Rice is one of the major export goods of Thailand. However, concerns over Thai rice exports have been ignited upon the upcoming formation of the ASEAN Economic Community (AEC) in 2015 as Thailand might lose rice market, at least in the ASEAN region to its fellow ASEAN friend, Vietnam.
Center for International Trade Studies (CITS) Director Dr Aat Pisanwanich from the University of the Thai Chamber of Commerce reported the studies on impacts of the AEC formation to the Thai rice market. He elaborated that Vietnam, which is the major rival of Thailand in rice exports, has the chance to take Thailand’s place as top rice exporter to the ASEAN markets if export tariff is cut to 0% in the AEC formation in 2015. He also pointed out that Thailand will be at risk of losing market shares, notably in the Philippines and Malaysia, which are important export targets of Thailand.
Dr Aat indicated that Vietnam will be able to dominate the rice market in ASEAN since qualities of Thai and Vietnamese rice are not much different while Vietnamese rice is cheaper than Thai rice by about 125 US dollars per ton. Taking into account the Vietnamese dong devaluation, he said Vietnamese rice becomes even cheaper than Thai rice. Thailand hence might also lose market shares in Africa in the future.
The director suggested that Thailand should publicize and promote Thai rice, especially premium grades, in upper markets by focusing higher quality of Thai rice among consumers. He also advised that Thailand should set up a panel to study pros and cons of Thai rice upon the AEC formation within three years from now in order to maintain its market share in the global market in general.
In preparation for the AEC, the public sector should urgently educate Thai farmers about the AEC via regional networks, universities and farmer communities since production efficiency should be improved and farmers should have more time to adjust to market demands. Whether Thailand will continue to maintain its grip in the global rice business under the coming integration of ASEAN markets, find out in the second part of this special report to follow, for other problems associated with Thai rice exports and the AEC.