III - The Clothing and Textile Industry and Domestic Policy

Summary

Historical Background

Although Thailand has a long history of textile production, the modern clothing and textile industry was established relatively late compared with other East and Southeast Asian countries (Koomsup 1973). Low import tariffs following the imposition of the Browring treaty in 1830 forced Thailand to open its market to the colonial powers and therefore inhibited the early development of the industry.

The first textile machines, including 3,232 spindles and 72 looms, were imported from Germany by the Ministry of Defence in 1936 for military purposes (Koomsup 1973). It was not until 1946 that modern, privately owned textile mills began to operate with a capacity of 3,600 spindles. The first privately owned modern textile mills were, in fact, established by a local entrepreneur in response to the shortages of the Second World War.

After 1946 the industry, particularly mechanized spinning, expanded rapidly, with the number of spindles rising to 43,000 in 1952. However, production collapsed in the late 1950s due to competition from low cost imported cotton textiles from Pakistan. The price of imported cotton yarn was 25–30 per cent below that of domestically produced yarn. Santikarn (1977) suggests that Pakistan export subsidies were one reason for these low import prices. Several Thai spinning mills went bankrupt and had to be closed down. The Thai Government reacted by giving protection to the industry for the first time, imposing the Import Restriction Act on cotton yarn imports in 1955. The Act was amended to include cotton fabrics in 1957.

Import tariffs and the introduction of the Investment Promotion Act in I960 encouraged investment. The textile mills that had closed during the 1950s, including the textile mills owned by the military, were taken over and expanded by local entrepreneurs as well as by Chinese entrepreneurs from Shanghai and Hong Kong. Three pioneer firms were established, mainly in cotton textiles: the Thai Blanket Industry (1959); Thai Durable Textiles (1961); and Luckytex (1961).