Thailand's Gem and Jewelry Import-Export Performance in 2013

2013            The Gem and Jewelry Institute of Thailand (Public Organization)

ภาพรวม

Thailands Gem and Jewelry Thailand’s Gem and Jewelry Import-Export Performance in 2013 Import-Export Performance in 2013

Thailand’s overall gem and jewelry export value decreased by 23.30 percent while the import value hailands emin and eport was valuethedecreased by  percent whilewhile the unwrought import value increased by 9.30overall percent 2013.ewelry Fine jewelry most important export product or increased by  percent in  ine ewelry was the most important eport product while unwrouht or semi-manufactured gold maintained the top position in import. However, if unwrought or semi-manufactured semi-manuactured old maintained top position import owever, i unwrouht or semi-manuactured gold is excluded, Thailand’s gem andthejewelry export invalue would grow by 4.64 percent from the previous oldAsis for ecluded, hailands ewelry eport value row due by  percent rom the previous year year.

2014, the export em valueand growth is expected to would be positive to supportive factors from steady s or , the eport value rowth is epected to be positive due to supportive actors rom steady economic economic recovery of Thailand’s trading partners, as well as depreciation of the baht currency. recovery o hailands tradin partners, as well as depreciation o the baht currency dollars, growing by 4.64 percent from the previous Thailand’s gem and jewelry export value year.

On the other hand, Thailand's gem and jewelry Thailand's gem and jewelry export value under under Customs Tariff Schedule Chapter 71* declined Tariff toSchedule declined On the other hand, Thailand’s gem and byCustoms 23.30 percent 10,084.76Chapter million 71* US dollars in by import value increased by 9.30 percent from 16,646.19 million US dollars to 18,193.80 million US dollars in 2013 23.30 percent to 10,084.76 million US dollars in jewelry import value increased by 9.30 percent 2013 from 13,147.55 million US dollars in 2012. As from 16,646.19 million US dollars to 18,193.80 the2013 from 13,147.55 million US dollars in 2012. As fourth most important export category, gem US dollars in 2013. and jewelry accounted for 4.41 percent of million Regarding the trade balance in gem and jewelry the fourth most important export category, gem and Thailand’s overall export products.

However, if jewelry accounted for 4.41 percent of Thailand's overall category, Thailand had a huge deficit of 8,109.04 million Regarding the trade balance in gem and unwrought gold, which was mainly investment US dollars in 2013 as shown in Figure 1, as a result from export products. However, if unwrought gold, which jewelry category, Thailand had a huge deficit of product and accounted for 32 percent of the the import of unwrought or semi-manufactured gold was mainly investment product and accounted for 32 8,109.04 million US dollars in 2013 as shown in export value, is excluded, the net export value of at a high level valued of 14,869.24 million US dollars. percent of the export value, is excluded, the net export Figure 1, as a result from the import of unwrought gem and jewelry would be 6,812.25 million US value of gem and jewelry would be 6,812.25 million US or semi-manufactured gold at a high level valued dollars, growing by 4.64 percent from the previous year. of 14,869.24 million US dollars.

Figure 1: Thailand’s Gem and Jewelry Import-Export Value in 2004-2013 US$ Mil. 21,000 18,000 15,000 12,000 9,000 6,000 3,000 0 -3,000 -6,000 -9,000

igure 1: Thailand's Gem and Jewelry Import-Export Value in 200-2013

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

Import Value

2,945.93

4,080.74

3,995.49

4,223.40

9,398.72

5,998.49

10,438.16

20,649.38

16,646.19

18,193.80

Export Value

2,630.19

3,227.56

3,605.92

5,381.39

8,270.07

9,761.40

11,651.81

12,301.11

13,147.55

10,084.76

BalanceCustoms -315.74Department, -853.18 data -389.57 1,157.99 3,762.91 Institute 1,213.65of Thailand -8,348.27 (Public -3,498.64 -8,109.04 Source:Trade Thailand calculation

by The-1,128.65 Gem and Jewelry Organization) Source: Thailand Customs Department, data calculation by The Gem and Jewelry Institute of Thailand (Public Organization) ’       

-1-

1

Export Performance The product with the highest export value in 2013 was fine jewelry, accounting for 36.94 percent of Thailand's gem and jewelry export value, in spite of a 1.12 percent decrease in its growth. Details in each main product are as follow: Gold Jewelry had a 6.28 percent drop compared to the previous year, as a result from the 8.45 percent and 0.63 percent decline in export to Hong Kong and the United States respectively; both were the top two markets with the combined share of 43 percent of the overall gold jewelry export value.

Since the US economy was still in its early stage of recovery, consumption demand for gold jewelry was modest due to its relatively high price, while most consumers shifted their attention to the more affordable silver jewelry. Consequently, Thailand's export value to Hong Kong, as a supplier and re-exporter of gold jewelry to the United States and other countries, was also in decline.

The export to other main markets, including the United Arab Emirates, the United Kingdom and Switzerland, grew by 36.34 percent, 16.15 percent and 15.01 percent respectively, while potential markets including Qatar, Singapore and Bahrain, at the 10th, 14th and 15th places among Thailand's major export markets, had strong growth rates of 4.67 times, 71.75 percent and 45.49 percent respectively. This suggests steadily increasing consumption demand for gold jewelry among consumers in the Middle East, making this region a high potential export market where Thai entrepreneurs should seek opportunities for market penetration. Thai gold jewelry was exported to the United Kingdom, Switzerland and Singapore for local consumption, direct re-export, or value addition through branding before exporting to third markets.

Silver Jewelry grew by 5.53 percent from the export to the United States, which is the main market of over 43 percent share and 3.31 percent growth in terms of export value. Markets among the top five

2

other markets with increasing importance, including Russia, Singapore, South Korea and the United Arab included Germany and Hong Kong, which grew by 30.02 percent and 4.95 percent respectively, while Emirates had growth rates of over 2.40 times, 24.52 percent, 1.09 times and 2.29 times, and moved up to the 7th, 12th, 13th and 14th places among Thailand's major export markets. The export value especially to Russia increased due to popularity in designs and quality of Thai products among consumers in the market. Apart from direct export, Thai products were also supplied to Russia indirectly through other countries.

Meanwhile, the export to Australia and Denmark at the third and the fourth places dropped by 3.92 percent and 40.76 percent respectively due to modest economic growth. Consumers were still cautious in spending on luxury products, while the market had a large number of competitors. Silver jewelry from various brands entered a fierce competition with intense strategic moves. Moreover, since many silver jewelry exporters in Thailand are foreign entrepreneurs using Thailand as a manufacturing base and adjusting their strategies to penetrate higher-potential emerging markets, the decline in the export value to both markets might be caused by this shift of focus.

Platinum Jewelry had an exceptional growth of 31.74 percent due to strong increase in the export value to all major markets, including Japan, which dominated over half of the export, Hong Kong, the United States, the United Kingdom and the United Arab Emirates, growing by 6.13 percent, 2.55 times, 65.09 percent, 49.27 percent and 5.29 times respectively. Meanwhile, the export to Australia and Switzerland, at the sixth and seventh places among major markets, had dramatic increase of 95.64 percent and 84.64 percent respectively. This is because the price of platinum as raw material was just slightly higher than gold price, resulting in increasing demand for platinum jewelry.

Thailand's Gem and Jewelry Import-Export Performance in 2013

Unwrought or Semi-Manufactured Gold had the second highest export value with a 32.45 percent share of the overall gem and jewelry export. However, the value plunged 50.70 percent from all-year fluctuating gold price in line with global economic situation, especially in influential economies like the United States. The average gold price in 2013 decreased from the previous year by 15.44 percent to 1,411.23 US dollars per ounce (www.kitco.com). As a result, the gold export declined in every quarter from the first, the second, and the third, to the fourth quarters of 2013, by 87.39 percent, 29.82 percent, 47.19 percent and 9.84 percent respectively, compared to the same periods in the previous year, leaving gold export value in the negative territory through 2013.

stones increased in almost every market, led by Hong Kong, which dominated over 45 percent of the overall export value and grew by 24.16 percent. Other major markets, including the United States, Switzerland, Japan and the United Arab Emirates all achieved high growth at the rates of 36.89 percent, 50.25 percent, 87.28 percent and 76.79 percent respectively. The export value to some potential markets also showed outstanding growth; for example Singapore, Turkey and Taiwan went up to the 9th, 11th and 15th places with the increase of 3.62 times, 1.06 times and 1.93 times respectively in terms of value.

Polished Semi-Precious Stone grew by 12.35 percent thanks to the export to major markets like Hong Kong, which accounted for over 56 percent of the export and had a 22.11 percent increase, as well as China, India and Switzerland, holding the third, fourth and fifth places with the growth rates of 40.02 percent, 1.07 percent and 22.14 percent respectively.

Thailand also exported to the United Arab Emirates, as the eighth market on its list, at the growth of over 1.73 times. However, the export value to the United States as its second most important market declined by 31.63 percent.

Diamond was the third most important export product, accounting for 16.61 percent and gaining a 12.24 percent increase in terms of value. Polished diamond was the main product in this category with 14.75 percent growth from the previous year.

Thailand's major markets for diamond export included Hong Kong, Belgium, India and the United States, which grew by 17.90 percent, 0.38 percent, 97.14 percent and 10.63 percent respectively; only the export value to Israel at the fourth place dropped Costume Jewelry stayed in the fifth place with by 17.05 percent. a 3.59 percent share and a 3.38 percent decrease in Colored Stone was the fourth most important the export value since the export to major markets, export product with a 7.51 percent share and 23.81 including Liechtenstein, Germany and France percent growth compared to the previous year. Details decreased by 26.14 percent, 10.04 percent and of each product are as follow: 16.06 percent respectively. One of reasons could be

Polished Precious Stone (Ruby, Sapphire and consumer's growing appreciation of fine jewelry, Emerald) had a substantial growth of 31.29 percent. leading to their shift towards affordable silver Around 48 percent of the products were sapphire, jewelry instead. Meanwhile, the United States and which achieved a high growth rate of 36.52 percent, Singapore as the second and the third major export while ruby accounted for almost 36 percent of the market showed the high growth of 1.53 percent and export with a 30.73 percent growth compared to the 1.42 times. Apart from domestic consumption, Thai previous year. The export value of polished precious costume jewelry was also imported for re-export to other countries.

Thailand's Gem and Jewelry Import-Export Performance in 2013

33

Table 1: Thailand's Gem and Jewelry Export Value from January to December 2012 and 2013   

     

 

   

 

 











  











  































    











 





















 

 

 

 

 





















   











   











  











    































    

             

 

Source: Thailand Customs Department, data calculation by The Gem and Jewelry Institute of Thailand (Public Organization)

The major market for Thailand's gem and jewelry export in 2013 was Hong Kong, which accounted for 26.17 percent while the export value to this market decreased by 7.35 percent. This is a result of a 24.76 percent decline in the export of unwrought or semi-manufactured gold, which was the main product at the share of around 39 percent, as well as an 6.67 percent decrease in the export value of fine jewelry, which accounted for around 21 percent and was largely gold jewelry. On the other hand, the export of diamond and colored stone accounted for around 23 percent and 14 percent and the value increased by 17.90 percent and 21.75 percent respectively.

fine jewelry, of which around two-thirds were silver jewelry, growing by 3.31 percent, while the remaining was gold jewelry of which the export decreased by 0.63 percent. As for other important products like colored stone and diamond, the export increased by 7.92 percent and 10.63 percent respectively.

Singapore was the third most important export market with a share of 8.92 percent and the growth of over 10.01 times in export value. This is due to an increase of over 47.36 times in the export value of unwrought or semi-manufactured gold, which accounted for almost 89 percent. The export of fine jewelry, including gold and silver jewelry, as well as The United States was the second most costume jewelry was all on the increase, growing important market, accounting for 13.09 percent of by 71.75 percent, 24.52 percent and 1.42 times the overall export and achieving a 3.37 percent respectively. growth. Over 80 percent of the export products was

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Thailand's Gem and Jewelry Import-Export Performance in 2013

Switzerland was the fourth major market with a share of 8.08 percent and a large decline of 81.29 percent in export value. The top export product in this market at around 75 percent share was unwrought or semi-manufactured gold, of which the export value plummeted by 85.38 percent. The second most important was fine jewelry at a share of around 13 percent and a slight growth of 0.11 percent; most of the increase came from rising export in gold jewelry while silver jewelry export was in decline.

Thailand's fifth most important market was Germany, having a 5.26 percent share and a 22.57 percent increase in the export value. The export of silver jewelry, which accounted for almost 68 percent, increased by 30.02 percent, although the export of gold jewelry, which accounted for around 7 percent, dropped by 13.54 percent.

The United Arab Emirates was the sixth most important export market growing at the rate of 36.27 percent. All major products in this market maintained steady growth, especially gold jewelry, which held the share of around 68 percent, gained a large increase of 36.34 percent in the export value. Polished diamond as the second most important product achieved 28.68 percent growth, while the export of other products, including silver jewelry, platinum jewelry, polished precious stone, and polished semi-precious stone, was also on the rise.

As for other major markets, including Belgium, India, Australia and Japan, the export value moved down 1.08 percent, 2.31 percent, 60.59 percent and 4.56 percent respectively. In the case of Belgium, the decline was caused by a 12.67 percent decrease in the export value of rough diamonds, while most export products were polished diamonds, of which the export value grew by 2.46 percent.

A decline in the export to India was a result of an 83.31 percent drop in the export value of gold jewelry as one of the main export products. On the other hand, polished diamond, which accounted for over a half of the export, unwrought or semi-manufactured gold, polished precious stone and polished semi-precious stone still maintained growth at 97.33 percent, 74.46 percent, 10.09 percent and 1.07 percent respectively. Gold jewelry used to be a high-potential export product in 2012. However, since the beginning of 2013, India has curbed the import of Thai gold jewelry, considering that the concessional import duty given to Thai products under the Thailand-India free trade agreement had offered a chance for product substitution from China and Malaysia. By this way, Thailand was used as a gateway to India for the lower rate of import duty, which is a violation against the rules of origin where the value of raw material and production cost from Thailand are required to be at a minimum of 20 percent of the Free on Board (FOB) value of the product. As a result, India suspended the import of Thai gold jewelry and re-imposed the customs duty at the normal rate of 15 percent, leading to a massive decline in Thailand's gold jewelry export to India in 2013.

Moreover, India is now reviewing the FTA agreements with many countries including Thailand, and considering to empower India's tax organization to automatically suspend trading in case that the FTA benefits are used in wrong purpose through product substitution in violation of the rules of origin. Therefore, Thai exporters should strictly comply with the rules of origin under the Thailand-India FTA. Meanwhile, the export value to Australia went down due to a 72.81 percent decline in unwrought or semi-manufactured gold, as well as decreased export value in other important products, including silver jewelry and gold jewelry, at the rates of 3.92 percent and 14.48 percent respectively.

Thailand's Gem and Jewelry Import-Export Performance in 2013

55

purpose through product substitution in violation unwrought or semi-manufactured gold, as well as of the rules of origin. Therefore, Thai exporters decreased export value in other important should strictly comply with the rules of origin products, including silver jewelry and gold jewelry, under the Thailand-India FTA. at the rates Thailand’s Gem and Jewelry Import-Export Performance of 3.92As for Japan, the export of gold jewelry and silver percent and 14.48 percent respectively. As for Japan, the export of gold jewelry and silver jewelry as the main export products decreased by jewelry18.01 percent and 16.19 percent respectively. Since as the main export products decreased by 18.01 percent and 16.19 percent respectively. Since Japan's economic recovery just started improving Japan’s economic recovery just started improving at the end of 2013, consumption demand in both at the end of 2013, consumption demand in both

categories had not fully returned. However, other categories had not fully returned. However, other products like unwrought or semi-manufactured products like unwrought or semi-manufactured gold gold and platinum jewelry still gained significant and platinum jewelry still gained significant growth at growth at 6.78 percent and 6.13 percent 6.78 percent and 6.13 percent respectively.

respectively.

igure 2:2:Thailand’s Thailand's Gem Gem and and Jewelry Jewelry Export Export Markets Marketsinin2013 2013 Figure HONG KONG 26.17%

U.S.A. 13.09%

(+3.37%)

(-7.35%)

SINGAPORE 8.92%

(+1,001.64%) SWITZERLAND 8.08%

OTHERS 19.54%

(-81.29%)

(+11.69%) JAPAN 3.58%

AUSTRALIA INDIA 3.61% 3.76% (-4.56%)

GERMANY 5.26%

BELGIUM U. ARAB EMIRATES (+22.57%) 4.15% 3.84%

(-60.59%) (-2.31%) (-1.08%)

(+36.27%)

Source: Thailand Customs Department, data calculation by The Gem and Jewelry Institute of Thailand (Public Organization) Source: Thailand Customs Department, data calculation by The Gem and Jewelry Institute of Thailand (Public Organization)

Regarding the export value of Thai gem and

all achieved growth in export value at the rates of

Regarding the export value of Thai gem and or improved economic performance, leading to more 0.92 percent, 3.37 percent, 17.89 percent, 32.31 jewelry (excluding gold) to various markets/regions jewelry (excluding gold) to various marketsregions purchasing power among and respectively. higher percent, 1.12 times andconsumers 18.52 percent in 2010-2013 as shown in Table 2, it is found that This strong growth was a result of positive factors the export value to many major markets was on in 2010-2013 as shown in Table 2, it is found that demand in gem and jewelry consumption. from economic recovery or improved economic the increase in 2013; for example, Hong Kong, the export value to many major markets was on the performance, leading to more purchasing power which moved up as Thailand’s top export market, increase in 2013; for example, Hong Kong, which ASEAN is another export market with outstanding among consumers and higher demand in gem and ahead of former top markets like the European moved up as Thailand's top export market, ahead potential as seen from strong growth in export value jewelry consumption.

Union and the United States with the growth rate of former top markets like the European Union and steadily increasing share in Thailand's overall of 8.33 percent, due to its status as one of the ASEAN is another export market with export. This is mainly due to the export to Singapore, world’sand the United States with the growth rate of 8.33 largest re-exporters. Other main markets outstanding potential as seen from strong growth in including the European Union, the United States, percent, due to its status as one of the world's largest which grew strongly by 53.03 percent from the main export value and steadily increasing share in the Middle East countries, ASEAN, Russia and the re-exporters. Other main markets including the products including costume jewelry, gold jewelry and Thailand’s overall export. This is mainly due to the Commonwealth of Independent States and China, export to Singapore, which grew strongly by 53.03 European Union, the United States, the Middle East silver jewelry. The second most important market in countries, ASEAN, Russia and the Commonwealth of this region was Malaysia, to which the export value Independent States and China, all achieved growth -6- moved down 1.86 percent due to a decrease in gold in export value at the rates of 0.92 percent, 3.37 jewelry which was the main product. At the third place percent, 17.89 percent, 32.31 percent, 1.12 times and was Indonesia, having 17.62 percent growth in terms 18.52 percent respectively. This strong growth was of value, and synthetic stone as the main product on a result of positive factors from economic recovery the increase.

6

Thailand's Gem and Jewelry Import-Export Performance in 2013

In the meanwhile, the export value to Russia and the Commonwealth of Independent States also achieved strong growth and higher market share, as a result of the export to Russia over 1.60-time increase in the export value of silver jewelry, gold jewelry, polished precious stone and polished semi-precious stone.

The export value to other markets, including India, Japan and countries in the Pacific Islands, decreased by 10.44 percent, 7.20 percent and 5.59 percent respectively since these economies were still affected by economic slowdown, resulting in decreasing consumption demand for gem and jewelry.

Table 2: Thailand's Gem and Jewelry Export Value (Excluding Gold) by Markets/Regions in 2010-2013 

      











  

 





 









  

 





 









  

 





  















 

 

















   

















 

  

































 

 

   















 

 

















   

















 











     





  



         





 



Source: Thailand Customs Department, data calculation by The Gem and Jewelry Institute of Thailand (Public Organization

Import Performance Thailand's import value of gem and jewelry in 2013 was 18,193.80 million US dollars, up 9.30 percent from the previous year. Unwrought or semi-manufactured gold had the highest import value, accounting for 81.73 percent at the growth rate of 20.12 percent. The import in the first three quarters of 2013 increased by 55.39 percent, 0.76 percent and 70.26 percent respectively, while the import in the fourth quarter dropped 24.89 percent

compared to the same quarter in the previous year. This was when the gold price dropped after the US Federal Reserve announced its plan to taper the third round of quantitative easing (QE3) from the beginning of 2014 onwards, due to continuous economic recovery. This action led to US dollar appreciation, which in turn reduced interest and demand in holding gold as a secure asset around the end of 2013.

Thailand's Gem and Jewelry Import-Export Performance in 2013

77

Other major import products included diamond, of which the import value plunged by 33.10 percent, mostly from polished diamond import, which moved down 30.55 percent; silver and fine jewelry, of which the import value dropped by 18.03 percent and 22.92

percent respectively, while most of the imported fine jewelry was gold jewelry. Colored stone import increased by 2.24 percent in terms of value. Over 95 percent of the import products were raw material.

Table 3: Thailand's Gem and Jewelry Import Value from January to December 2012 and 2013    

 

 

 

 

 

 





















  











  





















 











 











  











  











  











 































   











   











  











 





















       

 

     

 

Source: Thailand Customs Department, data calculation by The Gem and Jewelry Institute of Thailand (Public Organization)

The most important supplying country for Thailand's gem and jewelry import was Switzerland, which accounted for 42.81 percent of the overall import and achieved 7.11 percent growth in terms of value. Other sources with high import value included South Africa and the United States, with the equal shares of 8.44 percent and the growth

8

rates of 6.07 percent and 1.07 times respectively; Australia and Japan, accounting for 7.46 percent and 6.97 percent and, growing at rates of 39.92 percent and 6.15 percent respectively. Almost all imported products from these five countries were unwrought or semi-manufactured gold.

Thailand's Gem and Jewelry Import-Export Performance in 2013

Thailand’s Gem and Jewelry Import-Export Performance igure 3: Thailand'sGem Gemand andJewelry JewelryImport ImportSources Sourcesinin2013 2013 Figure 3: Thailand’s SWITZERLAND 42.81%

SOUTH AFRICA 8.44%

(+7.11%)

(+6.07%)

U.S.A. 8.44%

(+107.95%) AUSTRALIA 7.46%

OTHERS 10.69%

(+7.36%)

(+39.92%)

JAPAN HONG KONG 6.97% (+6.15%) THAILAND SOUTH KOREA SOUTH KOREA 4.32% INDIA (-18.35%) 2.92% 2.97% (-16.37%) (-14.39%) 2.96% CHINA 2.01%

(-22.19%) (+6.03%)

Source:Source: Thailand Customs Department, data calculation by The Gem and Jewelry Institute of Thailand (Public Organization) Thailand Customs Department, data calculation by The Gem and Jewelry Institute of Thailand (Public Organization)

3. Conclusion

Conclusion Thai gem and jewelry export value decreased by 23.30 percent in 2013. However, if unwrought or Thai gem and jewelry export value decreased semi-manufactured gold was excluded, the export by 23.30 percent in 2013. However, if unwrought or value would have a 4.64 percent growth, and if the overall value was deducted by both the export of semi-manufactured gold was excluded, the export unwroughtvalue would have a 4.64 percent growth, and if the or semi-manufactured gold and the value

of products returned to Thailand after being featured in international trade fairs, it is found that the net of products returned to Thailand after being featured export value would grow at the rate of 6.65 percent in international trade fairs, it is found that the net as shown in Table 4, which reflects the real potential of Thai gem and jewelry from its continuous growth. export value would grow at the rate of 6.65 percent

as shown in Table 4, which reflects the real potential overall value was deducted by both the export of of Thai gem and jewelry from its continuous growth.

Table 4: Thailand’s Gem and Jewelry Net Export Value from January to December 2012 and 2013 unwrought or semi-manufactured gold and the value Description

Value (Million US Dollars)

Jan-Dec 12

Jan-Dec 13

Share (Percent)

Jan-Dec 12

Jan-Dec 13

Change

(Percent)

Total gem Table and jewelry export value 10,084.76 100.00 2012 and100.00 -23.30 : Thailand's Gem and Jewelry et 13,147.55 Export Value from January to December 2013 Deducted by unwrought or semi-manufactured 6,637.62 3,272.51 50.49 32.45 -50.70        gold export value       49.51   67.55 4.64 Export value excluding gold 6,509.93 6,812.25                         



















































-9-

        

Source: Thailand Customs Department, data calculation by The Gem and Jewelry Institute of Thailand (Public Organization)

Thailand's Gem and Jewelry Import-Export Performance in 2013

99

The export value of Thai gem and jewelry products in 2014 is expected to have strong growth due to several supportive factors, including gradual economic recovery of Thailand's major trading partners and baht depreciation. On the other hand, Thai industry may also face some challenges from the threat of fluctuations in the world economy, volatile prices of metal used as raw material, and Thailand's political situation, which affect the volume of purchase orders for Thai products as detailed below: Recovery in trading partners and fluctuations in global economy: Recently the International Monetary Fund (IMF) raised its growth forecast for the world economy in 2014 to 3.7 percent, after the 3 percent growth rate in 2013. The United States, Thailand's main trading partner, is expected to grow by 2.8 percent in 2014, from a small growth of 1.9 percent in 2013, due to its improvement in economic recovery during late 2013 from higher consumers' spending and rising export. However, despite the increase in spending, consumers' income still has sluggish growth, and indices in the manufacturing and employment sectors in January 2014 are still lower than expected. These factors can impede the US economic recovery in its attempt to achieve strong growth.

Moreover, due to the improved situation in the US economy, FED decided to gradually reduce its bond purchase in 2014 and may totally stop its effort in boosting the economy through bond-buying program by December 2014. Now their decision has started to create indirect effects upon international financial markets, causing fluctuation in money outflow from many emerging markets. This has enabled the possibility that these emerging economies might face problems which develops into a major crisis, as happened in the Asian financial crisis in 1997, and may finally jeopardize the overall global economy.

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Japan's economy is steadily recovering. The IMF expects that in 2014 Japan will grow by 1.7 percent, which is the same rate as in 2013. Although the government has implemented the "Three Arrows" policy or Abenomics to stimulate the local economy, Japan is still facing problems in its economic structure, as well as the government's burden of public debt at the amount of over 2 times of its GDP. As a result, the government has limitations in its effort to increase investment for the efficiency of the economic system, and this will affect the sustainability of economic recovery in Japan. Meanwhile, Japan will continue its plan in raising the value added tax from 5 percent to 8 percent in April 2014, which will affect the household sector at the value of 8 trillion yen and lower consumers' demand during the economic recovery; the negative effects are also likely directed towards Japan's gem and jewelry import.

The European Union economy is largely improving and is expected to grow by 1 percent in 2014 after the contraction of 0.4 percent in 2013. According to the IMF's forecast, the United Kingdom will grow at the highest rate among countries in the eurozone, at the rate of 2.4 percent in 2014, due to less unemployment and strong growth in the industry and retail sectors.

Germany, France, Italy and Spain are expected to grow by 1.6 percent, 0.9 percent, 0.6 percent and 0.6 percent respectively. Only few countries are still struggling with weak economy, being unable to solve the crisis. However, analysts are speculating on the possible threat of deflation in the eurozone Steady economic recovery of Thailand's trading partners may help to increase the export of Thai gem and jewelry and indirectly boost its export to other manufacturing countries which import intermediate products from Thailand for value addition before re-exporting to the United States and the European Union. However, risks in the global economy can be a negative factor which undermines the export value of Thai gem and jewelry in 2014.

Thailand's Gem and Jewelry Import-Export Performance in 2013

Baht currency fluctuation towards depreciation: Now the baht currency has depreciated to the rate of 33 baht to US dollar, which is the weakest rate in four years since February 2010 (www.bot.or.th). This depreciation has continued from the second half of 2013 in line with the trend of other currencies in the region. In 2014 baht currency may face more fluctuations, depending on money flow under the influence of the US' tapering of quantitative easing or ending of bond-purchase program, as well as foreign investors' confidence towards political conflicts in Thailand. It is predicted that baht currency will weaken into the rate of 33.50 baht to US dollar at the end of the first quarter in 2014. Analysts from various research houses predict that the baht currency will vary between 32-34 baht to US dollar in 2014, depending on factors in the local and global environment. Baht depreciation should provide benefits to Thailand's export as more competitive price while the economies of its trading partners have recovered. However, it will also raise the cost of raw material which Thailand imports from other countries.

Precious metal price fluctuation in negative trend: Gold and silver price in 2014 is expected to highly fluctuate in negative direction, as a result from continuous recovery of the global economy, and FED's reduction of bond purchase, leading to less amount of investment in the global gold market.

Additionally, many gold consuming countries have reduced their gold import, pressuring gold price to decline. Analysts from leading institutions predicted that gold price in 2014 should be moving between the lowest range of 1,200-1,250 US dollars per ounce, while silver price is also likely to have similar fluctuation as gold. This highly fluctuated cost of material may affect jewelry consumption demand in the global market, as well as Thailand's gem and jewelry export value.

The impact of Thailand's political situation on purchase orders: Due to concerns over Thailand's prolonged political conflicts, decreasing number of foreign buyers make business trips to Thailand for direct purchase or product ordering, which might affect Thailand's export in early 2014. However, Thai entrepreneurs should adapt to the situation by implementing more proactive strategies in the international markets, and seeking for trading partners or buyers in major gem and jewelry trade fairs abroad rather than waiting for orders in Thailand to add more distribution channels and boost Thailand's export value.

To create opportunities by taking benefits from positive factors and minimize the effects from risk factors in 2014, Thai entrepreneurs should review their business strategies for more efficiency in manufacturing and higher competitiveness by focusing on value addition and quality standard, developing new creative designs to pursue consumers' demand in each target market, seriously considering trends and factors which influence modern consumer's purchase, as well as recognizing the importance of value creation and product awareness through branding. At the same time, they should also create business opportunities through various channels by putting the emphasis on proactive marketing and penetration into other potential markets, including Russia, China, the Middle East and ASEAN, where purchasing power is steadily increasing in line with economic development.

Entrepreneurs should also reap benefits from the FTA for lower import duty in all product items, while prevent the risk from conversion rate with the use of forward contracts. These approaches will all contribute to strong growth in Thailand's gem and jewelry export value in 2014.

* Customs Tariff Schedule Chapter 71 is on "Natural or cultured pearls, precious or semi-precious stones, precious metals, metal clad with precious metal and article thereof; imitation jewelry; coin"ď€ ď€

Thailand's Gem and Jewelry Import-Export Performance in 2013

11 11

                                                                                                                                                        

                –                                                                                                         

12

Thailand's Gem and Jewelry Import-Export Performance in 2013