SMEs not to be affected much by wage hike policy

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BANGKOK, 3 August 2011– The Office of Small and Medium Enterprises Promotion (OSMEP) has evaluated that small and medium enterprises (SMEs) should not be affected much by the policy of the new government to increase daily minimum wage to 300 baht nationwide. 

OSMEP Director Yuthasak Supasorn expressed his agreement with the minimum wage hike policy and believed that it would not harm entrepreneurs seriously. He cited a SMEs database as showing that 70-80% of SMEs hire only four to five workers each.

According to him, larger SMEs have already been paying more than 300 baht a day on each worker.

The director however called on the new government to help reduce operating costs both on energy and logistics, in order to increase SMEs’ competitiveness. He added that authorities should provide entrepreneurs with easier access to capital sources, which remain a major hindrance to SME business at present.

As for the planned reduction of corporate income tax from 30% to 23%, Mr Yuthasak viewed that it might not benefit SMEs much as they usually earn around 150,000 baht to 1 million baht in profit a year, which subjects them to a tax rate of 15% while those with profits lower than 3 million baht pay 25%.

The director concluded that the minimum wage hike policy of the Pheu Thai Party will increase operating cost of entrepreneurs by around 8% while the new government will offer a 4% tax deduction on companies’ spending on training courses to partially offset entrepreneurs’ loss.