Foreign investment in Thailand may decline in the long term if the government fails to tackle expensive power bills, making the nation less competitive than its neighbours, warns the Federation of Thai Industries (FTI).
The government may need to consider more efficient use of its power surplus for economic purposes, which could eventually ease the impact of high electricity prices, said Sompote Ahunai, vice-president of the FTI and chief executive of Energy Absolute Plc.
The FTI said in a seminar titled "Thailand: New Episode" to reiterate its concerns over the surge in the power tariff, which has increased production costs in the manufacturing sector.
The power tariff, driven by a higher fuel tariff (Ft), has risen to 5.33 baht per kilowatt-hour (unit), up from a record high of 4.72 baht per unit last year.
In Vietnam, the power tariff stands at only 2.88 baht a unit, according to the FTI.
"A high fuel tariff will affect Thai economic growth. Many businesses cannot afford expensive operating costs and will lose competitiveness," said Kriengkrai Thiennukul, chairman of the FTI.
Expensive electricity is becoming a new economic risk, causing foreign businesses to invest in neighbouring countries, especially Vietnam, he said.
According to the Office of Industrial Economics, Thailand is ranked third for the highest Ft rates in Asean, behind Singapore and the Philippines. Previously Thailand was ranked fourth after Cambodia.
The daily wage in Thailand is also higher than that of Vietnam, said Mr Kriengkrai.
Over the first six months of 2022, around 50% of foreign direct investment in Asean went to Singapore, followed by Malaysia and Vietnam, he said.
Mr Kriengkrai said he does not want to see lower foreign direct investment adding more economic woes to Thailand.
"We already face several problems and threats, including higher fuel prices, a global recession, and the impact of geopolitical conflicts and climate change," he said.
Mr Sompote suggested the government make more use of the power capacity reserve to support electric vehicle (EV) charging facilities, especially for large commercial vehicles.
Thailand's power generation capacity in reserve is high, causing the government to shoulder high power generation costs.
Authorities should use more electricity to support industries like EVs and build economic value, which may indirectly help the business sector relieve the impact of high power bills, he said.