The Federation of Thai Industries is telling export-oriented Thai plastic product manufacturers to consider relocating to a lower-cost production base in Southeast Asia, particularly Vietnam.
The move may help to keep companies' earnings intact as the Thai baht appreciates in value against the U.S. dollar.
Most Southeast Asian currencies have strengthened against the weakening U.S. dollar but the baht has been hit hard, appreciating by almost 23 percent since early 2006, according to Somsak Borrisuttanakul, chairman of the federation's plastics industry group.
With resin prices increasing and a stronger Thai currency, it is becoming difficult for the industry to maintain profitability, he said. With Thailand's strong economic growth and a military-led interim government carrying out day-to-day national affairs, the baht is not expected to soften, Borrisuttanakul said.
In comparison, the Vietnamese dong has depreciated by 2 percent against the dollar since early 2006, making Vietnam one of the preferred choices for relocating Thailand's export-oriented industries, he said. The other main Asian currencies also have appreciated against the U.S. dollar: about 7 percent for the Chinese yuan and 15 percent for the Philippine peso.
The Thai plastics industry also has been hard hit by anti-dumping levies in its main markets - the United States and the European Union, Borrisuttanakul said in an interview at Flexpo 2007, held Oct. 17-19 in Bangkok.
The U.S. has imposed a 2.84 percent anti-dumping duty since August 2004, and the EU has imposed a duty of 14.3 percent since October of last year.
Thailand's largest plastics export item is plastic bags. The country produces about 1.54 billion pounds of bags annually, and exports about 441 million pounds of that total, according to the Federation of Thai Industries.
But bag exports to the United States have dropped to 69.2 million pounds in the first half of 2007 compared with 69,900 tonnes for all of 2006.
Some areas that Thailand should explore include multilayer packaging films and bioplastics, Borrisuttanakul said.
``We need our industry to start producing international-standard products, especially the multilayer films, which are widely used in making packages for food,'' he said. He added that Thailand is one of the region's leading food exporters.
Borrisuttanakul said the Thai government has started promoting biodegradable plastics, using cassava, sugar and corn starch.
``We are looking for know-how to convert these items into bioplastics,'' he said.
Thailand produces 40 billion pounds of cassava fruits a year, some of which could be turned into bioplastics for making bags, Borrisuttanakul said. The vision, he said, is to have a fully integrated bioplastic industry.
He added that Thailand's plastics industry hopes to establish a design center as well as a center for material applications in three to five years.