News Room - Steel Industry

Posted on 24 Mar 2008

Japanese chamber seeks higher steel import quotas

Japanese investors have asked the Thai government to more than triple the import quota for steel products for this year, saying that domestic demand is far higher than the amount allowed. 

Mitsuhiro Sonada, the president of the Japanese Chamber of Commerce (JCC), said that members recommended lifting the quota for pickled and oiled steel products to 730,000 tonnes from the 227,500 tonnes allowed under the free trade agreement between Thailand and Japan.

Steel was a highly contentious issue during the negotiation leading up to the signing of the Japan-Thai Economic Partnership Agreement (JTEPA), as the trade pact is formally known. The deal took effect last November.

Local steel producers asked the government to help protect them by forcing Japanese manufacturing plants in Thailand to use local content instead of allowing them to import their own products freely.

The Japanese side countered that certain types of high-quality steel required by major manufacturers, notably the big Japanese-invested automobile and electrical goods makers, were not made in Thailand.

Responding to the Japanese request yesterday, Industry Minister Suwit Khunkitti said the government would review steel market conditions before this year's quota takes effect in July.

Japanese investors also urged the government to allow all products that are made in Asean countries to be included in the Asean Industrial Co-operation (AICO) scheme.

As well, the JCC has proposed that the Bangkok government remove as many goods and services from the country's sensitive list in current trade negotiations with India. The chamber said its members would be able to take advantage of lower tariffs when they imported raw materials from India to assemble in Thailand.

Currently, Thailand has 500 items on its sensitive list out of a total of 5,000 goods and services items expected to be covered in the Thai-Indian pact.

The Japanese chamber also said the Foreign Business Act should be relaxed to draw more overseas businesses to set up regional office headquarters in Thailand.

Tax incentives are available for regional headquarters operations but the response has been slow in the five years they have been available.

Mr Sonada said JCC members were also concerned about the currency and would like to see the baht-dollar exchange rate more stable if possible.

''We know that it is difficult for Bank of Thailand to control the currency exchange rate but the stronger baht could cause Japanese investors to suspend their investments here,'' said Mr Sonada, who is also the president of Toyota Motor Thailand.

Mr Suwit said that investors should use a basket approach to managing their currency exposure, and also consider the potential for risk reduction by buying more machinery at times when the baht is strong.