July 28, 2009

Thailand's seafood firms and exporters face bankruptcy this year due to multiple factors, including a surplus of seafood factories, inadequate reactions to the economic crisis, and the appreciation of the baht, according to Thai Frozen Seafoods Association (TFSA) president Poj Aramwattananon.

 

Many companies have failed to adapt to the changes in the business environments, and many lacked financial liquidity as exports dropped, while some lost competitiveness due to a shortage of raw materials, said the president.

 

Trang Seafood Products will shut down its facility in August. It is the largest seafood manufacturer in Trang and had endured over three years of losses.

 

The plant's workforce had been trimmed to only one-third of its original size, but the company plans to get the facility running again once a joint venture partner is found, Aramwattananon said.

 

Rising global demand for seafood in the past decade has led to the establishment of numerous seafood companies. But climate change and other issues have led to a shortage of raw materials in Thailand. The appreciation of the baht worsened the situation as Thai products became more expensive and less attractive to importers who opted to buy from cheaper markets.

 

Aramwattananon has requested the government to approve soft loans immediately to help the exporters to tide over this crisis. The government should also handle the national currency's exchange rate so that exporters can compete with their competitors on a fair playing field, he said.

 

The current exchange rate is unfavourable at THB36 per US dollar, according to Aramwattananon.

 

The Finance Ministry may reject an import tariff cut for raw materials, which could cause exports to drop 30 percent by 2010, he said.