Higher labour costs shrinking industrial base, TCC official claims

Pornsilp Patcharintanakul, vice chairman of the Thai Chamber of Commerce, said higher labour costs were one factor making the future look bleak.
Some local and foreign investors are considering putting their investment in other Asean countries because of the government’s minimum-wage policy, which is set to take effect on April 1 in seven provinces, when workers will get Bt300 a day.
“Many industries will be downsized, as investors do not want to shoulder a higher burden, while they can’t raise prices amid the tough competition in the market,” Pornsilp said, repeating a consistent line of the TCC against higher wages without concurrent higher productivity.
He said that while Thailand’s industries grow smaller, other countries in Asean that keep their wages low will pick up more new investment. Both local and foreign companies are now seeking opportunities in other Asean countries because of the rising cost of labour in this country.
The tariff incentives that neighbouring countries have gained from the European Union and the United States have also spurred Thai businesses into venturing outside the country.
The garment industry will suffer the most from the wage hike. Labour costs account for 20 per cent of total production costs in the garment industry, while the profit margin is less than 10 per cent. Garment producers will be hit by an increase of Bt8 per hour in wages, while they claim they cannot adjust prices.
If the government has no concrete plan to promote investment and prioritise each business, industries in Thailand will get smaller.
To ensure that major industries continue to expand here, the government should have a clear plan to promote investment and develop human resources to support the industries’ growth with higher productivity to go along with the higher wages, Pornsilp said.
TCC chairman Phongsak Assakul showed deep concern for small and medium-sized enterprises, since they are the most at risk because of limited liquidity.
“I have not seen any clear plan of the government to help SMEs. The government must provide not only financial support for SMEs, but also measures to promote their development after the rise in production costs,” he said.
The government should concentrate on accelerating economic growth amid concerns over repeated flooding, the rising cost of living and spiralling fuel prices, Phongsak said.
However, it must carefully prioritise its spending, as it could lead to dangerous levels of public debt.
The 46th annual meeting of the chamber in Bangkok yesterday promoted vice chairman Isara Vongkusolkij, an executive from leading sugar manufacturer Mitr Phol Group, as chairman-elect.
Isara will work closely with Phongsak to ensure that all projects of the chamber carry on when he takes over next March.