Heat waves spark surge in demand for air-con parts

Thailand’s exports of air-conditioner components to the US surged in the first quarter, driven by rising demand caused by an increase in heat waves.

Ronnarong Phoolpipat, director-general of the Foreign Trade Department, said the air-conditioner parts exported to the US became the leading product category to benefit from the generalised system of preferences (GSP) privileges awarded by the US, accounting for 19.3% of total GSP utilisation in terms of value, which is considered to be a significant proportion.

According to the Foreign Trade Department’s data, the utilisation of GSP privileges by Thai exporters during the first three months of 2023 amounted to US$819 million, representing a 9.93% decrease from the corresponding quarter last year.

The US remained the largest market in which Thai exporters utilised GSP privileges, followed by Switzerland, Norway, and the Commonwealth of Independent States (CIS). Air-conditioning components remained the leading product category benefiting from GSP privileges, with the export value increasing by 126% from the first quarter of last year to around $147 million.

The US ranked first as the market with the highest utilisation of GSP privileges for Thai exports, with a value of $759 million, representing a decrease of 9.92% and accounting for 92.6% of the utilisation rate.

Switzerland ranked second with a value of $55.6 million, a decrease of 7.96% and a utilisation rate of 28.2%. Norway ranked third with a value of $3.71 million, a decrease of 24.7%, and a utilisation rate of 53.5%. The CIS member states recorded $980,000 in terms of value, a decrease of 44%, and a utilisation rate of 19.9%.

The US is a significant export market that provides tax privileges to Thai goods under the GSP programme. Thailand enjoys a 0% import tax exemption on various goods from the US under the GSP, covering more than 2,600 items. These items include seasoning, lenses, citric acid, rubber gloves, large-sized luggage, garment bags, and seamless copper tubes, among others. Although the GSP programme with the US expired on Dec 31, 2021, and the US is currently in the process of renewing the programme, importers who previously enjoyed GSP privileges will have to pay taxes at the normal rate until the programme is extended.

Nevertheless, importers can still apply for the retention of GSP privileges for imported goods as usual, and the US will refund the tax once the programme is renewed.

Regarding exports under the GSP programme to Switzerland, Norway, and the CIS member states, there are several high-value goods that utilise GSP privileges, such as fragrances for food or beverages, precious gemstone jewellery, and packaging made of ethylene polymer (Switzerland), and sweet corn, suits for women or girls made of wool or fine animal hair, and seasonings (Norway).

‘‘ Air-con parts exported to the US became the leading product category to benefit from the generalised system of preferences privileges awarded by that country. RonnaRong PhoolPiPat Director-general, Foreign Trade Department