REality-based policies to show the way

The heads of large companies say newly launched energy initiatives and other government policies could force Thai companies to boost their competitiveness and stand ready for the upcoming Asean Economic Community (AEC).

The initiatives include floating energy prices, increasing the minimum wage and reducing corporate income tax.

At the third SCB Annual Conference on the Economy, "Thailand: Moving Forward with the New Government", Pailin Chuchottaworn, president and chief executive officer of PTT, said yesterday that flotation of energy prices could bring Thai companies out of the comfort zone. Until now, lower fuel prices than faced by their counterparts in other countries had masked the real costs.

Isara Vongkusolkit, chairman of Mitr Phol Sugar Group, said such policies as floating fuel prices at first seemed to shock the market, but concerns eased after the government listened to business operators.

Fuel is a major component of business costs, and recent decisions on the Oil Fund have reflected the real costs. This would force Thai companies to boost competitiveness so they can deal with real fuel costs when the AEC materialises in 2015.

"Thailand enjoys the cheapest fuel prices. It’s fair if the subsidy goes to all people in the country. However, no government could subsidise fuel prices if the population goes up to 600 million people" in the AEC, Pailin said.

There are only three more years for Thai companies to adjust for higher competition in the community, he said. "We will not gain if we don’t accept more competition."

Thailand should see a change of its industries towards higher-skilled labour and technology to increase their competitiveness in the wake of the government policies regarding fuel and wages, he said.

Isara agreed on a shift to high-skilled labour, but raised a question on how to train these people and upgrade their capabilities.

Thai business operators should unite in clusters to add value to products, he said.