Meet urges rise in productivity for competitiveness

Thailand is at risk of losing competitiveness to other Asean countries because of the lack of an agenda to increase labour productivity while wages rise, a seminar was told yesterday.

Without attention to this issue, Thailand could face many difficulties as it attempts to improve incomes while maintaining foreign direct investment and even drawing new investment, under its plan to shift the country away from the middle-income trap towards a value-added manufacturing base. In the end, local enterprises could flee Thailand to invest in more cost-competitive countries that also boast higher productivity.

The seminar on “Increase Productivity, Increase Labour Competency in Farm and Food Industries”, held by the Thailand Productivity Institute, claimed that Thai productivity has grown slowly, at an average of 3 per cent a year, for the past 10 years. Other countries in Asean have improved productivity at doubled that rate, mainly Malaysia and Vietnam. The productivity rate of the United States is five times Thailand’s.

The policy to boost the minimum wage to Bt300 a day has increased enterprises’ costs by roughly 10 per cent, the seminar organisers claimed.

“Other countries such as Malaysia and Vietnam have national plans to develop productivity. However, Thailand has never had a particular plan to boost productivity for each industry, creating risk that Thailand could lose competitiveness to other countries after the full implementation of the Asean Economic Community,” said Phanit Laosirirat, executive director of the institute.

He said that regardless of the party in power, no Thai government had ever drawn up a national agenda to boost labour competency, while only planning to boost the minimum wage. The Kingdom needs to revise some rules and regulations to encourage enterprises to invest more on research and development so that Thai industries will develop more.

He noted that even if the current government made plans to boost productivity, such an increase could not happen in the short term. Phanit said the government should hold off on any further wage increases for a few years so that productivity can catch up, with a 40-per-cent improvement.

 

Tax incentives 

To boost productivity, the institute suggested that the government provide some tax incentives for companies that spend a lot on R&D and technology development. It should also set up a national agenda and allocate a higher budget for supporting R&D in particular sectors, as well as assisting enterprises in accessing information.

Currently, spending on R&D is less than 1 per cent of gross domestic product, while in some other countries the rate is double that.

Phanit said Thailand should focus its productivity development plan on the agricultural-industrial sector as it is labour-intensive and is mostly owned Thai enterprises and local farmers.

Panisuan Jamnarnvej, president of the Thai Frozen Food Association, said the public and private sectors should make labour productivity a priority. Simply raising wages without emphasising productivity would mean loss of competitiveness “in many industries, mainly the agricultural industry that Thailand has relied on”, he said.

Panisuan said that for every 1-per-cent productivity increase, shrimp production would increase by 3,500 tonnes.

Komin Pimtanotai, senior director of quality control for MK Restaurants, said the company had to spend more to boost labour productivity after the rise in the minimum wage. Although the company pays higher than the minimum, it needs to keep wages relatively high to retain its workers.

To ensure Thailand’s competitiveness, Komin said the government should freeze the minimum wage for a few years so that industries have time to increase their production capacity and compensate for higher wage costs.

MK Restaurants employs about 15,000 labourers at present.

MK, which has a plant in Nava Nakorn Industrial Estate that was flooded last year, plans to resume operations at the plant in a few months after ensuring sanitary safeguards are in place and that there will not be a repeat of the disaster this year, Komin added. In the meantime, the company has been relying on its plant on Bang Na-Trat Road.