Bangkok, 13 May 2012 – In the wake of the 300-baht minimum wage policy, textile and garment entrepreneurs are considering relocating their production bases elsewhere in order to relieve its financial burdens.
The Thai Garment Manufacturers Association (TGMA) has predicted that garment exports in the second half of 2012 will experience a limited growth due to the US and European economic crisis. Furthermore, the export value in the first quarter of this year at 749 million US dollars represented a negative growth of 6.94% from the same period last year.
With its main trade partners like the US and the EU struck by an economic crisis, the Thai garment industry must adjust its strategies and turn its export focus to the Asian market, including China, Japan and ASEAN. If the export target in Q2, which is normally the peak season for garment export fails to be achieved, it can be assumed that the industry will be seeing a whole-year negative growth.
The association stated that the new 300-baht minimum wage has proved to be problematic for the textile and garment industry given the sector is labour intensive. Additionally, entrepreneurs’ lack of preparation and a shortage of workers have prompted the industry to consider relocating its production base to neighbouring countries, such as Myanmar, Cambodia and Laos, due to their lower wage rate. SME businesses which cannot afford to relocate might be forced to close down.
Meanwhile, the Thailand Textile Institute said that the overall growth in the textile and garment industry since the start of 2012 has been on a declining trend as a result of its trade partners’ economic situation. However, positive signs have begun to show in the Asian market. The institute pointed out that the minimum wage hike to 300 baht daily has caused textile production cost to rise by 4% while pushing garment production cost up by 8%.
