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Bangkok Post
Bangkok Post
Business

Manufacturing to thrive despite threats

Thailand's manufacturing sector is expected to keep growing next year following the easing of Covid-19 infections, but economic challenges caused by high inflation and the impact of the Russia-Ukraine war could cause a bumpy ride, according to analysts.

Higher demand for industrial products overseas is expected to drive growth in various industries, including automobiles and auto parts, electric vehicles, medical devices, smart electronics, food processing and bio-based manufacturing, said Warawan Chitaroon, deputy permanent secretary for industry and acting chief of the Office of Industrial Economics (OIE).

"Goods purchase orders from foreign countries have increased as the global economy recovers slowly after the pandemic eased," she told an OIE forum titled "Disruptive Change is A New Chance".

Thai industries also have bright prospects from many state initiatives, notably infrastructure development projects in the Eastern Economic Corridor area and a push for bio-, circular and green (BCG) economic development, said Ms Warawan.

BCG, which was announced as a national agenda item by the administration, aims to encourage manufacturers to adopt techniques that can add value to products via methods that have no or minimal impact on the environment.

To help improve the country's economy, the Thai Chamber of Commerce plans to invite investors from Saudi Arabia, India and Vietnam to invest here, said Sanan Angubolkul, chairman of the chamber.

"Investors from these countries have the potential to help grow the economy post-pandemic," he said.

Challenges ahead

"Geopolitical conflicts like the prolonged Russia-Ukraine war may worsen the global semiconductor shortage, which could decrease the production capacity of automakers," said Kriengkrai Thiennukul, chairman of the Federation of Thai Industries.

The chip scarcity has been a major hindrance in car manufacturing, causing global car companies in Thailand to change their production plans and delay delivering some car models to their customers.

Mr Kriengkrai is also worried about high inflation and expensive energy prices, which could affect economic development and the country's competitiveness.

"These factors come as many factories are still struggling to improve their technologies in line with the government's push to develop Industry 4.0," he said, referring to the state's efforts to promote the fourth Industrial Revolution, which encourages manufacturers to apply digital technology and data analysis to manufacturing.

Clean and lean

Speaking at the forum, Thailand Development Research Institute president Somkiat Tangkitvanich encouraged manufacturers to adopt a "clean and lean" approach amid expectations the global economy would stagnate or face a recession next year as a result of high inflation.

Manufacturers face rising production costs caused by high energy prices.

However, they will not be able to pass through all the higher costs to consumers as this group is experiencing waning purchasing power, he said.

Mr Somkiat suggested manufacturers make themselves clean and lean by cutting production costs to deal with the economic challenges next year.

They should adjust their production processes to be in line with the environmental, social and governance practices that have been adopted by many developed countries, he said.

Mr Somkiat also suggested manufacturers adopt automated systems in their production processes to address the labour shortage and disruptions caused by the pandemic.

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