Thai Commerce Ministry: Business Closure In Q1/2012 Nearly Doubled From 2011

[webfact]

Commerce Ministry: Business closure in Q1/2012 nearly doubled from 2011

BANGKOK, 1 May 2012 (NNT) – According to the Commerce Ministry, the number of businesses closed down in the first quarter this year is nearly twice as many of that of the same period in 2011 due to the rise in minimum wage. The government is trying to do all it could to assist the SMEs.

The Commerce Ministry has reported that almost 2,800 companies closed down in the first quarter of 2012, a 96% increase from the first quarter of 2011's figure. Meanwhile, the number of new business registration in the first quarter of this year is 5% fewer than last year’s.

The ministry is trying to come up with assistance measures to soften the impact of the rising production cost stemming from the 300-baht minimum wage policy. Deputy Commerce Minister Siriwat Kachornprasart has assigned the Department of Business Development to study the assistance plans for SMEs, focusing on franchise, restaurant, spa and service businesses.

Under the plan, the department will encourage SMEs to utilize more e-commerce and increase import-export effectiveness. Mr Siriwat said the entrepreneurs were dealt a heavy blow by the rising minimum wage, but they will be able to adapt to it soon.

-- NNT 2012-05-01

[OzMick]

" Deputy Commerce Minister Siriwat Kachornprasart .......said the entrepreneurs were dealt a heavy blow by the rising minimum wage...."

I'm sure this is not the party line - correction expected soon.

"........ but they will be able to adapt to it soon." Is closing down an adaption?

[pimay11]

I wonder how many people lost their jobs from these 2,800 companies? Good luck getting any assistance from this government.

[webfact]

related

Poll: 1/3 of employers may lay off workers due to Thai govt's minimum wage hike

Full story:

[jonclark]

This is really a shame as 300 baht a day is a paltry amount for a days work. The whole policy has been so badly thought through and implemented that once again those who should have benefited, will bear the brunt of this lack of vision and some no doubt will sink further into poverty and debt. With ASEAN looming large and the removal of protectionist trade barriers that cushion Thai businesses from the realities of 21st Century global trade, the cynic in me fears for Thailand future economic well being.

[ramrod711]

I wonder how many of these companies are closing because of the increasingly hostile political climate in this country?

I think the economy is in trouble, not because of the 300 baht law but because the government has to borrow money to pay for all the other promises they made. Now there is talk of raising the VAT, things are going to get worse.

[Skywalker69]

I wonder how many people lost their jobs from these 2,800 companies? Good luck getting any assistance from this government.

"Thaksipolitics" is going to send Thailand back 40-50 years.

[Skywalker69]

This is really a shame as 300 baht a day is a paltry amount for a days work. The whole policy has been so badly thought through and implemented that once again those who should have benefited, will bear the brunt of this lack of vision and some no doubt will sink further into poverty and debt. With ASEAN looming large and the removal of protectionist trade barriers that cushion Thai businesses from the realities of 21st Century global trade, the cynic in me fears for Thailand future economic well being.

PTP have only one policy, Bring the dear leader home.

[Thai at Heart]

Minimum wage increase wasn't in effect in Q1 was it? Closures from flood effects infinitely more likely.

[DoctorG]

Minimum wage increase wasn't in effect in Q1 was it? Closures from flood effects infinitely more likely.

This is correct. There could be many reasons for the increased closures. The report just assumes it is the 300bt issue.

[Pseudolus]

In recent months I have seen increased RD and Social Security department action trying to target nominee firms. Maybe this has something to do it; xenophobic parochialism in action.

[Moruya]

This is really a shame as 300 baht a day is a paltry amount for a days work. The whole policy has been so badly thought through and implemented that once again those who should have benefited, will bear the brunt of this lack of vision and some no doubt will sink further into poverty and debt. With ASEAN looming large and the removal of protectionist trade barriers that cushion Thai businesses from the realities of 21st Century global trade, the cynic in me fears for Thailand future economic well being.

What I'd like to see would be a proper cost of living/minimum wage ratio for countries in ASEAN.

Something like the Big Mac or Starbucks Latte index would be useful

[BrianCR]

I wonder how many of these companies are closing because of the increasingly hostile political climate in this country?

I think the economy is in trouble, not because of the 300 baht law but because the government has to borrow money to pay for all the other promises they made. Now there is talk of raising the VAT, things are going to get worse.

All governments borrow to keep their election promises and run their country making that comment a bit of Thai knocking again! VAT is 7% and much higher in most other countries (the UK for example is 22% and going up). What do you want a government to do sit back and not try and improve its citizens life style?

[Skywalker69]

I wonder how many of these companies are closing because of the increasingly hostile political climate in this country?

I think the economy is in trouble, not because of the 300 baht law but because the government has to borrow money to pay for all the other promises they made. Now there is talk of raising the VAT, things are going to get worse.

All governments borrow to keep their election promises and run their country making that comment a bit of Thai knocking again! VAT is 7% and much higher in most other countries (the UK for example is 22% and going up). What do you want a government to do sit back and not try and improve its citizens life style?

What we want is the Government to start working for the people of Thailand, not just one multi-billionaire person whom lives in Dubai.

[noitom]

Thailand is dire. It's not the 300 baht per hour. That is a scapegoat. Thailand knows that the world is in economic crisis. Europe is in shambles and in recession. Even Germany has slowed substantially. Japan is still floundering and struggling with other social economic issues. China is slowing down and desperate to create new jobs. Yet Thais are in denial that their export driven economy with low unskilled labor being paid bare wages can blame this on the 300 baht minimum.

Thailand has done virtually nothing in decades to transition to more of a domestic economy, engage with the entire population, and to upgrade the education, knowledge, and skills of its people. The only Thai industry that holds promise for stable growth is sex tourism, the old standby reliable consistent trade.Fewer tourists with fewer discretionary euros, dollars, yen, won and renminbi will find it worth while to travel to a high cost center like Thailand for sex. There are no peripheral benefits for travelers to come here anymore. Prices are high, higher than the US in most cases for imported foods from Europe and Japan. Shopping is no longer a novelty as most goods found in shopping areas run the risk of being defected knockoffs.

Thailand is at a dire point. Let's see what they do. They'll thrash about blaming the minimum wage, and each other depending on their party, but no one will bite the bullet and stand up for the truth and the right thing to do for the nation as a whole. Thailand has few friends willing to trust it. Thailand has double crossed most of its partners or ignored most of its relationships with other countries. It thrashes about flipping and flopping between the US and Iran, it sues Germany repeatedly, it ignores the assistance of the Dutch on flood management. The French rarely use Thailand as a travel destination. The Japanese are retreating from unmanaged manufacturing relationships and flood control. Thailand is dire.

[Ricardo]

I wonder how many of these companies are closing because of the increasingly hostile political climate in this country?

I think the economy is in trouble, not because of the 300 baht law but because the government has to borrow money to pay for all the other promises they made. Now there is talk of raising the VAT, things are going to get worse.

All governments borrow to keep their election promises and run their country making that comment a bit of Thai knocking again! VAT is 7% and much higher in most other countries (the UK for example is 22% and going up). What do you want a government to do sit back and not try and improve its citizens life style?

The UK's standard VAT-rate was increased from 17.5% to 20% from 4th January 2011, do you have details of the further increase, to 22% please ?

[culicine]

I wonder how many people lost their jobs from these 2,800 companies? Good luck getting any assistance from this government.

"Thaksipolitics" is going to send Thailand back 40-50 years.

More likely it will plod along like a blind 3-legged dog as it always has done....

[culicine]

Minimum wage increase wasn't in effect in Q1 was it? Closures from flood effects infinitely more likely.

This seems more likely, but need to know of the demographics of closures.

[belg]

rise the wages compared to your neighbouring countries who also have a vast amount of no education labour... and what do you get ? same as what happend in de US and Europe... companies will relocate where the labour is cheap(er)

thai economics 101

[OzMick]

I wonder how many of these companies are closing because of the increasingly hostile political climate in this country?

I think the economy is in trouble, not because of the 300 baht law but because the government has to borrow money to pay for all the other promises they made. Now there is talk of raising the VAT, things are going to get worse.

All governments borrow to keep their election promises and run their country making that comment a bit of Thai knocking again! VAT is 7% and much higher in most other countries (the UK for example is 22% and going up). What do you want a government to do sit back and not try and improve its citizens life style?

Please do a quick google on regressive and progressive taxation. Then consider wealth taxes such as land tax and death duties, both with minimum limits.

OR if they wanted to improve their citizens lifestyle, they could stop vote-buying with economically insane subsidising of uneconomic industries, and use the money to improve infrastructure, especially education.

[IsaanUSA]

rise the wages compared to your neighbouring countries who also have a vast amount of no education labour... and what do you get ? same as what happend in de US and Europe... companies will relocate where the labour is cheap(er)

It's a little different though. In the US, it is the US companies that are sending work overseas. The US company is still bringing in big profits to the US as well as tax revenue and there are still many workers with that company in the US that are getting paid and paying taxes.

In Thailand the companies that would relocate are multi-nationals. It's not a Thai company that's now going to start outsourcing work to Vietnam. So it would be an even bigger loss to Thailand.

I'm not a liberal, and I generally oppose government run social services, but I think in Thailand's situation, the best thing for the government to do is to subsidize the cost of basic goods needed by poor people or do something pro-active that helps the people instead of just throwing them money.

[hellodolly]

Minimum wage increase wasn't in effect in Q1 was it? Closures from flood effects infinitely more likely.

I agree that flood related issues probably pushed a lot of the marginally profitability ones out of business.

It just goes to show that the PT Government has not done a thing to help the small business owners.

Just wondering if the 7 11s will still have two or three employes in the store at all times some times even four.

Typical political move promise the world. Eight months later start to put it into play find out it has huge problems so they decide to start looking for the answers.

Edited May 1, 2012 by hellodolly

[hellodolly]

I wonder how many of these companies are closing because of the increasingly hostile political climate in this country?

I think the economy is in trouble, not because of the 300 baht law but because the government has to borrow money to pay for all the other promises they made. Now there is talk of raising the VAT, things are going to get worse.

All governments borrow to keep their election promises and run their country making that comment a bit of Thai knocking again! VAT is 7% and much higher in most other countries (the UK for example is 22% and going up). What do you want a government to do sit back and not try and improve its citizens life style?

You seem to be under the impression that they are trying to improve the citizens life style. I hate to be the one to break the news to you but promising any thing does not improve there life style.

[tlansford]

nearly twice as many of that of the same period in 2011 due to the rise in minimum wage.

minimum wage increase had not yet happened in Q1

What are they smoking at the commerce ministry?

[Thai at Heart]

Minimum wage increase wasn't in effect in Q1 was it? Closures from flood effects infinitely more likely.

I agree that flood related issues probably pushed a lot of the marginally profitability ones out of business.

It just goes to show that the PT Government has not done a thing to help the small business owners.

Just wondering if the 7 11s will still have two or three employes in the store at all times some times even four.

Typical political move promise the world. Eight months later start to put it into play find out it has huge problems so they decide to start looking for the answers.

Well on the basis that the flood went on for some areas for 3 or 4 months and only ended in November/December, 4 months with little or no revenue, faced with the cost of reinvestment in machinery/equipment to get restarted, I can easily believe that the amount of companies/businesses that closed in Jan/Feb and March was absolutely astronomical. Had a relative with a printing company in Bangkok, even when he was dry, the vast majority of his clients hadn't even started production again 6 weeks later.

This is why I have always talked about the folly of building a wall around the industrial parks because a manufacturer only has to be without a couple of vital widgets and the product can't leave the factory, be it a special lightbulb, circuit or packaging, so it is of very little benefit in terms of productivity if the main manufacturer is dry but even a small percentage of the supply chain is under water. Car manufacturers aren't going to magically switch suppliers in a second to get hold of even a gear stick knob, the tooling takes weeks to put together. Then of course, you have to get the products into the now dry estate. Anyone see too many delivery trucks running around in Bangkok when the water was 1 metre deep?

The entire supply chain has to be moved, simple. At the end of it, the amount of suppliers just to say the hard disk industry in Thailand is enormous, and a couple of the big factories have basically closed up shop. Be it packaging, clothing, distribution, design, or anything else associated with this industry many small, medium and big businesses will close or have their business severely reduced, irrespective of the minimum wage.

Edited May 3, 2012 by Thai at Heart