgrade products. 

Upstream industries vulnerable
With combined capacity of 1 million tons, 15 local plants account for 80% of total synthetic fiber output. Total export volume increased by 20% in 2009, but export value dropped by 14-15%. Future expansion will risk fierce competition, changing purchasing power and consumer preference.

"By targeting the ASEAN and FTA markets for technical/ functional textiles and green marketing, Thai textiles can adjust products to suit market demand. Anti-dumping measures may also be needed," said Jittikun Chiempitayanuvat, Chairman of the Thai Synthetic Fiber Manufacturers' Association

Export orders for Thai silk wedding/ evening gowns and hi-end home textiles have been severely hit by the US recession. Local silk factories and 100,000 households dependent on mulberry cultivation and sericulture will be affected by zero duty on Chinese silk fabrics and 20% tax on imported raw silk, said The Thai Silk Association President, Buntoon Wongseelashote.
 
Existing regulation requiring importers to buy 5 portions of local raw silk per portion of import, combined with failure to regulate import quantity or enforce product differentiation, may cause 50% of existing silk factories to shut down. Brand building and promotion of genuine Thai silk could also boost US and EU demand.

Suchai Pornsirikul

Sampeng: ASEAN Marketplace
Handling over Bt10 billion of cross-border trade each year, Sampeng is already a regional marketplace. Buyers can order small lots of different fabrics from numerous vendors who are concentrated in this wholesale market. Orders can be consolidated and delivered to neighboring countries within 2-3 days, compared with 24-hour delivery of 10,000 products guaranteed by one Japanese company.

Comprised 325 members (95% are fabric dealers), 5% of Association members operate their own weaving/ dyeing/sewing plants. Counting 200 non-members, 600 companies located in Sampeng cater mainly to India, Bangladesh, Sri Lanka, Nepal and the Middle East. Quick delivery of small lot orders and a diverse range of fashion items that mirror international fashion trends will sustain Sampeng's role as the ASEAN marketplace.
"Fabric imports dropped 20% during the first 9 months of 2009 while baht appreciation forced wholesalers to diversify products and cut lead time. The next step is to link up local supply chain and open new outlets in neighboring countries," said Suchai Pornsirikul, Chairman of Thai Textile Merchants Association.
 
Within the ASEAN group, only Indonesia and Thailand have upstream and downstream industries; Indonesia's export production relies on Thai raw materials. Intra-ASEAN textile imports worth Bt5-6 billion account for 20% of total textile imports. Thailand's Bt1.2 billion market share could expand if products satisfy diverse consumer demand, quality standards and Quick Response. Functional, recycled and green textiles also require equipment and plant upgrading.
 
"The first step is to create regional supply chain and provide One-stop service. Starting in 2015, Phase 2 will focus on ‘green' supply chain. The final phase starting in 2022 concerns brand building and market research," said Thailand Textile Institute's Executive Director, Virat Tandaechanurat.