FTI warns wage rise will hit SMEs

The cabinet approved a plan yesterday to impose a daily minimum wage of 300 baht nationwide on Jan 1 even as companies warned the government it must take full responsibility for damage to small and medium-sized enterprises.

  • Published: 21/11/2012 at 12:00 AM
  • Newspaper section: topstories

"SMEs will definitely suffer from more unpaid loans, which eventually will hurt the whole labour force if they stop hiring and the government does nothing to help them cope with the wage hike next year," said Vallop Vitanakorn, vice-chairman of the Federation of Thai Industries (FTI).

He said the industrial sector will wait 6-12 months to reassess the situation and decide whether it will have to close down their offices in provinces.

"We might have to lease the closed factories to the government for rice storage," quipped Mr Vallop.

Petcharat Eksaengkul, vice-chairman of the FTI's industrial department, said even though it is difficult to change government policy, it should look at the FTI's 27 proposed measures.

The measures include lending money to help improve production, seeking new marketing channels, lowering corporate income tax and expanding the time frame for loan repayment.

Thailand has 2.9 million SMEs generating 3.7 trillion baht or 37% of the country's 10-trillion-baht gross domestic product.

The figure rises 1.9% a year on average.

"In reality [such measures] will not provide much help at all," said Ms Petcharat.

Marc Spiegel, vice-chairman of the Joint Foreign Chambers of Commerce in Thailand (JFCCT), said foreign enterprises will also feel the impact of the wage increase, and some may be forced out of Thailand.

Foreign SMEs rarely receive any support and many find it difficult to access funding, he said.

"We support the wage increase on a conceptual level, but it has to come with an improvement of education, productivity and training," said Mr Spiegel.

With Myanmar opening up, Thailand will be less attractive to manufacturers in the coming years, he added.

Pornsil Patcharintanakul, vice-chairman of the Thai Chamber of Commerce, suggested the government set up a special fund to compensate Thai SMEs with low-interest loans to help ease financial liquidity after the wage hike.

JFCCT chairman Nandor von der Luehe said he is more worried about the domino effect of a wage increase.

"The [increase to] 300 baht is minimal, but others who are now getting 500 baht will also ask for more, and everything will become more expensive," he said, adding that the wage increase should come from higher productivity.

Mr von der Luehe said the government's tax rebate will not really benefit SMEs that will be affected the most by the wage hike.

The cabinet also agreed yesterday to set up a committee to be chaired by Deputy Prime Minister and Finance Minister Kittiratt Na-Ranong to create measures aimed at helping business entrepreneurs affected by the minimum wage increase.

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