Survey predicts bleak future for labour-intensive industries

Survey predicts bleak future for labour-intensive industries

Higher expenses will force 200,000 closures

Labour-intensive industries will face a bleak outlook next year, while hundreds of thousands of businesses, mostly small and medium-sized enterprises, will close due to higher production costs from both rising raw material prices and higher wages, says a new survey.

Thanavath: Warns ‘old-fashioned’ firms

Thanavath Phonvichai, vice-president for research at the University of the Thai Chamber of Commerce's Center for Economic and Business Forecasting, said rising production costs driven by the higher price of raw materials and the hike in the daily minimum wage to 300 baht starting on Jan 1 are expected to lead directly to the closure of 200,000 businesses.

Political volatility and higher oil prices also remain key risks for the Thai economy and must be watched closely, he said.

The centre's latest survey showed businesses that rely heavily on labour or are "old-fashioned" will end up being sunset industries in the year to come.

Hardest hit will be the tannery industry, as it is completely unlikely to be able to compete against firms based in China, Cambodia and Vietnam, where labour costs are much lower.

Shoe-making, apparel and leatherwear ventures that do not focus on skills and design will be the next hardest hit, followed by those in the dried vegetable and fruit sector _ which lacks quality development _ traditional basketry and handicraft trades, and mom-and-pop stores.

Homestay businesses as well as water parks and resorts that fail to differentiate themselves will also face bleak prospects. Toy businesses that are heavily reliant on labour will also be in trouble next year.

However, the centre said there remain dozens of business types facing a promising 2013.

Medical and beauty firms as well as those involved in telecommunications and television are expected to enjoy outstanding performances next year.

"The medical and beauty sectors still retain the top slots as sunrise industries, as people are expected to pay more attention to their health next year, boosted by the growing economy, affordable prices and good quality services," said Mr Thanavath.

"The advent of a third-generation mobile network and cheaper devices will also help to drive the communications technology sector."

He said the arrival of digital TV next year will also boost the expansion of the TV sector.

Other sunrise industries include NGV and LPG filling stations as well as businesses in the energy and alternative energy, food, alcohol, tobacco, electronics, education, construction, real estate and logistics sectors.

Financial institutes are also expected to do well.

Do you like the content of this article?
COMMENT (2)