According to a recent Maybank report, Thai-listed companies in the agri-food sectors stand to benefit the most from lower tariffs due to the Regional Comprehensive Economic Partnership (RCEP), which came into force on 1 January. Maybank report has identified Tipco Foods and Malee Group as one of the greatest beneficiaries.
Maybank Analyst Maria Lapiz came up with the report after reviewing a list of more than 39,000 Thai products that will see significant tariff reductions as a result of the RCEP, the world’s largest free trade agreement.
The 39,366 items, most of which are from agri-based industries, will see zero tariffs over a 20-year period, and changes to the tariff for close to 30,000 of these items were immediately implemented.
Of the 39,366 items, 11,104 items pertain to Thai products being exported to South Korea, such as frozen fruits (mangosteen and durian), pineapple juice and fishery products. Some 8,216 items including seasoned vegetables, frozen pineapples and roasted coffee pertain to exports to Japan, while some 7,491 items, including flavoured pineapple, coconut juice and other non-food items relate to exports to China.
Lapiz said Tipco Foods, which manufactures and distributes pineapple products and beverages, and canned food and drink producer Malee Group will benefit the most since South Korea has the highest number of products with tariff cuts on such products.
Concerns however remain that under RCEP, Thailand could be flooded with cheap manufactured and agricultural goods from China, which would pose difficulties for domestic businesses, especially for SMEs and farmers. Lapiz however highlighted that these players need to address their cost competitiveness in terms of production and logistics.
Over the past 10 years, the main export markets for Thai products in RCEP have been China, Japan and Vietnam, comprising more than 50% of exports, while 60% of Thai imports have come from China, Japan and Malaysia. Last year, Thailand had a U$25 billion trade deficit with RCEP and this was largely due to its high deficit with Japan and China. Lapiz expects the significant trade deficits especially with Japan and China to narrow significantly in the next 20 years.