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July 2008
Around the World: Thailand

     Q & A with Pramode Vidtayasuk

Pramode Vidtayasuk
Director General,
Department of
Industrial Promotion,
Thai Ministry of Industry

We would like to thank Pramode Vidtayasuk for taking the time to respond to our questions. He
is the Director General of the Department of Industrial Promotion of the Royal Thai Government's Ministry of Industry. The Department of Industrial Promotion (DIP) supports new enterprises and job creation and promotes and develops industries, especially small and medium-sized enterprises (SMEs) and community-based industries, to compete in the global market. The DIP has five goals:

  1. To promote the establishment of industrial business and an entrepreneurial culture for job creation and sustainable growth.
  2. To upgrade entrepreneurs’ performances in industrial sectors in order to compete in the world market and create more income for the country.
  3. To promote and support community-based industries to create more jobs and income for people in regional and remote areas.
  4. To create service standards and models as well as to support implementation factors between public and private agencies in order to promote and develop SMEs and various industrialists.
  5. To propose measures and policies for enhancing overall industries and SME entrepreneurs.

DIP has worked closely with the Thai apparel and textile sector to help it grow. For more information about DIP, please see www.dip.go.th/home/default.asp

Q. What does the Department of Industry Promotion (DIP) do to assist the Thai apparel and textile industry?

A. The DIP works closely with the Board of Investment (BOI) of Thailand to attract more foreign investors, especially the Japanese, to the upstream textile industry.

In the year 1987, textile export goods made the highest revenue for Thailand for the first time. The whole industry was active, with a lot of new companies and expansion of existing manufacturers. Then in 1997, we experienced the economic crisis. At that time, the government set up many projects to help the industry by increasing competitiveness and management skills, including a training fund, a consultant fund, and a productivity improvement fund. By giving the industry staff more professional skills, management know-how, and new technology, we were able to reduce production costs by improving productivity and efficiency. Through continuous and systematic assistance programs, the manufacturers have become highly efficient, offering quick response and shorter lead time with good quality.

The industry needs to be sustainable, and SMEs play a very important role. To strengthen SMEs in the future, the DIP has instituted One Tambon (village), One Product (OTOP). When OTOP groups team up as small community businesses and learn basic business skills, they will create a fundamentally solid foundation for this industry by forming stronger and more competivite SMEs. With new SMEs forming, we will need a new generation to be trained in basic business knowledge. The New Entrepreneurs Creation (NEC) project was therefore set up to provide training workshops for the next generation. Nowadays, the industry has many problems stemming from the management system, and this program can address this weak point.

To serve market needs, the Thai apparel and textile industry needs to fully integrate material sourcing with material development. Our project in design and product development is a very important step to prepare manufacturers to serve their buyers and tighten their business partnerships. This project addresses not only new material development, but also product development. Product development is the spirit of the design; the whole process is one and the same and must be very strongly tied together and built up as a design and product development management system.

The design and product development project has a small budget. But there are so many manufacturers, and continual improvement is necessary regardless of the size of the manufacturer. Invigorating Thai Business (ITB) is a project with a larger budget to help more manufacturers provide in-house training through seminars and basic management system consultants.

Our goal is for the Thai industry to provide the "full package" — a fully integrated textile and apparel industry. The Thai government set up the Bangkok Fashion City to help the industry become more competitive in the global market. Bangkok Fashion City brings the Thai fashion industry visibility on the world stage. The whole industry is very active and aware of the need to develop this visibility. Another important project is the Bangkok International Fashion Academy. Through this project, we bring experts from all over the world to transfer their professional know-how to the Thai fashion industry and strengthen the fundamentals of education in the industry.

After all the colorful activity of the Bangkok Fashion City project, is everything going smoothly? No, of course there is still room for continual improvement and development. The DIP also has the Manufacturing Development to Improve Competitiveness Program (MDICP), which helps form clusters within the industry to work on management re-engineering. This project has been so successful, it is running into its tenth phase.

Q. What does the future look like for SMEs in the apparel industry in Thailand?

A. Apparel companies are easy to set up with just a few sewing machines, especially in the past 15 to 20 years. Some of these will become big enterprises in the industry. SMEs are mostly family businesses, but the difference is that the younger generation is taking over the management of these companies, and many of them have been highly educated abroad and have professional degrees. For globalization and international partnerships, the younger generation has more of the communication skills needed to work with buyers; this will be the future of the Thai apparel industry.

In the local fashion market, the industry consists of mostly SMEs, due to the limited market. When a local brand would like to grow, it needs to globalize. But before it goes international, the company needs to review its brand concept and market segment because seasonal timing and consumer expectations are different internationally. Thailand is an increasingly cosmopolitan country with a lot of tourists. Here, a foreign company can work very smoothly and freely.

Q. What export markets are of interest to DIP and the Thai apparel market?

A. Japan, the European Union (EU), the Middle East, and niche markets in the U.S. are all potential markets for the Thai apparel industry. These markets are the most suitable for the items produced, the prices, and the business strategies of Thai manufacturers.

Japan is currently the most important potential market for Thai apparel exports. Not only does Japan import our high value-added items, but also Thailand and Japan are forming partnerships to support each other. For example, Japan will help with developing new materials for textile products which can be applied to the apparel industry or others such as the automobile industry.

The EU is on track to keep going and growing, especially in small-quantity orders at reasonable prices. The Middle East is a new potential market for the Thai apparel industry, as customers there increase their buying power in the better price range. And the U.S. is still a big export market, but quantity and price are adjusting to more of a niche market, with smaller quantities at reasonable prices combined with quick response.

Q. What kind of foreign investor would the DIP and the Thai apparel industry like to see more of in Thailand?

A. Due to the strategic partnerships and vertical set-up mandated by the Free Trade Agreement (FTA), Thailand needs more upstream and midstream manufacturers to supply the technical and functional support for downstream textile manufacturers.

Full-package service will be our future marketing strategy. The supply of high-technology materials is not enough for local export manufacturers’ demand in addition to the demand from Vietnam and Cambodia. We can tell from the import data that demand for fiber and yarn has been gradually increasing in the last few years.

Q. How has the retail apparel market in Thailand changed over the past 15 to 20 years as the country’s middle class has emerged?

A. The selling point for middle and high-end products in the retail market is mostly in department stores. Budget items, in the past, have mostly been found in the free market or the weekend market. Nowadays, Thai consumers know more about fashion, and dress more along with international trends, so there have been many big supermarkets established, as some consumers turn to the big retailers for a bit higher price but with better quality.

The import data show that the value of the garments imported is increasing, which means the consumer expects more in fashion and will accept products from anywhere that can satisfy their requirements. Today, there is both very cheap clothing from China available in the free market and very expensive international brands (almost every famous brand is there) in the modern department store.

Q. What opportunities do you see for expanded American-Thai apparel and textile business linkages, particularly if the Free Trade Agreement is successfully negotiated?

A. Thailand is going to be more competitive with other Association of Southeast Asian Nations (ASEAN) countries for full-package service. It’s not only the Thai investor but also investors from Japan, Taiwan, and Korea who are increasing their investment in Thailand. America should be in the same situation, especially with nylon, which is the strongest product imported from America. However, U.S. market share may decrease as Taiwan is coming up with high-technology fibers, too. Compared to other ASEAN countries, human resources in Thailand include more educated people in the textile field, and environmental protection, product safety, labor and human rights, and public education are already more commonly practiced here. We can expect the Free Trade Agreement to lower the price of Thai products in America.