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300 Baht Wage could lower Foreign Investment by 25%

Thailand may lose Bt100 billion per year in foreign direct investment FDI if the new government immediately raises the daily minimum wage to Bt300, the Joint Standing Committee on Commerce, Industry and Banking JSCCIB says.

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Thailand may lose Bt100 billion per year in foreign direct investment FDI if the new government immediately raises the daily minimum wage to Bt300, the Joint Standing Committee on Commerce, Industry and Banking JSCCIB says.

Chairman Dusit Nontanakorn yesterday said the minimum wage in Malaysia was 10 per cent higher than the minimum wage in Thailand, whereas in Indonesia it was 10-20 per cent lower.If Thailand adjusts the daily minimum wage to Bt300 throughout the country, it will be more expensive than other production bases in Southeast Asia.

BOI net applications

In the long term, foreign investors may consider relocating to other countries such as Vietnam, he said.Thailand attracts FDI of about Bt400 billion per year. If the country raises minimum wages, FDI is likely to drop 25 per cent per year or Bt100 billion, he said.Dusit said he had discussed the issue with many foreign chambers of commerce in Thailand. Most said foreign investors considered competitiveness before deciding to invest in a country.

If labour costs rose, some investors could relocate to other countries and it would be very difficult to bring them back.

“The Asean Economic Community will happen in the next four years. Investors have many choices for their investments. It is not necessary for them to stick with Thailand all the time,”

he said.Dusit said that in the short term, about 90 per cent of small and medium-sized enterprises would be affected, as they would not be able to absorb the increased costs.

via Wage rises could cost Bt100 bn in FDI.

The National Reform Office supports the government’s wage-hike policy, saying a labourer actually needs a daily wage of Bt461 to cover living costs adequately. At the same time, there is a need for the labour force to develop its skills.

The deputy director of the Reform Office, Wanee Pinprateep, said an improved labour system and welfare were urgent issues for the office, and for workers’ security.

“The issue must be pursued seriously, especially in developing skilled and non-skilled labourers. In Germany, labourers lacking skills get after-work training so they can do a better job and get higher wages,” she said. The problem in Thailand was linked to the education system that promoted university education but lacked sufficient workers for industry.

The National Reform Office includes the National Reform Committee (NRC), formerly chaired by former prime minister Anand Panyarachun, and the Assembly for National Reform (ANR) chaired by Prawase Wasi.

For its second plan, the office is considering national reform for farmers’ security and quality of life, Wanee said.

Cambodia

US$ 61 per month for the garment sector; none for any other industry
Indonesia established by provincial and district authorities, which vary by province, district, and sector; as high as 1,410,000 rupiah (€116) per month in Papua; as low as 675,000 rupiah per month in West Java
Vietnam official monthly minimum wage for unskilled laborers at foreign-invested joint ventures and foreign and international organizations: 1,000,000 VND in the urban districts of Hanoi and Ho Chi Minh City; 900,000 VND in the suburban districts of Hanoi, Ho Chi Minh City, and several other industrial districts and towns; and 800,000 VND elsewhere; the government may temporarily exempt certain joint ventures from paying the minimum wage during the first months of an enterprise’s operations or if the enterprise is located in a very remote area, but the minimum monthly wage in these cases can be no lower than 800,000 VND; the official monthly minimum wage for unskilled labor in the state sector was 540,000 VND (€18) in the provinces and 620,000 VND in the urban districts of Hanoi and Ho Chi Minh City
Thailand ranges from 159 Thai baht (3.69) to 221 baht (5.13) per day, depending on the cost of living in various provinces; set by provincial tripartite wage committees that sometimes include only employer representatives
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