Thailand and S.Africa trade relations 20-years strong - CNBC Africa

Thailand and S.Africa trade relations 20-years strong

Special Report

by admin 0

South Africa is Thailand’s number one trading partner in Africa, and other countries close behind in establishing trade relations with the Southeast Asian nation include Nigeria, Egypt, Ghana and Kenya.

“This is the economic powerhouse of Africa. It is the largest economy, it is the most developed in terms of facilities, banking systems and payment systems,” Chakarin Komolsiri, the head of the office of Commercial Affairs at the Royal Thai Embassy, told ABN Digital in an exclusive interview.

“You’d be surprised that Thai exports to South Africa are very diverse. We have both agricultural products and industrial products. The number one item is automotive parts,” Komolsiri explained.

South Africa is one of Thailand’s crucial rice markets and South Africa’s second largest import product from the country. Par-boiled rice in particular is the most common type of rice demand, with close to 90 per cent of rice on local retail shelves having been imported from Thailand.

According to global rice news, research and analysis website Oryza, between 2010 and 2011, 75 per cent of rice in South Africa was imported from Thailand at roughly over 500,000 tonnes. 

India is however emerging as a strong competitor in the rice export market in South Africa, and is expected to export over 250,000 tonnes of rice to South Africa by the end of 2013. This is significantly close to Thailand’s estimate of having exported over 260,000 tonnes of rice by the end of 2013 as well.

Majority of South Africa’s canned fish is also a Thai import. Rubber and chemical products also make the import list, but are not as heavily imported.

South Africa’s and Thailand’s strong compatibility, according to Komolsiri, stems from similarities in population size, though Thailand’s is slightly larger, and the fact that both countries are top economic players within their regions.

South Africa’s currently volatile currency and labour sector unrest has however spiked fears of a poor economic outlook for the remainder of the year and changed investor sentiment of the country.

Adding to the pressure is the recent downgrading by rating agency Standard and Poor’s of local gold producer Anglo Gold Ashanti’s credit rating.

The negative economic outlook for the country is nevertheless not expected to affect trade relations between Thailand and South Africa.

“I don’t see a lot of problems with the labour unrest and the weak rand. Certainly when we export to you our products will become more expensive because of the weaker rand but people will go for products from Thailand, not because of the cheap price, but because of the quality,” said Komolsiri.

The labour unrest and lengthy wage negotiation periods have still generated investor concerns over the security of current investments in the country. This is in light of rumours of an impending credit downgrade for the entire economy.

Assuring investors that their investments will not be affected by any political or market volatility is then essential for future investment procurement.

“South Africa, like any other country, needs to ensure that once you invest in the country, that your investment is protected,” added Komolsiri.

In 2011, Thailand’s exports to South Africa increased by 24 per cent and in 2012 by 27 per cent, indicating a growth trend that is expected to be sustained in future.

Thailand is also a big importer of citrus fruit from South Africa, but not at the same scale as South Africa’s Thai import base. South African wine is also gaining popularity among Thai consumers.

With 80,000 South African tourists visiting Thailand every year, the Thai hospitality industry has been a prominent selling point of tourism and a major revenue generator alongside Thailand’s strong export market.

2013 also marked the 16th year of The Thailand Trade Show exhibitions in Cape Town and Johannesburg, where Thai-based businesses, manufacturers and products were exhibited with the aim of improving relations on a local level.  

“Thailand looks at South Africa as a strategic trading partner, we want to find partnership here. We think of South Africa as a springboard to other African countries,” said Komolsiri.