Traditional Textiles, Government Reform Help Thailand Recover
January 17, 2003
Bangkok - In the early 1990s, Thailand's economy boiled, with building and infrastructure projects going on at an intense pace. But in 1997, the value of the Thai baht melted from 25 to 40 per U.S. dollar, making several companies bankrupt and leaving the economy in distress and shambles. Hotels stopped expansions, even basic replacements of soft furnishings. Importers could not pay for imported merchandise and a cash crisis took its toll on small, medium and large businesses alike. But the Thai economy, which took a severe beating along with its neighbors' in the late 1990s, has begun to recover.
The year 2002 has spelled confidence and revival. Hotels have started refurbishing, textile manufacturing output exceeds 80 percent and the currency is steady between 43 and 44 baht per U.S. dollar. The government intends to pay off its IMF loans by January 2003.
Spurring the textile industry has been overseas interest in regional handcrafts. Upper-end home decorating experts, scouring the globe in search of ''traditional handcrafts'' to embellish their more sophisticated collections, have arrived at Thailand's door. As a result, Thailand's traditional handcrafts - 'Thai Style' art objects - are enjoying rising popularity and are exported all over the world.
Woven into the recovery is an ancient fiber - silk. In Bangkok, Thai silk's eminence is on the rebound, spearheaded by American Jim Thompson. Thompson invested in his passion for more than thirty years to establish his silk factory, and the Jim Thompson showroom is now a tourist landmark, displaying silk manufacturing from primitive sericulture of rearing silk worms to hand weaving of silk fibers.
''Evolution of the handicraft by traditional means still rules Thai silk,'' said Surindr Supasavasdebhandu, deputy managing director of Jim Thompson, ''but the Western influence in new manufacturing methods has been well integrated to meet diversified global demands. Value addition comes from combining creative Thai traditional skills with modern manufacturing technology.''
Thailand has recently made its mark on tassels, too. Bangkok's MDI Intertrade Holding Group Co. Limited had imported trimming from Europe until it was hit by the currency meltdown in 1998. Then the company started manufacturing tassels ''handcrafted in Thailand,'' and has been exporting 70 percent of its production to world markets and growing at the rate of 30 percent a year.
''In order to reduce the delivery period to four to six weeks, we are contemplating new investments in special purpose machinery to speed up production to meet the increasing demand,'' said Nancy Sirichotekunakorn, managing director.
While the textile industry has capitalized on traditional handcrafted items delivered by modern means, the government has focused its energies on improving Thailand's infrastructure to encourage global trade. Prime Minister Thaskin Shinwatra said his restructuring policy is to adopt new management techniques and western technology in the next five years and to cut political red tape.
''Our aim is to make civil servants understand the importance of Thailand's economy weaving into global trade, and this can happen by improving systems as well as implementation,'' he said.
New systems adopted include the Bangkok Port Authority's launch of a one-stop import service center (ending the hassles of the earlier system of going through six different units of warehouses to check whether goods had arrived, and then having to clear customs). Plus the massive $5.1 billion new Bangkok International Airport is nearing completion. The government has also tried to help domestic markets regain strength by adopting a policy of soft loans to buy and build homes at low interest payable in 30 years.
But what do you do in a country that historically does not use curtains or sofas in most of its homes? At least one Thai company has decided on export as the answer. Satin Textile Co. Limited started in Bangkok as an importer to cater to the domestic market, but since Thailand's traditional windows are wide and open, curtains historically are not a part of its culture. And since most people traditionally squat rather than sit, sofas, too, have been limited to urban areas. For highly decorative Thai specialties such as tassels and silk, the domestic market is small and limited to palaces, hotels and rich homes. So the company now exports 80 percent of its decorative fabric, catering to the middle and upper-market segments of Europe and Australia. Satin Textile is also opening a new showroom in Shanghai, China.
''There is a good potential for high-end decorative fabrics, and the gradual opening of [the] China market and increased consumer buying power assures a good market to us,'' observed Schle Wood, managing director. Textiles imported to Thailand, meanwhile, grew more than 10 percent this year. The residential sector is buying primarily Chinese and other non-European fabrics, which offer acceptable quality and low price. VC Fabrics Company Limited, Bangkok, an importer and re-distributor, grew its retail business during the boom period in early 1990s and still caters to residential markets. In places where curtains and upholstery sell, said general manager Pranee Woraditkittkul, ''polyester cotton blends are preferred for curtain making and chenille for upholstery, followed by jacquard. Polyester dupion weave, which looks like Thai silk but sells at a fraction of the price, has carved out a good share from the mass market segment.''
Contract markets seem more promising than residential. Thai real estate prices for retailing space have recovered fully from lows in 1998 of $10 to $30 a square meter to $20 to $45 a square meter, depending on the location in the scattered business districts of Bangkok. Hotel capacities are enough and the hospitality industry is beginning to spend on redecorating and refurbishing. NP Fabrics, a division of MDI Intertrade Holding Group, distributes imported furnishing fabrics. It estimates the market size for imported fabrics between $5 million and $6 million a year and retails products through 500 retailers in Thailand.
Foreign direct investment has also been encouraging. The leading investor, Japan, continues investments in Thailand for automobiles as well as automotive interior textiles. China, too, has chosen Thailand for investments. Though it offers direct sellers only about 60 million fashion-conscious Thais, Thailand is nevertheless perceived as a good place for higher value addition and re-exports. China World Group is investing $117 million to build a 60,000-spindle cotton yarn mill, a 400-ton synthetic yarn spinning mill and other factories.
Said Thailand's Phinij Jarusombat, Minister of Science & Technology, ''The economic indicators are promising and indicate a positive and steady recovery.'' F&FI
The year 2002 has spelled confidence and revival. Hotels have started refurbishing, textile manufacturing output exceeds 80 percent and the currency is steady between 43 and 44 baht per U.S. dollar. The government intends to pay off its IMF loans by January 2003.
Spurring the textile industry has been overseas interest in regional handcrafts. Upper-end home decorating experts, scouring the globe in search of ''traditional handcrafts'' to embellish their more sophisticated collections, have arrived at Thailand's door. As a result, Thailand's traditional handcrafts - 'Thai Style' art objects - are enjoying rising popularity and are exported all over the world.
Woven into the recovery is an ancient fiber - silk. In Bangkok, Thai silk's eminence is on the rebound, spearheaded by American Jim Thompson. Thompson invested in his passion for more than thirty years to establish his silk factory, and the Jim Thompson showroom is now a tourist landmark, displaying silk manufacturing from primitive sericulture of rearing silk worms to hand weaving of silk fibers.
''Evolution of the handicraft by traditional means still rules Thai silk,'' said Surindr Supasavasdebhandu, deputy managing director of Jim Thompson, ''but the Western influence in new manufacturing methods has been well integrated to meet diversified global demands. Value addition comes from combining creative Thai traditional skills with modern manufacturing technology.''
Thailand has recently made its mark on tassels, too. Bangkok's MDI Intertrade Holding Group Co. Limited had imported trimming from Europe until it was hit by the currency meltdown in 1998. Then the company started manufacturing tassels ''handcrafted in Thailand,'' and has been exporting 70 percent of its production to world markets and growing at the rate of 30 percent a year.
''In order to reduce the delivery period to four to six weeks, we are contemplating new investments in special purpose machinery to speed up production to meet the increasing demand,'' said Nancy Sirichotekunakorn, managing director.
While the textile industry has capitalized on traditional handcrafted items delivered by modern means, the government has focused its energies on improving Thailand's infrastructure to encourage global trade. Prime Minister Thaskin Shinwatra said his restructuring policy is to adopt new management techniques and western technology in the next five years and to cut political red tape.
''Our aim is to make civil servants understand the importance of Thailand's economy weaving into global trade, and this can happen by improving systems as well as implementation,'' he said.
New systems adopted include the Bangkok Port Authority's launch of a one-stop import service center (ending the hassles of the earlier system of going through six different units of warehouses to check whether goods had arrived, and then having to clear customs). Plus the massive $5.1 billion new Bangkok International Airport is nearing completion. The government has also tried to help domestic markets regain strength by adopting a policy of soft loans to buy and build homes at low interest payable in 30 years.
But what do you do in a country that historically does not use curtains or sofas in most of its homes? At least one Thai company has decided on export as the answer. Satin Textile Co. Limited started in Bangkok as an importer to cater to the domestic market, but since Thailand's traditional windows are wide and open, curtains historically are not a part of its culture. And since most people traditionally squat rather than sit, sofas, too, have been limited to urban areas. For highly decorative Thai specialties such as tassels and silk, the domestic market is small and limited to palaces, hotels and rich homes. So the company now exports 80 percent of its decorative fabric, catering to the middle and upper-market segments of Europe and Australia. Satin Textile is also opening a new showroom in Shanghai, China.
''There is a good potential for high-end decorative fabrics, and the gradual opening of [the] China market and increased consumer buying power assures a good market to us,'' observed Schle Wood, managing director. Textiles imported to Thailand, meanwhile, grew more than 10 percent this year. The residential sector is buying primarily Chinese and other non-European fabrics, which offer acceptable quality and low price. VC Fabrics Company Limited, Bangkok, an importer and re-distributor, grew its retail business during the boom period in early 1990s and still caters to residential markets. In places where curtains and upholstery sell, said general manager Pranee Woraditkittkul, ''polyester cotton blends are preferred for curtain making and chenille for upholstery, followed by jacquard. Polyester dupion weave, which looks like Thai silk but sells at a fraction of the price, has carved out a good share from the mass market segment.''
Contract markets seem more promising than residential. Thai real estate prices for retailing space have recovered fully from lows in 1998 of $10 to $30 a square meter to $20 to $45 a square meter, depending on the location in the scattered business districts of Bangkok. Hotel capacities are enough and the hospitality industry is beginning to spend on redecorating and refurbishing. NP Fabrics, a division of MDI Intertrade Holding Group, distributes imported furnishing fabrics. It estimates the market size for imported fabrics between $5 million and $6 million a year and retails products through 500 retailers in Thailand.
Foreign direct investment has also been encouraging. The leading investor, Japan, continues investments in Thailand for automobiles as well as automotive interior textiles. China, too, has chosen Thailand for investments. Though it offers direct sellers only about 60 million fashion-conscious Thais, Thailand is nevertheless perceived as a good place for higher value addition and re-exports. China World Group is investing $117 million to build a 60,000-spindle cotton yarn mill, a 400-ton synthetic yarn spinning mill and other factories.
Said Thailand's Phinij Jarusombat, Minister of Science & Technology, ''The economic indicators are promising and indicate a positive and steady recovery.'' F&FI
