Thailand Food Industry Outlook
Thailand Food Industry Outlook
Commercial Section Royal Danish Embassy Bangkok June 2009
Agenda • Introducing THAILAND
• Strength of Thai Food Industry • Opportunity for Danish Companies in Thailand • How can the Embassy help you develop your business? 2
References •
Ministry of Commerce
•
Board of Investment (BOI)
•
National Economic and Social Development Board (NESBD)
•
ASEAN Economic Bulletin 1/8/07
•
2009 World Bank Doing Business Report
•
All About Food Directory 2008
•
Thai Food Processors’ Association 2008
•
Conversion Rate used in this presentation ‒
1 DKK = 6.4 Thai Baht
3
Introducing THAILAND
Location : Thailand The Heart of Southeast Asia
Transport hub and gateway to Indochina, Myanmar and Southern China
Population of 65 Million
Russia
China India
Australia
Thailand at a Glance •
2nd largest economy in Southeast Asia after Indonesia
•
4th easiest country in Asia in which to do business, and the 20th easiest in the world*
•
GDP Growth ‒ +5.2% (2006) +4.9% (2007), +2.6% (2008)**
•
Emerging economy & heavily export-dependent (70% of GDP)
•
Favoring FTA as a Trade Policy Tool
•
Good infrastructure for foreign investors
•
Foreign investments actively promoted by the government ‒ especially those contributing to the development of skills, technology and innovation are
•
Tax incentive ‒ import duty reduction/exemption on machinery and raw or essential materials *World Bank Report 2009 **Got impact from Global Economic Crisis during Q4-08
6
Thai Food Industry •
Kitchen of The World
•
Food industry included as the targeted industry by the Ministry of Industry due to its export potential
•
One of the world’s leading food producers & exporters ‒
‒ ‒ ‒ ‒
World’s number one producer of rice, canned and frozen seafood, canned tuna, canned pineapples and cassava, number two producer of Sugar World's top 15 food exporter (Y2005) World's top exporter of frozen shrimps Largest exporter in the world of canned pineapples Top five global exporters for rice and sugar
•
Approximately > 10,000 food processing companies in Thailand produce annual earnings of about 130 Billion DKK
•
90 per cent of food producers remain as small and medium enterprises (SMEs) – 2007 7
Thailand is a high potential market with total export on the rise Million DKK
Thailand Total Export - Import
% Growth Q1-09 vs Q1-08 Export -16% Import -34%
Q1-09 vs Q1-07 Export -5% Import -16% 8
Good Prospect for Thai Food Exports over past decade Despite negative impact on Thai Export during Q1/09 from global economic crisis, processed food is still showing positive figure Thailand Food Exports* Million DKK
Food contributes ~14% of Total Thai Export
% Growth Q1-09 vs Q1-08 Total Export -16% Total Food -5% Processed Food ** +2%
*Food Export refers to Export of Agricultural + Agro Industrial Products excluding Rubber/Orchid /Tobacco Leaves/Animal Feeding : Food contributes ~90% ** Processed Food refers to Agro Industrial Products excluding Animal Feeding, contributing half of total Food Export
9
Food exports, both raw and processed, continue to bring in significant revenue for Thailand
Million DKK
Thailand Top 15 Food Exports
11
Japan, USA and China are the biggest importers of Thailand Food Products Top 15 Countries for Thailand Agri+Agro Industrial Export : 2008 15% 12% 9% 7% 3%
EU (27 Countries) = 14%
Million DKK
12
Strengths of Thai Food Industry > 80% of raw materials used by the food industry are locally sourced at low prices
Abundant Raw Material
Skilled & hard working Workforce
Size of workforce now > 34 million Minimum Daily Wage 25-30 DKK
Good Quality & Safety
GMP and International Standard Good Manufacturing Practices is a mandatory measure for 54 types of food products 13
What are the opportunities? Thailand Food Industry Strength •
Abundant Raw Materials
•
Skilled & hard working Workforce
•
Good Quality & Safety – meet international Standard
•
Positive figures for Thai Processed Food despite world economic crisis
Threat Global Competition e.g. China
•
Greater intention on Food Safely and Product Quality especially major countries like Japan and US
•
•
Lack of value chain management and having a loose network particularly on supply chain lead to a fluctuation in prices and quality of raw materials
•
Slow in adoption of new technology from abroad
Opportunity
•
•
Weakness
•
Food Safety Issue in China -> Some countries shift their order to Thailand which care for quality -> Japanese investors to shift their production bases to Thailand in coming years
Global Financial Crisis •
-> Consumers have less purchasing power
•
•
-> impact on Thai Export as US is one of the major importing countries
Processed Food especially Canned Food will be popular due to its cheap price
•
New Technology Development to compete in a global market
Appreciation of Thai Baht -> this may lead to less competitiveness
14
Opportunities for Danish Companies in Thai Food Industry Current Situation
Opportunity for Danish Companies
Greater intention on Food Safety and Product Quality
More investments in
Especially from Japan and US
International Quality Standards Intense Global competitions
Technology R&D for Food Safety
90% of Thai Food Producers remain SMEs
•
GMP standard having been enforced since 2003 leading to significant growth of food safety equipment market, mostly imported
•
Some BOI promoted investments enjoy 15 exemption on import duty on machinery and corporate income tax for 8 years
Opportunity also exists in the following areas •
Supply chain management systems to improve traceability capabilities
•
Quality standards inspections
•
R&D, product development and biotechnology
•
Inspection analysis of crop, livestock or aquatic-animal diseases
•
Inspection of soil or water for agricultural use
•
Manufacture of farm and food processing machinery
•
Grading, packaging and storage of produce, plants and flowers
•
Organic product development and processing
•
Advanced technology for crop drying and silo facilities
•
Trading centres for agriculture goods
•
Food packaging materials-filling, closing, sealing, wrapping and labelling machines
•
Cold storage and cold storage transportation
•
Ready-to-eat food manufacturing
•
Energy Saving
16
Commercial Section Royal Danish Embassy
Commercial Section Royal Danish Embassy - Bangkok
Trade Council of Denmark (TCD)
Commercial Section at Embassy
Ministry of Foreign Affairs of Denmark
Objectives
• To contribute to the financial growth and development of the Danish Society • To increase global competitiveness of Danish Companies and their products • To assist Danish companies in generating additional turnover, profits
18
Why the Embassy?
• Real time based professional consultancy service • Experienced and knowledgeable in Danish & Thai Business and Culture • Unique access to the Thai Authorities
19
What we do? • Increasing the exports of Danish goods ‒ Market Survey ‒ Partner Search • New Models for business cooperation • Assistance in company establishment • Assistance in formation of Danish production facilities in Thailand • Breaking-down of political trade barriers • Recruitment of skilled labor and outsourcing • CDM Projects 20
Thai Danish Business Forum 2008
21
Life Style Exhibition 2008
22
Fishing and Fish Processing Seminar in Mahachai organised by The Danish Fishing Equipment Group of the Danish Export Association Thai Overseas Fishing Association Royal Danish Embassy
23
Charity Dinner at Ambassador’s Residence
in Support of Diabetes Awareness and Treatment in Thailand
24
Q&A
25
Commercial Section Royal Danish Embassy Bangkok June 2009
Agenda • Introducing THAILAND
• Strength of Thai Food Industry • Opportunity for Danish Companies in Thailand • How can the Embassy help you develop your business? 2
References •
Ministry of Commerce
•
Board of Investment (BOI)
•
National Economic and Social Development Board (NESBD)
•
ASEAN Economic Bulletin 1/8/07
•
2009 World Bank Doing Business Report
•
All About Food Directory 2008
•
Thai Food Processors’ Association 2008
•
Conversion Rate used in this presentation ‒
1 DKK = 6.4 Thai Baht
3
Introducing THAILAND
Location : Thailand The Heart of Southeast Asia
Transport hub and gateway to Indochina, Myanmar and Southern China
Population of 65 Million
Russia
China India
Australia
Thailand at a Glance •
2nd largest economy in Southeast Asia after Indonesia
•
4th easiest country in Asia in which to do business, and the 20th easiest in the world*
•
GDP Growth ‒ +5.2% (2006) +4.9% (2007), +2.6% (2008)**
•
Emerging economy & heavily export-dependent (70% of GDP)
•
Favoring FTA as a Trade Policy Tool
•
Good infrastructure for foreign investors
•
Foreign investments actively promoted by the government ‒ especially those contributing to the development of skills, technology and innovation are
•
Tax incentive ‒ import duty reduction/exemption on machinery and raw or essential materials *World Bank Report 2009 **Got impact from Global Economic Crisis during Q4-08
6
Thai Food Industry •
Kitchen of The World
•
Food industry included as the targeted industry by the Ministry of Industry due to its export potential
•
One of the world’s leading food producers & exporters ‒
‒ ‒ ‒ ‒
World’s number one producer of rice, canned and frozen seafood, canned tuna, canned pineapples and cassava, number two producer of Sugar World's top 15 food exporter (Y2005) World's top exporter of frozen shrimps Largest exporter in the world of canned pineapples Top five global exporters for rice and sugar
•
Approximately > 10,000 food processing companies in Thailand produce annual earnings of about 130 Billion DKK
•
90 per cent of food producers remain as small and medium enterprises (SMEs) – 2007 7
Thailand is a high potential market with total export on the rise Million DKK
Thailand Total Export - Import
% Growth Q1-09 vs Q1-08 Export -16% Import -34%
Q1-09 vs Q1-07 Export -5% Import -16% 8
Good Prospect for Thai Food Exports over past decade Despite negative impact on Thai Export during Q1/09 from global economic crisis, processed food is still showing positive figure Thailand Food Exports* Million DKK
Food contributes ~14% of Total Thai Export
% Growth Q1-09 vs Q1-08 Total Export -16% Total Food -5% Processed Food ** +2%
*Food Export refers to Export of Agricultural + Agro Industrial Products excluding Rubber/Orchid /Tobacco Leaves/Animal Feeding : Food contributes ~90% ** Processed Food refers to Agro Industrial Products excluding Animal Feeding, contributing half of total Food Export
9
Food exports, both raw and processed, continue to bring in significant revenue for Thailand
Million DKK
Thailand Top 15 Food Exports
11
Japan, USA and China are the biggest importers of Thailand Food Products Top 15 Countries for Thailand Agri+Agro Industrial Export : 2008 15% 12% 9% 7% 3%
EU (27 Countries) = 14%
Million DKK
12
Strengths of Thai Food Industry > 80% of raw materials used by the food industry are locally sourced at low prices
Abundant Raw Material
Skilled & hard working Workforce
Size of workforce now > 34 million Minimum Daily Wage 25-30 DKK
Good Quality & Safety
GMP and International Standard Good Manufacturing Practices is a mandatory measure for 54 types of food products 13
What are the opportunities? Thailand Food Industry Strength •
Abundant Raw Materials
•
Skilled & hard working Workforce
•
Good Quality & Safety – meet international Standard
•
Positive figures for Thai Processed Food despite world economic crisis
Threat Global Competition e.g. China
•
Greater intention on Food Safely and Product Quality especially major countries like Japan and US
•
•
Lack of value chain management and having a loose network particularly on supply chain lead to a fluctuation in prices and quality of raw materials
•
Slow in adoption of new technology from abroad
Opportunity
•
•
Weakness
•
Food Safety Issue in China -> Some countries shift their order to Thailand which care for quality -> Japanese investors to shift their production bases to Thailand in coming years
Global Financial Crisis •
-> Consumers have less purchasing power
•
•
-> impact on Thai Export as US is one of the major importing countries
Processed Food especially Canned Food will be popular due to its cheap price
•
New Technology Development to compete in a global market
Appreciation of Thai Baht -> this may lead to less competitiveness
14
Opportunities for Danish Companies in Thai Food Industry Current Situation
Opportunity for Danish Companies
Greater intention on Food Safety and Product Quality
More investments in
Especially from Japan and US
International Quality Standards Intense Global competitions
Technology R&D for Food Safety
90% of Thai Food Producers remain SMEs
•
GMP standard having been enforced since 2003 leading to significant growth of food safety equipment market, mostly imported
•
Some BOI promoted investments enjoy 15 exemption on import duty on machinery and corporate income tax for 8 years
Opportunity also exists in the following areas •
Supply chain management systems to improve traceability capabilities
•
Quality standards inspections
•
R&D, product development and biotechnology
•
Inspection analysis of crop, livestock or aquatic-animal diseases
•
Inspection of soil or water for agricultural use
•
Manufacture of farm and food processing machinery
•
Grading, packaging and storage of produce, plants and flowers
•
Organic product development and processing
•
Advanced technology for crop drying and silo facilities
•
Trading centres for agriculture goods
•
Food packaging materials-filling, closing, sealing, wrapping and labelling machines
•
Cold storage and cold storage transportation
•
Ready-to-eat food manufacturing
•
Energy Saving
16
Commercial Section Royal Danish Embassy
Commercial Section Royal Danish Embassy - Bangkok
Trade Council of Denmark (TCD)
Commercial Section at Embassy
Ministry of Foreign Affairs of Denmark
Objectives
• To contribute to the financial growth and development of the Danish Society • To increase global competitiveness of Danish Companies and their products • To assist Danish companies in generating additional turnover, profits
18
Why the Embassy?
• Real time based professional consultancy service • Experienced and knowledgeable in Danish & Thai Business and Culture • Unique access to the Thai Authorities
19
What we do? • Increasing the exports of Danish goods ‒ Market Survey ‒ Partner Search • New Models for business cooperation • Assistance in company establishment • Assistance in formation of Danish production facilities in Thailand • Breaking-down of political trade barriers • Recruitment of skilled labor and outsourcing • CDM Projects 20
Thai Danish Business Forum 2008
21
Life Style Exhibition 2008
22
Fishing and Fish Processing Seminar in Mahachai organised by The Danish Fishing Equipment Group of the Danish Export Association Thai Overseas Fishing Association Royal Danish Embassy
23
Charity Dinner at Ambassador’s Residence
in Support of Diabetes Awareness and Treatment in Thailand
24
Q&A
25
