SMEs on alert as AEC nears

       Local small and medium-sized enterprises are expected to be hardest hit once the Asean Economic Community (AEC) starts to take effect next year, a university study warns.
       "Certain Thai businesses such as electrical appliances and electronics, textiles and garments, chemicals, rubber, plastic,wooden products, petrochemicals, steel and mining would face adverse conditions once import tariffs are brought down to zero next year under the AEC agreement," said Aat Pisanwanich, director of the Center for International Trade Studies of the University of the Thai Chamber of Commerce.
       "Without proper preparations, those industries would definitely face intensifying competition and be subject to operating losses."
       Eleven priority goods and services sectors are part of a pilot programme to be completed by 2010 under the AEC regional integration goals. Full integration is supposed to take place by 2015.
       The priority sectors are agro-based products, fisheries, wood-based products, rubber-based products, textiles and apparel, automotive, electronics,information and communication technology, health care, tourism, and air travel. Recently, logistics were added as the 12th priority sector.
       The study estimates that integration would raise export revenue from small and medium-sized enterprises by 35.9 billion baht and imports worth 38 billion baht in 2015.
       Currently, exports from SMEs are estimated at 5.2 trillion baht, with the 12 priority sectors under the AEC pilot programme making up 80%. Imports were estimated at 5.2 trillion baht.
       The study also projected that eco-nomic integration would benefit Thailand's non-farm sector more than the farm sector. Income of the farm sector was expected to increase by 1,428 baht per household per year, with the nonfarm sector rising 3,380 baht per household per year in 2015.
       Currently,farm sector household income is estimated at 12,300 baht per month, while the non-farm sector earns 28,000 baht per month.
       "We're now gravely concerned, particularly over five sectors - tourism,aviation, health care, and information technology - in which foreign ownership of up to 70% would be allowed next year," said Mr Aat.
       "From this study, questions arise whether those businesses are well prepared for higher competition under the AEC over the next six years, as this should affect the way of life of all Thais going forward."