Thailand’s soybean importing stands to benefit from the AEC

Various industries in Thailand are expected to benefit from the upcoming ASEAN Economic Community (AEC) in 2015. Today we will focus on the import of soybean, of which the price is expected to go down with the arrival of the AEC.

Thailand, which imports over two million tons of soybeans each year, is the third largest soybean importer in Southeast Asian region after Vietnam and Indonesia. The imported soybeans are mainly used in three categories as follows:

The first one is soybean oil. Since Thais and most people who live in Thailand including Chinese, Japanese, and those from other countries use soybean oil in their cooking, over 84 percent of the imported soybean are used to produce soybean oil. Second, soybean is needed for the processed-food industry which produces soya milk, tofu, soybean paste, and soy meat. At present, soy meat, known as analogue meat, is popular among people throughout the world, especially vegetarians. However, only about 1 percent of imported soybean is used for this purpose. The last main usage of soybean Thailand imports is for the animal feed industry, which, in addition to soybeans, requires soybean waste—residue from soy bean oil production process. Despite the amount of residue generated locally, over 85 percent of soybean residue needed is imported.

Most of the ASEAN member countries are soybean importers except for Myanmar, which cultivates enough soybeans for domestic consumption. Even though Thailand has a demand for approximately two million tons of soybean each year, it produces only 200,000 tons a year. Thailand imported 1.8 million tons of soybeans, at the cost of 25 billion baht, in 2010; mostly from Brazil, followed by the US, Argentina and Cambodia respectively. In 2011, Thailand imported about 1.8 million tons of soybeans as well. However, it spent almost 32 billion baht for the same amount of soybeans, given the price has gone up.

Meanwhile, Thailand each year exports 9,500 tons of soybean seeds to the Philippines, Saudi Arabia, Vietnam and the US respectively .

It is clear that Thailand does rely on soybean imports, and that the establishment of the ASEAN Economic Community (AEC) in 2015 will benefit Thailand as regards this issue. Upon the AEC formation in 2015, ASEAN members will integrate into a single community and production base, and implement a free-trade agreement. Thailand will then be able to import soybeans from her neighbors freely and at a lower cost, thanks to the zero tax agreement activated between Thailand and its neighboring countries, including Cambodia, Laos and Myanmar. Some might not believe that the difference of only a single-digit percent would affect the country in macro-economic level. However, the nation’s soybean importing costs of over 25 billion baht inclusive of a five-per cent import tax baht last year would have been be lowered by at least one billion had there been no such a tax. With that kind of funds, Thailand can use it to improve its agriculture industry in a number of ways. With the market integration in 2015, Thailand will be given various choices from which to choose. Rather than having to buy soybeans inclusive of tax from Brazil or the US, Thailand will be able to buy them exclusive of one from her neighboring countries.

Source: http://thainews.prd.go.th/en/news.php?id=255501050021

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