30 July 1998: Moves by New Zealand, Malaysia and the Philippines to increase tariffs on glass imports will have serious financial repercussions for Thai companies such as Siam Guardian Glass (SGG) and…
30 July 1998: Moves by New Zealand, Malaysia and the Philippines to increase tariffs on glass imports will have serious financial repercussions for Thai companies such as Siam Guardian Glass (SGG) and Thai-Asahi Glass, recent reports say. Both companies are reportedly trying to trade their way out of financial difficulties, caused by the downturn, by boosting exports. Somyod Tangmeelarp, SGG managing director, said the move by the three countries to protect their local glass producers was unfair and inconsistent with their stated policies of trade liberalisation. New Zealand, a major importer of Thai glass, announced in February it would remove its tariff, but recently threatened to rescind the decision. “The protectionist bid is to help Pilkington, a glass manufacturer in Australia, which is a good neighbour of New Zealand,” Mr. Somyod said. Malaysia announced a hike in import tariffs from 15% to 30% in May. The decision runs counter to an agreement reached by Asean countries to limit members“ glass tariffs to 15%. Purchase orders from Malaysia have fallen sharply as a result of the price increase of imported glasses, he said. The Philippines also plans to increase tariffs to protect its local glass industry. The rate has yet to be decided but it will be imposed for a minimum of five years. A large number of glass importers have cancelled orders because of the decision to increase the tariff, the report said. Mr. Somyod added that African nations were also expected to increase glass tariffs. There is an oversupply of glass on the world market after Asean manufacturers boosted exports to replace plummeting domestic sales, said the report. Siam Guardian Glass and Thai-Asahi Glass reportedly plan to step up efforts to export their products to more than 40 countries, particularly in Asia-Pacific, during 1998/99. SGG plans to produce 260,000 tonnes of glasses for this year. Of this, 156,000 tonnes, or 60%, is earmarked for export. The firm expects to earn two billion baht from exports, the report said. The Guardian Group, SGG“s parent company in the US, is planning to ask US trade representatives to negotiate with the countries to remove the tariffs. Siam Cement will also urge the Commerce Ministry to address the issue. SGG is already suffering as a result of the economic downturn and must service loans of 3.5 billion baht, 80% of which is in foreign currency. The firm increased its capital from 950 million baht to 1.4 billion baht in March, as part of its effort to ease its liquidity shortage.