Shuttering down textile and garment factories and the relocation of manufacturing activities to neighbouring countries has been a trend in Thailand. As a labour-intensive industry, reasons for the downward trend of this industry revolve around high wages, labour scarcity and the end of Generalised System of Preferences (GSP) tariff privileges.
Thai garments are deemed as not competitive compared to those from neighbouring countries which still enjoy GSP privileges and where low-wage labour is still abundant. Textiles and garments are generally viewed as a sunset industry. A research team from Thailand Development Research Institute (TDRI), with support from the Commerce Ministry's Trade Policy and Strategy Office, has been exploring this issue, as this industry still hires many in the Thai labour force and can add value in the domestic market.
Experience from other countries such as Japan, Korea, and Taiwan that entered this industry before Thailand did, suggests similar kinds of problems during the transition period when their textile and garment industries made the transition from a labour-intensive to high-value industry. Higher labour costs and labour shortages compelled these countries to upgrade from labour-intensive, low-value-added garment manufacturing activities to capital-intensive, high-valued-added ones by moving upstream to textiles, fibres and machinery industries.
Countries like Taiwan, Japan and even Germany that are usually associated with high-technology, still manufacture textiles and garments. The industry in these countries is, however, quite different from the one in Thailand. Taiwan focuses on technical textiles such as fabrics that ventilate heat and moisture, fire-resistant textiles, or special fabrics for use in industries, construction and hospitals.
Some of these textiles have glow-in-the-dark or electricity-conducting properties, something that could be put to use in a wide variety of high-value final products. Japan, in addition to her dominance in automobiles, electronics and other high-tech products, has gone another step upstream, as one of the world's major exporters of weaving and knitting machinery for textiles. Germany, the world's foremost producer of world-class automobiles, is, perhaps surprisingly, the number one world exporter of advanced technical textiles for use in cars and for medical purposes.
