The Kingdom of Thailand's modern textile and apparel industry dates back to 1936, when the Ministry of Defense imported textile machinery from Germany to produce textiles for military applications. While Thailand's industry was established later than that of other East and Southeast Asian countries, it has since grown beyond its military beginnings and now plays an integral role in the country's economy. According to the Thailand Textile Institute's (THTI's) 2010-2011 Thai Textile Statistics, the textile subsector accounted for approximately 3.4 percent of the country's total gross domestic product in 2009.

Industry Profile
Thailand possesses a fully integrated textile and apparel industry, and as such, is one of the few countries globally with capabilities to supply the entire textile industry chain from natural and man-made fiber and yarn manufacturing through weaving, knitting, dyeing, printing and finishing; to textile and apparel design, production and sales. Thailand also is a well-known silk producer; and produces both organic and inorganic cotton on a small scale.

The Department of Industrial Works, Ministry of Industry, reports that in 2010, Thailand's textile subsector comprised 2,388 apparel mills, 695 knitting mills, 595 weaving mills, 389 dyeing and printing mills, 150 spinning mills and 16 man-made-fiber mills. The textile subsector provides jobs for more than one million people annually and is considered to be the country's second-most important industrial segment for employment.

THTI statistics indicate that in 2010, Thailand's textile and apparel industry produced 918,400 tons of fiber, of which 917,600 tons were man-made fiber and 800 tons were cotton fiber; 977,200 tons of yarn, of which 626,100 tons were man-made fiber yarn and 351,100 tons were cotton yarn; 746,400 tons of fabric, of which 483,300 tons were woven fabric including 197,900 tons of cotton fabric and 285,400 tons of man-made fabric, and 263,100 tons were knitted fabric; and 499,900 tons of apparel, of which 300,000 tons were made from woven fabric and 199,800 tons were made from knitted fabric.

Thailand produces for internal consumption as well as for export, as its 67-million population provides a large domestic market for textiles and apparel. In 2010, the country consumed 904,000 tons of fiber, of which 513,800 tons were man-made fiber and 390,200 tons were cotton fiber; 753,900 tons of yarn, of which 445,200 tons were man-made fiber yarn and 308,700 were cotton yarn; 725,200 tons of fabric, of which 461,500 tons were woven fabric including 189,000 tons of cotton fabric and 272,500 tons of man-made fiber fabric, and 263,700 were knitted fabric; and 336,500 tons of apparel, of which 259,300 tons were made from woven fabric and 77,200 tons were made from knitted fabric.

Industry Status
THTI reports that in 2010, the export value of Thailand's textiles and apparel totaled US$7.55 billion. The export value of those items totaled US$6.37 billion in 2009 — the year of the global economic crisis — significantly lower than the previous year's export value of US$7.1 billion. Leading exported items include woven and knitted apparel, man-made fiber and cotton fabric and yarn, and man-made fiber.

Thailand's textile and apparel imports in 2010 totaled US$3.7 billion; in 2009, US$2.6 billion; and in 2008, US$3.3 billion. Leading imported items include man-made and cotton fiber and fabric, and man-made fiber yarn.

According to 2010 data from Thailand's Information and Communication Technology Center and Customs Department, the top three markets for Thailand's textile and apparel exports were the United States, which received exports worth US$1.58 billion, representing a 21-percent share; European Union (EU) countries, which received exports worth US$1.43 billion, representing a 19-percent share; and Association of Southeast Asian Nations (ASEAN) countries, which received exports worth US$1.37 billion, representing an 18-percent share. Other important markets include East, South and Middle East Asia, and Japan.

The World Trade Organization's 2010 International Trade Statistics show that Thailand's textile exports in 2009 ranked 13th globally, accounting for a 1.4-percent share of global textile trade; and its apparel exports ranked 11th globally, accounting for a 1.2-percent share of global apparel trade.

Machinery Investments
The 2009 and 2010 International Textile Machinery Shipment Statistics reports of the Switzerland-based International Textile Manufacturers Federation indicate that Thailand increased investments in certain textile machinery in 2010 over 2009 — particularly imports of shuttleless looms, which increased 119 percent. In 2010, the number of air-jet shuttleless looms installed accounted for 58 percent of total shuttleless looms installed. Other notable investments include imports of large circular knitting machinery, which increased 70 percent; open-end rotors, 68 percent; hand knitting/semi-automatic flat knitting machinery, 61 percent; and short-staple spindles, 51 percent.

In 2010, Thailand's textile and apparel industry had 3,669,613 spindles, 130,230 weaving machines, 118,150 knitting machines, and 736,000 sewing machines in operation, according to THTI's preliminary numbers.

Industry Future
Trade liberalization has benefited Thailand's economy, particularly the ASEAN Free Trade Area agreement, which supports local manufacturing in ASEAN countries by eliminating tariffs and attracting foreign direct investment. Cooperation among ASEAN countries' textile and apparel industries through organizations such as the ASEAN Federation of Textile Industries and the Source ASEAN Full Service Alliance is expected to help stimulate Thailand's textile exports and lessen reliance on its main export markets such as the United States and the EU.

However, Thailand's textile and apparel industry has faced significant challenges in the past few years, including heavy flooding in 2010 and 2011 — which impacted many textile factories and is estimated to have caused billions of dollars of damage to the industry — and rising production costs — which will further escalate as a result of the recent 40-percent minimum wage increase implemented by the government.

Potential setbacks for Thailand's textile and apparel industry include a shortage of workers, owing in part to its aging workforce; a lack of skilled workers, particularly well-educated managers in apparel manufacturing; low-efficiency production in many factories resulting from outdated technology, especially information technology; a large SME base that lacks funds to invest in new technology; and few research and development activities.

The success of Thailand's textile and apparel industry in the future will hinge on modernization and change. The government remains committed to supporting the industry, taking measures such as borrowing from the Asian Development Bank and the World Bank to finance industrial upgrades; and establishing THTI as a non-profit organization to support the textile industry. THTI is focused on enhancing the industry's competitiveness in the global market by upgrading existing machinery and technology, increasing research and development, and better educating the workforce. The organization reportedly has launched a US$9.7 million textile and apparel development plan for 2012-2016 to help the industry prepare for implementation of the ASEAN Economic Community in 2015 and become more globally competitive. The initiative focuses on increasing the textile and apparel industry's production capacity and promoting Thailand as a regional fashion center.

The outcome of the government's initiatives to modernize the textile and apparel industry, in addition to the industry's cooperation, could determine whether Thailand's textile and apparel industry maintains its central role in the economy or has passed its peak and will decline.

April/May/June 2012