"Orders for the first part of this year should be better than last year. In January, some leather-goods business operators attended a fair in Germany, and more customers placed orders than last year. This is a sign that exports should increase," said Mrs Nauvarat.

Businesses have also run out of stock and are increasing orders, she said.

Exports of leather goods in 2009 totalled 47 billion baht, down 19.7% from 58.5 billion in 2008 because of the global economic slump, said Mrs Nauvarat.

The market for Thai leather goods is estimated at 77 billion baht, with domestic sales at about 30 billion.

As tourists contribute to domestic sales, Mrs Nauvarat is concerned that political conflict could affect tourism.

Leather-goods exports are made up of 54.13% shoes and shoe parts; 32.7% leather, including tanned and dyed leather; and 13.18% bags and travel accessories.

Mrs Nauvarat said the industry would break away from its usual focus on the US and Europe to concentrate on the Asean market - including Burma, India, the Philippines and Indonesia - and also Bangladesh.

"We hope that the [Asean] market will create a large number of buyers due to the trend of rising income of people in the region. The Chinese, for instance, are becoming increasingly rich and are earning higher incomes due to their large amount of exports. This results in high purchasing power, especially if we take into account the whole Asean," said Mrs Nauvarat.

In her view, it is still unclear whether Afta will benefit the leather industry, although if the industry prepares and is fully supported, it should gain.

"Our competitors are not China and Vietnam, since our customers are different groups. Thai products are prominent in focused groups or niche markets," she said.

Pak Tongsom, the deputy director-general of the Office of Small and Medium Enterprises Promotion (Osmep), said leather goods businesses should focus on improving technology in design and production. This would add value to products, cut labour costs and create differentiation for Thai brands, he said.

Of the sector's 4,550 operators, 3,000 are small businesses, 1,500 are medium-sized and only 50 are large firms with more than 200 employees.

The Thai Leather Goods Association and Osmep are now setting up a project to improve production and design. Mrs Nauvarat said Italian experts would be invited to provide information on creating value-added products.