The association wants this to happen before Asean countries form a single market in 2015 under the Asean Economic Community (AEC), as it would strengthen the competitiveness of Thai industries.

TGMA vice president Sukij Kongpiyacharn yesterday said Thai manufacturers bringing back profit from their foreign businesses had to pay 25 per cent in corporate income tax even though their operations in some Asean countries benefited from the incentive of a waiver from local corporate tax.

This disparity - leading to higher overall costs for Thai firms - is an obstacle for manufacturers in many industries, including garments, to establish their businesses in other Asean countries despite market liberalisation under the Asean Free Trade Agreement, which took effect on January 1.

Sukij said another factor favouring some Asean countries - notably Singapore and Malaysia - is that their rate of corporate tax on income from abroad was zero. This has encouraged investors from those countries to expand in other Asean member countries, in order to benefit from a larger market.

"The government supports the country becoming the manufacturing base of the region, but its policy has not encouraged local investors to reap benefits from [operations in] other countries. If the government cannot amend the corporate tax rate before the AEC takes effect in 2015, I believe manufacturers will lose their market, as other Asean countries will be able to share our market easily," he said.

Sukij said the TGMA had met with Finance Minister Korn Chatikavanij, executives of the Board of Investment and officials at the Commerce and Industry ministries to call for amending the tax structure. It is still awaiting a response to its proposal.

Although Thailand has the strongest operating base for the garment industry among Southeast Asian countries, it will lose competitiveness in the future because of the tax rate, he said.

At US$488 million (Bt15.8 billion), the industry's export value over the first two months of the year was 8.24-per-cent lower than in the same period last year, due to the fragile recovery in the main markets of the US, Europe and Japan.

The TGMA anticipates export value swinging back into positive territory this month, with a full-year target of $3.5 billion, similar to what was achieved in 2008.

Last year's export value was $2.96 billion, down 15.52 per cent from the 2008 level.

Meanwhile, Virat Tandaechanurat, executive director of the Thailand Textile Institute, said the government should also provide funding for manufacturers to exhibit their products at international fairs.

He said garment and textile exports in January and February were worth a combined $1.13 billion, up 13 per cent year on year. Garments were the only segment witnessing a drop during that period.

The institute expects the combined export value of the two industries this year to grow by 10-12 per cent from last year's $6.5 billion.