Banker predicts 5% rise in property-sector labour costs
Kiatnakin Bank, a small local lender, has cautioned that property developers could see their labour costs rise by 5 per cent as a result of tomorrow's increase in the minimum daily wage to Bt300 in seven provinces, as workers at all levels will likely see
The minimum wage will be hiked in seven provinces, including Bangkok and its vicinities, from April 1. The Bt300 daily rate will be employed across the nation next year.
“The effect of the wage increase is that business operators may need to raise wages for all worker levels,” said Tawatchai Sudtikitpisan, chief executive officer and president of Kiatnakin Bank.
Once a business operator increases its workers’ minimum wage from Bt225 per day to Bt300, Tawatchai said, other workers whose wages are higher than Bt300 will likely demand a corresponding rise of Bt75 per day.
The property sector, which has not yet recovered from last year’s floods, is expected to see its labour costs rise by 5-20 per cent, he said.
The wage increase and current high crude-oil price could add to inflationary pressure, the banker said. “Likely rises in prices of goods may be a factor that should be watched out for.”
In the first quarter of this year, the property sector, while not achieving a full recovery, fared better than it did in the fourth quarter of 2011, when floods swamped many residential projects in Bangkok, its vicinities and the northern part of Thailand.
“We’ll have to wait and see [whether the property sector will make a full recovery] in the third quarter,” Tawatchai said.
Meanwhile, Kiatnakin Bank yesterday launched KK Biz in an effort to rebrand its services for small and medium-sized enterprises, extending loans to the property sector, apartments, transport business, auto dealers, printing-materials firms and packaging operations.
“KK Biz is not only about extending loans, but also about providing know-how and problem-solving for customers,” Tawatchai said.
Kiatnakin Bank wants KK Biz’s loans to grow by 19 per cent this year.
The bank aims to have 70 per cent of its total loan portfolio come from auto hire-purchase, and the remaining 30 per cent from SME loans and KK Biz. Currently, KK Biz’s loans account for 22.5 per cent of total loans, with the remainder from auto loans.
“Demand [for residential units] remains strong, but potential home-buyers are waiting to see the [development of a] flood-protection system,” Tawatchai said.
