Call to reduce raw material tariffs

Thailand
Published:  18 November, 2013

Leather goods manufacturers have called on the government to help lower the cost of raw materials to ensure competitiveness amid slower global trading. Also, traders are worried that the current political conflict could drag down the industry.

Suriya Prateepmanowong, President of the Thai Leather Goods Association, said the industry was facing many problems including high import tariffs for raw materials, a shortage of labour, and high production costs, all of which have made it difficult for Thai producers to compete.

"Leather goods producers are trying to cooperate along the supply chain to reduce the cost of production, as well as focus more on innovation and design to ensure competitiveness. However, with the high cost of imported raw materials and of labour, the industry needs the government to lower tariffs," he said.

He pointed out that after the government reduced tariffs for brand-name products, the sale of leather goods had been affected. The government needs to help local manufacturers by cutting tariffs for imported raw materials, which are currently 25-30% of raw-material prices.

With such high tariffs, Thai leather goods cost 10% more than rivals'.

He said local producers had tried to ensure their business growth through cooperation. However, they still face difficulty due to the high cost of production and shortage of labour.

Suriya added that as the leather industry also relied on the domestic market, the current political conflict could result in slower growth for the industry this year.

However, other recent reports that leather goods production in the country grew by 10% this year despite the political instability.

Duangkamol Jiambutr, deputy director-general of the International Trade Promotion Department, said export of leather products was expected to grow by 4% this year as the economies of some major markets such as to the euro area and the United States recovered.

Demand from Hong Kong, mainland China and Japan is also expected to increase in the current quarter thanks to New Year festivities.

The value of export of leather products grew slightly, by 2.3%, to Bt41.3 billion (US$1.3 billion) in the first nine months year on year.

Source: The Nation

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