K-Bank Warns of Another Economic Crisis

Kasikorn Bank management warns that another economic crisis is looming as the European debt crisis persists and Thailand's competitiveness is to be weaken by higher minimum wage.

Kasikorn Bank or K-Bank Senior Deputy Managing Director Pridi Daochai said the public debt crisis in the United States and Europe will continue to have an effect on the Thai economy.

He said although Thailand conducts trade mainly with the Asian countries, the foreign public debt crisis will cause capital to flow into Asia, and specifically to Thailand.

Pridi said capital inflow will push the stock index up and push goods prices up, causing banks to release credit loans, which is the major cause of all previous financial crises.

However, he said banks are preparing to handle the situation by diversifying their investment risks and providing stricter credit loan conditions.

Meanwhile, K-Bank Senior Executive Vice President Somkiat Sirichatcha expressed concern over the new government's policy to increase the minimum wage rate of workers to 300 baht per day, a hike of 70 percent, throughout the country.

He said the action will strongly affect medium-sized enterprises.

He added that increasing goods prices can help reduce the entrepreneurs handle the burden, but it will decrease their competitiveness compared to other nations.

He said the wage rate hike will make the wage rate in Thailand five times more than Vietnam and 2.5 times more than Indonesia.

He urged the government to proceed slowly with the wage rate increase policy, as this will be more beneficial for Thailand.

Meanwhile, Somkiat said the new government's plan to increase wages for employees with bachelor's degrees to 15,000 baht will not have a major impact if it is imposed for government officials only.

However, if the policy were to include state enterprises and the private sector, it could distort the labor market mechanism, as entrepreneurs will likely switch to hiring vocational students, creating unemployment among university graduates.

-- Tan Network 2011-08-03

Wonder how many days / hours SCB before will roll out something completely opposite?