Licencing for new factories drops dramatically

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BANGKOK, 1 August 2011 – The issuance of licences for new factories by the Department of Industrial Works (DIW) dropped dramatically last month in the first-seen impact ascribed to the policy of the new government to increase daily minimum wage to 300 baht.

The DIW issued only four licences for new factories with a total value of 209 million baht in July, a drop of 1,476% or 14 times compared with the same period last year and the lowest value ever recorded as the figure usually stands at 10 billion baht each month.

The decline is attributed to the minimum wage hike policy, which once implemented, will make Thailand the production base for exports with the highest minimum wage in Asian countries. The drop in industrial investment is also attributed to the policy to increase salaries for new graduates to 15,000 baht per month.

During the global economic crisis in April 2009, new factories seeking operational licence were four billion baht worth totally which was higher than the value in July 2011.

In the first six months of this year, the DIW granted licences to 1,882 factories with a total investment value of 126 billion baht, up from the same period last year by 49 billion baht. As for the latter half of this year, establishment of new factories is expected to plummet due to the minimum wage hike policy.