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Govt pushed for retail measures

May 04. 2016
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THE RETAIL industry now expects to grow by only 2.8 per cent this year instead of around 3 per cent, and continues to urge the government to implement the short- and long-term measures it has proposed to improve the situation.

If no new concrete measures are forthcoming, industry growth this year could slide to 2.6 per cent or even lower, Jariya Chirathivat, president of the Thai Retailers Association, said yesterday.

According to the TRA, the industry has continued to dip, and achieved only 2.6-per-cent growth in the first quarter of this year.

It is the first time in two decades that the retail industry in Thailand has suffered so severely, slipping into negative territory. The index of retail sales in Thailand has been falling since 2012.

From 2002-12, average growth was 8 per cent annually. From 2012-14, sales contracted 3 per cent a year, and continued to shrink last year.

This is because the government focuses more on infrastructure and exports than on economic and consumption stimulus, the TRA maintains.

TRA members have continued to invest in their businesses. Their injections are estimated at Bt130.2 billion from 2015-17, or Bt43.4 billion annually.

This direct investment results in direct employment of 210,000 workers annually and 150,000 workers in indirect employment.

The TRA is concerned that the retail industry might not be able to maintain this level of investment in long-term if consumer spending continues to weaken.

The reason retail consumption is sluggish is that mid-to-low-income consumers who rely on agricultural income still have low purchasing power and they need stimulus from the government through Village Funds. This slams the sale of non-durable goods, which has seen virtually no growth.

Mid-to-high-end consumers are still able to spend, and tourist numbers have increased by 12 per cent yearly over the past five years. However, this does not translate into sales of semi-durable goods.

Thais are doing their shopping on overseas trips. Last year, they spent more than Bt170 billion outside the country, of which Bt50.84 billion was for brand-name products.

Although the arrivals of foreign travellers are increasing at double-digit rates every year, reaching |29.5 million in 2015, their consumption in Thailand is not as great as expected. This is because Thailand does not focus much on a shopping-tourism policy, and luxury products here are 20-30 per cent more expensive than in other countries.

Travellers take their shopping lists to duty-free stores because of the lower prices.

The TRA has recently proposed several measures to the government to help buoy the industry. Among them are government pushes for duty-free cities, to make Thailand a real shopping destination.

The association has proposed 10 tourism destination provinces to host duty-free cities, including Pattaya, Phuket, Samui and Chiang Mai.

It has also recommended that the government actively push for Thailand to become a genuine shopping-tourism destination to drive the economy forward at a time when local purchasing power has not fully recovered.

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