Thai Industry Assesses Unrest

The Thailand Garment Manufacturers Association expressed worries Tuesday about the repercussions of recent turmoil for the apparel industry.

The Thailand Garment Manufacturers Association expressed worries Tuesday about repercussions to the industry after the head of Thailand’s Army declared martial law upon a nation besieged by six months of political turmoil.

This story first appeared in the May 21, 2014 issue of WWD.  Subscribe Today.

This move comes after antigovernment protesters held frequent demonstrations on the streets of Bangkok since November to demand the ouster of its prime minister, Yingluck Shinawatra. She was officially removed by the Constitutional Council from her position on May 7, but antigovernment protesters were not satisfied as the caretaker prime minister was also from the ruling party.

The demonstrations have been marred by violence since they began, with more than 20 protesters dead and about 700 injured.

Chartchai Singhadeja, the executive director of TGMA — which represents the country’s 400 exporting factories — said business remains as usual in factories, as it has for six months, but he is concerned about how this would be perceived by investors or buyers, and how this would affect the industry in the long term.

“The thing that affects us most is the image. There is a lot of negotiations that need to move forward, that will affect us in the future, like [free-trade agreements],” Chartchai said. “If we don’t have a government, that means we don’t have someone to do the negotiation.”

He added that the less confidence other countries have in Thailand, the less foreign direct investment it will receive, as well as free-trade agreements that could help boost the industry.

According to Chartchai, Thailand exported $2.87 billion worth of clothing in 2013, a 2.6 percent dip from the year before — the slight decrease was due to the flagging economy and offshore relocations of some factories, not politics, he said.

While 2014 has seen a slew of protests, TGMA has managed to make every production deadline, and Chartchai is confident that they will be able to continue to do so. But their growth will likely be stagnated if the political impasse were to continue.

“Every day, every week, every month, we request from the private sector that this concerns us, this affects us,” Chartchai said, adding that the government must “stop this and do something.”

“Because of prolonged [uncertainty, it would definitely] have a significant impact on the economy and the trade of the country, not only the garment industry, but every industry in the national policy dialogue,” he said.

There remains a lack of clarity in the publicized statements of General Prayuth Chan-ocha, who appeared on Thailand’s military TV channel at about 6:30 a.m. Tuesday to declare martial law in order to bring peace and stability to the streets while the opposing parties found a solution. In an attempt to alleviate public worries — significant in a country that has experienced almost a dozen coups by the hands of the armed forces — the Army broadcast a message that read, “The imposition of martial law is not a coup d’etat.”

Maurizio Bussi, country director for the International Labor Organization, advised caution against any doomsday scenario, adding that people are still going about their business, and that there has been no visible change on the streets.

“These measures are only for a couple of hours since this morning, so to give predictions on what kind of effect this would have on the entire industry would be a crystal-ball exercise,” Bussi said. “It’s very premature and it is still unfolding.”

Previously based in Thailand, Peter Brimble, now a regional economist and a deputy country director in Myanmar for Asian Development Bank, said it is unlikely that such a move would have lasting consequences on the industry.

“In the past, even if it led to a coup, I’ve never seen any real impact on industry. I think it’s the other things, like the regional crisis in 1997 or the global financial crisis of 2008, that will have a bigger and more immediate impact,” Brimble said.

This move by the military might bring a sense of stability back to the streets, he said, adding that local and foreign businesses might feel more secure about the situation.

“If this leads to peace and stability, and maybe a sensible transition to a democratic government, it might be a good move for business,” he said.