Identifying Thailand’s high-potential export opportunities in ASEAN+3 countries

Author:Ludo Cuyvers, Ermie Steenkamp, Wilma Viviers, Riaan Rossouw, Martin Cameron
Position:Centre for ASEAN Studies, University of Antwerp, Antwerp, Belgium, and Faculty of Economics and Management Sciences, North West University, Potchefstroom, South Africa
Pages:2-33
SUMMARY

Purpose This paper aims to identify Thailand’s realistic export opportunities (REOs) in the ASEAN+3 countries (i.e. ASEAN, Greater China, Japan and South Korea), which together constitute an economically dynamic region and a strategic export destination for Thailand. Furthermore, the paper seeks to determine the extent to which Thailand already has a share in ASEAN+3 countries and where new opportunities lie. This allows the formulation of appropriate export promotion strategies for Thailand. Design/methodology/approach The methodology used is a decision support model (DSM) which uses an extensive... (see full summary)

 
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Identifying Thailand’s high-potential
export opportunities in
ASEAN3 countries
Ludo Cuyvers
Centre for ASEAN Studies, University of Antwerp, Antwerp, Belgium, and
Faculty of Economics and Management Sciences, North West University,
Potchefstroom, South Africa
Ermie Steenkamp, Wilma Viviers and Riaan Rossouw
Faculty of Economics and Management Sciences, North West University,
Potchefstroom, South Africa, and
Martin Cameron
TRADE Research Advisory (Pty) Ltd, Potchefstroom, South Africa
Abstract
Purpose This paper aims to identify Thailand’s realistic export opportunities (REOs) in the
ASEAN3 countries (i.e. ASEAN, Greater China, Japan and South Korea), which together constitute an
economically dynamic region and a strategic export destination for Thailand. Furthermore, the paper
seeks to determine the extent to which Thailand already has a share in ASEAN3 countries and where
new opportunities lie. This allows the formulation of appropriate export promotion strategies for
Thailand.
Design/methodology/approach The methodology used is a decision support model (DSM) which uses
an extensive data-ltering system to systematically screen and eliminate less-promising product–country
combinations to ultimately reveal high-potential REOs. Product–country combinations are screened on the
basis of country risk; macro-economic country performance; market potential in terms of import growth and
import market size; and market access conditions, including market concentration and the existence of trade
barriers. The thus narrowed-down REOs are categorised according to Thailand’s relative market share in, and
the characteristics of, the identied import markets.
Findings The study reveals that the ASEAN3 countries account for about 40 per cent of the total
potential export value of Thailand’s REOs in the world, with China leading the way (12.45 per cent), followed
by Japan (8.56 per cent) and South Korea (6.23 per cent). However, Thailand has a relatively small or
intermediately small market share in the majority of these REOs, pointing to the need for more offensive and
exploratory export promotion strategies.
Research limitations/implications The ASEAN3 countries – given that they are an abundant
source of REOs for Thailand and are in Thailand’s “backyard” – should receive more focused attention and
resources in government export promotion efforts. The recent launch of the ASEAN Economic Community
and the proposed establishment of an East Asia Free Trade Area lend weight to the idea of Thailand adopting
a strong regional focus in its export activities.
Practical implications The insights derived from the study are valuable for export promotion
ofcials, industry representatives and practising exporters alike, as they constitute an easy-to-digest
snapshot of high-potential REOs for Thailand in the ASEAN3 region. This makes for more efcient
planning and prioritising of export development activities, and a more streamlined approach to resource
allocation.
Originality/value Export promotion shows diminishing returns and requires sustainable strategies and
interventions. The value in this paper lies in its description of an innovative market selection tool, the DSM,
which is able to process and lter high volumes of information and arrive at a shortlist of high-potential REOs
The current issue and full text archive of this journal is available on Emerald Insight at:
www.emeraldinsight.com/1477-0024.htm
JITLP
16,1
2
Received 6 September 2016
Revised 26 November 2016
Accepted 2 December 2016
Journalof International Trade Law
andPolicy
Vol.16 No. 1, 2017
pp.2-33
©Emerald Publishing Limited
1477-0024
DOI 10.1108/JITLP-09-2016-0019
for Thailand in the ASEAN3 countries. The paper represents a concise case study of the DSM in practice,
which should be of particular interest to export promotion agencies, industry associations and both new and
more established exporting countries.
Keywords Thailand, Export promotion, Comparative advantage, ASEAN3,
Decision support model, Realistic export opportunities
Paper type Research paper
1. Introduction
The ASEAN3 region, which consists of the ten ASEAN countries (Brunei Darussalam,
Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand and
Vietnam), Japan, China and South Korea, is rightly considered to be the most dynamic
economic region in the world. (For a comparison between ASEAN and other systems of
regional economic integration in the world, see Chen et al., 2017) ASEAN3 cooperation
commenced in December 1997 and was formally institutionalised in 1999 when the ASEAN
leaders issued a Joint Statement on East Asia Cooperation at their Third ASEAN3 Summit
in Manila. In November 2004, the ASEAN3 leaders agreed on the establishment of an “East
Asian Community” as a long-term objective and afrmed the role of ASEAN3 as the main
vehicle for such an entity. International trade and investment links between ASEAN
countries, such as Thailand and China, have increased signicantly since China joined the
WTO in December 2001, and will be further strengthened under the China–ASEAN Free
Trade Area (FTA), which came into being in January 2010. At the time of writing this paper,
all tariff duties applying to products originating in the ASEAN–China FTA and exported
from Thailand to China were zero (IE Singapore Go Global, 2016).
The ASEAN countries also have signed a free trade agreement with Japan and
South Korea. The ASEAN–Japan Free Trade Agreement provides tariff duty elimination for
many products originating in the Japan–ASEAN region. However, Japan’s tariff schedule of
this FTA also contains products where the base tariff duty applies (e.g. 50 per cent in case of
HS020610 – edible offal of bovine animals, fresh or chilled, cheek meat and head meat!), or
where the base duty is eliminated in a number of yearly instalments. Moreover, a number of
products are excluded from any tariff commitment, such as some agricultural and shery
products and preparations (e.g. HS021020 – meat of bovine animals) (Ministry of Foreign
Affairs of Japan, 2016). In turn, based on the ASEAN–Korean FTA, on 1 January 2010, South
Korea completely eliminated tariff duties on products in the “Normal Track” of the FTA, and
by 1 January 2016, the tariff duties were brought to 0-5 per cent of the products in the
sensitive list of the “Sensitive Track” of the FTA (ASEAN, 2006)[1].
The ASEAN countries themselves have made great strides in terms of regional economic
integration – as evidenced, inter alia, in the formation of the ASEAN FTA (AFTA) in 1992
and the ASEAN Economic Community (AEC) at the end of 2015, which together have created
a market of approximately 622 million people. The commitments under AFTA have cleared
the way for less-developed member countries, such as Vietnam, Laos and Cambodia, to forge
international trade and investment relationships with the more-developed ASEAN
countries, including Thailand. On 22 November 2015, the leaders of the ten ASEAN member
countries signed a declaration establishing a formal economic, political, security and
socio-cultural community. The AEC is collectively the third largest economy in Asia and the
seventh largest in the world. Economic growth in the AEC countries is projected at 3.3 per
cent in 2015, slightly lower than the previous year’s growth rate of 3.4 per cent, but forecast
to accelerate to 4.9 per cent in 2016 (ASEAN, 2015, p. 17). In 2014, after nearly 20 years of
continuous liberalisation of trade in goods within ASEAN, 99.2 per cent of the tariff lines
were duty-free in the ASEAN-6 (Brunei, Indonesia, Malaysia, the Philippines, Singapore,
3
High-potential
export
Thailand) and 72.6 per cent were duty-free in the “CLMV” (Cambodia, Laos, Myanmar,
Vietnam), with the latter share expected to increase to 90.8 per cent in 2015 (ASEAN, 2015,
p. 18). Moreover, the many non-tariff barriers are continuously being reduced or harmonised,
and intra-ASEAN trade in a number of services has been liberalised. Clearly, all these factors
point to greater export opportunities within the ASEAN and the ASEAN3[2].
In this paper, we endeavour to make a quantitative assessment of Thailand’s export
opportunities in the ASEAN3 region, which represents Thailand’s “backyard”. Therefore,
Thailand’s export opportunities in the other ASEAN countries (Brunei, Cambodia,
Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore and Vietnam), as well as in
China, Hong Kong, Taiwan[3], Japan and South Korea, will be identied and investigated.
This will be achieved through the application of the decision support model (DSM), an
innovative market selection tool.
In Section 2, we discuss the more recent literature on the impact of the AEC on Thailand.
In this section, also a literature contextualisation for the DSM is provided. Section 3 outlines
the DSM methodology used to identify Thailand’s realistic export opportunities (REOs),
after which we show how this methodology was applied using macro-economic and
international trade data up to 2013. In contrast to the previous “runs” of the DSM, we use
averaged and weighted international trade data, allowing us to focus on the more sustainable
REOs. In Section 4, we discuss the results based on the number of REOs identied. In a
deviation from previous analyses of Thailand’s export opportunities (Cuyvers, 1996,2004),
Section 5 briey describes the methodology of the DSM used to quantify Thailand’s REOs
based on potential export values. In Section 6, we investigate the REOs at product level and
then bring the paper to a close with a number of concluding comments.
2. Literature overview
2.1 The economic impact of the ASEAN Economic Community on Thailand
There is abundant literature on regional economic integration of the countries of Southeast
Asia, in which also a quantitative assessment is made of its impact on international trade of
the individual countries involved, among which is Thailand. It will lead us much too far to
review this literature, which has been cumulated over three decades. Let it sufce to review
some of the more recent studies.
To estimate the economic impact of the creation of the AEC, Lee and Plummer (2011) used
a modied version of the LINKAGE model. They established a baseline scenario for
2004-2020, after which they simulated the impact on the ASEAN countries of the following
scenarios:
Scenario 1: The ASEAN members remove bilateral trade barriers by 2015.
Scenario 2: A 2.5 per cent reduction in frictional trade costs among the ASEAN
members over the period 2010-2015 under Scenario 1.
Scenario 3: Scenario 2, but in contrast with Scenarios 1 and 2, with the sector-specic
productivity factors related to the degree of openness endogenously determined.
Scenario 4: Scenario 3, plus a 10 per cent reduction in the trade and transport margins
among the ASEAN countries relative to the baseline over the period 2010-2015.
For the purpose of the present study, we are evidently only interested in the estimation
results for the impact of their AEC scenarios on Thailand.
The welfare effects, measured by the percent deviations for Thailand in equivalent
variations from the baseline in 2015, are for the respective scenarios 2.26 per cent (Scenario 1),
4.39 per cent (Scenario 2), 4.87 per cent (Scenario 3) and 9.38 per cent (Scenario 4) (Lee and
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