Export growth to dip forecast: chamber study

The UTCC claims that Thailand’s export competitiveness has been hurt by the increased daily minimum wage and the rising prices of liquid petroleum gas (LPG) and natural gas for vehicles (NGV). 

The university’s Centre for International Trade Studies claimed that the 40-per-cent rise in the minimum wage to Bt300 a day in some provinces had pushed up the average cost of production for the export sector by 3.08 per cent, while the service sector’s labour costs are up 4.18 per cent.

“If Thai exports grew by just 13.7 per cent, Thailand would lose $4 billion in total shipment value compared with the initial estimate of a 15.5-per-cent expansion in exports to $264 billion this year,” said the centre’s director, Aat Pisanwanich.

The industries that it says will be hit hardest by having to pay their workers more are the wood-products and furniture businesses, whose cost of labour will increase by 4.65 per cent. 

Other industries to see their labour costs rise include garments (3.45 per cent), food and beverages (2.28 per cent), concrete and ceramics (2.24 per cent), rubber and plastics (1.6 per cent), paper and printing products (1.53 per cent), and steel and machinery (1.16 per cent).

Rising prices of LPG and NGV in the industrial and transport sectors would also add to production costs in the export sector. Some industries will see costs rise by more than 15 per cent, including automobiles and parts, machines and electric appliances, and steel and related products. Industries including plastics; rubber; food and beverages; and chemical products will face cost increases of 10-15 per cent, while costs of petrochemicals; garments; and paper and printing products will increase by 2-10 per cent, the centre estimates.

The price of LPG used in transport will increase from Bt20.38 per kilogram in March to Bt27.13 by the end of this year, while the cost of LPG in the industrial sector will rise from Bt27.18 to Bt30.18 per kilo. The price of NGV will increase from Bt10 per kilo to Bt14.50.

Aat said Thai shipments would face slower growth this year because of the effects of the higher costs of production on competitiveness. He said small and medium-sized enterprises in the sector would be seriously hit by the rising cost of production as they could not adjust their operations to offset higher labour costs.

According to Aat, about 30 per cent of the country’s export income is generated from SMEs.

Another negative factor affecting Thai exports this year is the higher fuel price in the world market. The average price of crude oil is expected to rise by 11.4 per cent from $94.86 per barrel last year to above $105 this year.

However, positive factors supporting export expansion include stronger global economic growth and the recovery of the Thai industrial sector from last year’s floods.

The centre’s study predicted that exports in the second quarter would grow by 9.79 per cent worth $63.29 billion, reversing a 1.6-per-cent contraction in the first quarter.

Exports in the first half are expected to grow by only 4.1 per cent because of the impact of the floods, while shipments in the second half will grow by 26.9 per cent year on year.