The textile and garment industry pl

The textile and garment industry plays a significant role in Thailand’s economic and social development. This diverse and heterogeneous industry covers a wide variety of products; everything from hi-tech synthetic yarns to wool fabrics, cotton bed linens to technical textiles, and pajamas to high fashion.

Such an assortment of end products corresponds to a multitude of industrial processes, enterprises, and market structures, allowing this industry to have one of the country’s top export values, nearly THB 275.1 billion (US $8 billion), and ranking 15th in the world for textile and garment export. Last year (2007), the overall industry was worth THB 500 billion (US $14.6 billion), split almost evenly between the domestic and export markets, with the United States, France, and Japan representing 60 percent of the foreign export market.

When this industry first began to develop over 50 years ago, much of its success was due to Thailand’s numerous competitive advantages; for example, cheap labor, lowpriced property, increases in the import and export quotas, and the currency crisis in 1997 all made Thai products favorable in the world market.

However, as time passed, the Thai textile and garment industry began to face many difficult challenges such as an increase in wages, a reduction in total productivity, a drastic increase in competition, a fluctuation in the world’s economic situation, and in 2005, the cancellation of quotas.

These internal and external factors cautioned the Thai textile and garment industry that it was losing its former comparative advantage. The government took this warning as an opportunity to adjust the industry accordingly; they began to shift their focus to quickening buyers’ responses, offering higher quality and standards for final products, upgrading technology, providing competitive pricing, providing training for their workers, and innovating their products.

Mr. Virat Tandaechanurat, Executive Director of the Thailand Textile Institute (THTI), explained, “At this time, global competition really began to intensify so there was a need for Thai entrepreneurs to adjust and make strategic changes as well as develop new products through valueadding enhancements and innovation. THTI played a major role in these advancements and continues to help further develop the textile and garment industry in order to remain competitive in the global market.”Over 12 years ago, THTI was set up as a non-profit, independent institute under the Ministry of Industry to help drive the textile and garment industry in the right direction.

THTI provides support and conveniences to the textile and garment industry and acts as a connection center for everyone in this industry: manufacturers, investors, suppliers, buyers, etc.

Furthermore, the institute is responsible for studying and analyzing industrial information to be able to assist companies in areas such as planning, human resource development, technological development and product research, as well as helping the industry develop quality standards, create linkages, boost capacity, create brand awareness, and explore new markets.

In order to get Thailand actively competing in the global market again, THTI worked to accelerate responses and improve the quality of Thai products. The Institute worked, coordinated, and focused on quality, time, and efficiency in order to reduce costs and increase quality though the introduction of supply chain management and entrepreneurial alliances and clusters. These clusters and alliances also allowed companies in the industry to avoid being labeled as Original Equipment Manufacturers (OEMs).

Currently, THTI is working to implement new activities such as creating a Thai identity and increasing product quality in order to change Thailand’s role from an OEM to an Original Design Manufacturer (ODM). These innovative ideas will in turn require more research and development, marketing, and further educating Thailand’s human resources.

“This industry began to realize that they cannot have stand alone businesses; everyone must work together to reduce costs and increase the knowledge pool,” Mr. Tandaechanurat noted.

“We have to realize that we cannot work individually. Clusters are the answer to forming a value chain. This will help small entrepreneurs survive and improve from OEMs to ODMs and eventually to Original Brand Manufacturers (OBMs),” he continued.

THTI also saw the need to improve the machinery for this industry and upgrade technology. In the past, the government granted the textile and garment industry THB 2.5 billion (US $72.7 million) for machinery and technology. THTI believed more was needed so they petitioned the government for more help. The government responded by increasing funds to THB 5 billion (US $145.5 million), its present day value.

Nevertheless, good machinery does not automatically give Thailand that competitive advantage it once had. The Kingdom still needed suppliers who could provide the raw materials according to the market’s demands. With this, the industry began to develop supply chain management practices in order to reduce product prices.

With Thailand’s increasing labor costs, the Kingdom turned to its neighboring countries to form trade alliances. With Thailand’s central location and its neighboring countries’ lack of upstream industry, this feat was easily accomplished.

Now, Thailand is able to procure raw materials for a cheaper cost, and with all the countries in ASEAN in such close proximity, companies are able to transport the materials into Thailand rather inexpensively.

“Once AFTA went into effect, taxes in the ASEAN region were eliminated and we began to look at ASEAN as one mass market. We are now able to import all the raw materials that we cannot produce locally from another ASEAN country tax-free,” Mr. Tandaechanurat mentioned.

In addition, THTI understood the importance of a properly trained and educated work force. One of the institute’s main missions is organizing activities to develop human resources for positions on every level of the textile and garment industry.

THTI set up a three-phase program in order to provide this industry with the necessary manpower.