Overseas expansion Cost, labour and supply woes cited
Thai enterprises have been urged to expand overseas, especially to neighbouring countries, as they will face higher wage costs, labour shortages and a dwindling supply of natural resources at home, a seminar was told yesterday.
Panellists at a Foreign Trade Department seminar on "Opportunities for Thais to Trade and Invest in Neighbouring Countries" said that if they did not move beyond the Kingdom’s borders, Thai investors could lose competitiveness amid rapid development of other countries in Asean and elsewhere in Asia.
They urged enterprises to tap into the benefits from Asean’s moves for closer linkages among its members as a key instrument in boosting business growth and connecting Thailand to the rest of the world.
Thanit Sorat, vice chairman of the Federation of the Thai Indus-tries, warned that the minimum wage in Thailand was expected to surge beyond Bt500 per day in the next five years. Other local problems such as labour shortages, the lack of natural resources and limited areas of investment because of natural disasters will only increase.
"An increase in the labour wage has become a tool for politicians to gain popularity. Wage hikes in following years will cause higher costs of production for domestic enterprises," Thanit said.
He said that given these domestic challenges, enterprises should consider expanding in other Asean countries, especially neighbouring states.
Cambodia is one of the best investment destinations for Thais as it has low labour costs and is rich in natural resources. So far, few foreign investors have entered that market, so Thai investors have plenty of room to grow in the country, he pointed out.
burma opportunity
Burma is another country with high potential as a new investment destination for Thais after its government has adopted a policy to promote closer connections to the world. However, new investors should carefully study risks and regulations before investing in Burma as the exchange rate fluctuates, while many rules can easily be changed, Thanit warned.
He urged the government to set up a specific agency to promote overseas investment, as well as making the issue part of the national agenda.
Aksornsri Phanishsarn, lecturer at the economics faculty at Thammasat University, said Thai labour costs would soon much higher than Malaysia’s under the government’s policy to boost the minimum wage to Bt300 in April.
Last September, Kasikorn Research said the minimum wage in Malaysia was Bt228, while in other neighbouring countries wages are much lower than in Thailand. For instance, the daily wage in Indonesia is Bt140, Laos Bt100, Vietnam Bt94, Burma Bt80, and Cambodia Bt76.
She urged Thai investors to reap the benefits of Asean integration, as well as other cooperation arrangements under the Greater Mekong River Subregion and Pan-Beibu Gulf Economic Cooperation, so they can adjust to changing domestic conditions and enjoy business expansion in a larger market.
Deputy Commerce Minister Poom Sarapol said the government would gradually promote more trade and investment along the borders amid closer economic linkages among Asean countries and China.
He said the Asean Economic Community would lead to seamless trade and investment. Thai enterprises will be supported to invest overseas to benefit from zero tariffs and lower costs of production in other Asean states.
Poom added that under progressive Asean integration to eliminate tariff barriers, cross-border trade between Thailand and neighbouring countries was expected to rise to Bt1 trillion this year from Bt889 billion in 2011.
