Higher Power Bills, Wages Could Trigger Border Run: Thai Manufacturers

Rising electricity bills and higher expected wages are the main reasons Thai manufacturers will relocate their production bases to neighbouring countries, said the head of the Federation of Thai Industries (FTI).

Despite the improving economy, these factors will definitely affect local industries and make operators look for opportunities to set up plants in cheaper wage countries such as Cambodia, Laos and Myanmar, said FTI chairman Supant Mongkolsuthree.

He said Thai operators could see a rise in the minimum wage in the near future, even as the government just raised the daily minimum wage nationwide to 300 baht last year.

Power bills are primed to rise to five baht a unit next year, up from 3.96 baht at present.

He said manufacturers had sought state assistance for their energy costs, threatening to take their business elsewhere if not.

“International calls in Thailand remain expensive with limited options from a few operators. 3G broadband service remains inefficient,” Mr Supant told participants at a seminar yesterday.

Vallop Vitanakorn, vice-chairman of the FTI, said he was not sure the state-promoted special economic zones (SEZs) planned for Tak, Sa Kaeo, Mukdahan, Songkhla, and Trat would attract business operators. Under the scheme incentives will be offered to high-technology industries, but the Thai government wants operators to employ workers from neighbouring countries even if they lack skills.

Thailand has suffered from a massive manufacturing labour shortage for a long time, he said.

“The problem will get very bad over the next three to five years because foreign workers will return to work in their home countries to enjoy the improving economy,” said Mr Vallop.

The economies in Cambodia, Laos, Myanmar and Vietnam are estimated to grow an average of 6% this year and 6.5-7.5% next.

There are 1.42 million foreign workers from Myanmar, Laos and Cambodia registered with the Labour Ministry.

In a related development, the Thai industrial sector expects base salaries to rise an average of 5.4% this year with bonuses covering 2.5 months, reported an FTI survey.

The 147 respondents across 14 industries said undergraduates and those with less education had seen their wages frozen, while salaries of master’s graduates rose 6.43% and PhDs gained up to 47.3%.

Source: Bangkok Post

Monthly Newsletter