VIII - Summary and Conclusions

Summary

Summary

Thailand has been a latecomer to industrialization in general, and to clothing and textiles in particular, largely as a result of the free trade policies that followed the Browring Treaty (1850–26) and subsequent attempts at public investment in industry. The policy served the country well in developing agricultural and raw material exports in the 1950s and 1960s. Thailand concentrated on exporting agricultural products such as rice and teak, while it imported manufactured products. A change in policy in favour of promoting private investment in the 1960s was inaugurated with the introduction of tariffs, an Investment Promotion Act and subsidized credit for industry. Clothing and textiles were among the first industries to be affected by these policies. Initially, manufacturing was largely for import substitution.

Clothing and textiles have become increasingly important since the mid 1980s because of their successful export performance. They have become the highest foreign exchange earners and the major source of employment in manufacturing.

Government intervention in clothing and textiles has been considerable, but often confusing. There has been both promotion and protection, as well as attempts to restrict the industry's capacity.

Although tariff protection has been high, especially at the more capital intensive end of the industry (notably for man-made fibres), the level has been moderate when compared with many other developing countries. Promotion granted to the industry has been intermittent. The government has also tried to control the supply of textiles by prohibiting capacity expansion from 1978–86.

Fluctuations in clothing and textile policies reflect the effectiveness of lobby groups within the industry. From time to time interest groups have lobbied: for the prohibition of expansion, against the establishment of new textile capacity, for protection, for an export quota allocation system that favours large firms, and for other forms of public assistance.

The prohibition of expansion of textile capacity has a major impact on the organization of the industry and on the effectiveness of protection policy.