Exim urges exporters to adapt strategies
To ensure sustainable growth, Thai exporters need to adapt amid the current disruptions
Digital disruption and the pandemic have served as a wake-up call to Thai exporters to change their business strategies to ensure sustainable growth in the global market, says Rak Vorrakitpokatorn, the new president at Export-Import Bank of Thailand (Exim Bank).
Thailand’s exports contracted 6% last year, mostly attributed to the impact of the pandemic. The sector has a significantly better outlook this year, though, based on the recovering global economy.
Many local research houses and Exim Bank forecast that the local export sector will register double digit growth this year.
Mr Rak said the export sector still faces pressure from technological disruption, ongoing trade wars, changing consumer behaviour and the impact of the pandemic.
He compared exporters to a football team, noting that shippers must improve their tactics and all segments must play together seamlessly and with flexibility in all situations.
Identifying manufacturers as strikers, Mr Rak said they must bolster their production capacity by using automated systems to maximise productivity. Automation can also promote social distancing and contactless working practices.
He said exporters should also conduct R&D to produce goods that can quickly latch onto mega-trends, such as environmentally friendly or health-conscious goods, as well as working from home.
The midfielders — referring to the shipping sector — should diversify risk by creating a balanced export market portfolio between markets with high levels of purchasing power, such as the US, Europe and China, and emerging markets like Cambodia, Laos, Myanmar and Vietnam, South Asia and Africa.
Moreover, they should focus more on creating online sales channels, which have grown rapidly since the pandemic began.
Mr Rak said shippers must create a clear identity on popular online marketplaces and social media networks in export destinations to further expand outreach to their new customer groups.
“Going online is not an option — it is the only way to survive,” he said.
For the defensive line, exporters will have to prepare tools to prevent possible risks. They should always have a second choice when it comes to suppliers, distributors and logistics providers in case of an emergency.
Mr Rak said some exporters have already learned this lesson from the pandemic, as the outbreak had resulted in supply chains in some industries grinding to a temporary halt.
He advised exporters to always insure their shipments. The unrelenting pandemic in many countries may cause importers experiencing falling sales to default on payments for products by due dates, or decline to receive goods, said Mr Rak. Both scenarios would affect exporters.
Mr Rak said Exim Bank is keen to play a role to improve and reinvigorate the traditional sectors, which are suffering from structural problems, such as a shortage of labour and raw materials and a lack of R&D, all of which can erode their competitiveness. These exist in the farm product sector, such as rice and rubber, as well as in labour intensive industries and tourism and related sectors.
He said Exim Bank stands ready to provide exporters with financial assistance measures and related advice during all stages of their business transformation, with the aim to upgrade their production capacity.
He said Exim Bank has continued to offer relief measures to customers during the pandemic and he noted that the crisis has impacted the non-performing loan (NPL) situation of the banking sector and Exim Bank, too.
Exim Bank set up a working panel to closely monitor customers affected by the volatile economic situation, with a focus on customers facing a high risk of having NPLs. This is to enable the bank to offer the affected customers with more financial assistance to ensure all of them can continue their business operations.
The bank targets its NPLs at the end of this year at 3.5-4% of outstanding loans, compared with 3.81% at the end of last year. It is aiming for 145 billion baht of new loans this year, which is a challenging goal when considering the impact of the pandemic on the global and local economy