BANGKOK, 19 April 2012 – The Thai Lifestyle Products Federation (TLPF) has revealed a drop in the group’s export value in 2012 as a consequence of the minimum wage hike policy.
TLPF Secretary-General Jiraboon Wittayasingha said that the government’s daily minimum wage hike to 300 baht, which came into effect on 1 April, has caused a drop in lifestyle goods export activities. The current growth rate, which stands at 6-8%, or an equivalent of 95-97 billion baht, has shrunk from the previous estimation of 12-15%, worth 100 billion baht. The 7-8 billion baht loss of export value has been brought about by the 15% higher production cost, which has reduced the competitiveness of entrepreneurs. With an increase in initial cost, entrepreneurs have informed overseas clients of an upward adjustment in product prices, starting in the second quarter of 2012. However, this has led to a lower export total.
Since most lifestyle products businesses are SMEs, the TLPF has so far been informed of over 100 closures as a consequence of the inability to adapt to the wage hike. The government is, thus, urged to provide a speedy solution to the problem, by finding capital resources for entrepreneurs, coordinating with commercial banks to grant loans for machinery acquisition as well as overseas raw material resources. On the other hand, the private sector will rush to adapt itself by adding more value to the products in order to prevent price-slashing competition in the market.
Meanwhile, Deputy Commerce Minister Phum Saraphol said that the ministry still maintains the overall export growth target for 2012 at 15%. Even though entrepreneurs are being impacted by the higher wage rate, he believes that the government’s assistance measures will contribute to the achievement of the export target. As for the lifestyle products category, it is expected that the group’s export value will be as high as 100 billion baht in 2012 despite last year’s flood and the newly-implemented wage hike policy.