Thailand, known for its strong manufacturing sector, is facing serious economic problems. Factory closures are increasing, and cheap imports from China are flooding the market, making the situation worse.
The recent inauguration of China’s BYD, a prominent electric vehicle (EV) manufacturer, marks its first foray into Southeast Asia with a new factory in Rayong. This move underscores China’s growing dominance in the regional EV market, while concurrently highlighting Thailand’s struggle to retain industrial competitiveness.
In contrast, Suzuki Motor’s decision to shutter its Thai factory, capable of producing up to 60,000 cars annually, adds to the mounting closures across Thailand. Nearly 2,000 factories have ceased operations in the past year alone, severely impacting a sector that contributes a quarter of Thailand’s GDP.
Chanpen Suetrong, a former worker at V.M.C. Safety Glass, voiced her distress following the closure of the factory where she had worked for almost two decades. “I don’t have any savings. I have hundreds of thousands of baht of debt,” lamented Chanpen, who supports a family of three. “I’m old, where will I go to work? Who will hire me?”
Prime Minister Srettha Thavisin, facing economic challenges since assuming office, aimed to boost GDP growth to 5% annually. However, the industrial sector slump, with capacity utilization dipping below 60%, presents a stark reality check.
According to Supavud Saicheua of Thailand’s National Economic and Social Development Council, the traditional manufacturing-driven economic model is now obsolete. “Cheap imports from China are causing significant disruption,” he remarked, advocating for a strategic shift towards products not exported by China and bolstering Thailand’s agricultural sector.
Recent data from the Department of Industrial Works reveals a 40% increase in factory closures from the previous year, leading to an 80% surge in job losses, affecting over 51,500 workers. The dwindling number of new factory openings underscores the sector’s challenges, exacerbated by rising energy costs and wage pressures.
As Thailand grapples with economic stagnation, initiatives like a new 7% value-added tax on imported goods under 1,500 Thai baht aim to mitigate the influx of cheap Chinese products. However, concerns persist over tariff evasion amid global trade tensions.
With Thailand’s GDP growth forecasted at just 2.5% this year, dissatisfaction mounts among citizens despite government pledges of a 500 billion-baht stimulus package. Chanpen, like many others, awaits economic relief amid uncertain times.
“The economy was bad before, and it remains the same,” Chanpen reflects, echoing widespread sentiment across the nation.
The future of Thailand’s manufacturing sector hangs in the balance as policymakers navigate challenges to revive economic vitality amidst global economic shifts.
