Thais told to prepare for price hikes in Q4

0
689

BANGKOK, Sept 3 – The price increases for liquefied petroleum gas (LPG) and electricity on September 1, combined with the daily minimum wage hike to Bt300 since January 1, will jack up consumer products prices by 5 per cent in the fourth quarter and at a higher rate next year, an academic said today.

Thanawat Polwichai, director of the Centre for Economic and Business Forecasting at the University of the Thai Chamber of Commerce (UTCC), said a recent survey among 800 business operators on the impact of the minimum wage increase found that the private sector adopted various methods for their business survival.

He said 39.7 per cent of the operators said they increased prices of their products, 26.5 per cent scaled down welfare for employees and 16.2 per cent replaced manpower with machinery.

According to the survey, 11.9 per cent of the operators said the minimum wage hike had a negative impact on their manufacturing costs, consequently affecting their liquidity by 37.8 per cent while 34.3 per cent of operators received “medium” benefits from the government’s relief measures and 73.1 per cent had never received any rehabilitation assistance from the government.

The January 1 minimum wage increase led to higher manufacturing costs and a labour shortage. On the average, business operators could bear the extra burden for only five months after the wage hike before calling it quits, while 44.2 per cent of the operators shouldered the additional burden themselves at medium level.

Among the assistance measures requested by the private sector are economic stimulation, export promotion, price reduction for consumer products and extension of low-interest loans.

Mr Thanawat said inflation could possibly rise to 3.5 per cent next year.

The LPG price increase would have a medium-level impact on private businesses with 51.5 per cent and 26.4 per cent of operators saying they would wait before deciding if they would adjust their product prices.

Small enterprises have been severely hit by the higher manufacturing cost though some could adjust while a labour shortage is wreaking havoc on the private sector, said Dr Thanawat.

Pumin Harinsut, vice president of the Thai Chamber of Commerce, said a future government should discuss with the private sector on the economic-related election campaign and map out preventive measures, otherwise the negative impact on private businesses would be too harsh to handle.

He was apparently referring to the Yingluck Shinawatra’s policy to increase Thailand’s daily minimum wage to Bt300 nationwide. The policy was repeatedly announced during the pre-election campaign.